The chance of the lira rising against the dollar is still weak as the pair is moving in a generally upward direction. 

Today’s recommendation on the USD/TRY

• Risk 0.50%.
• None of yesterday’s buy or sell deals were activated

The best selling entry points

• Entering a sell deal with a pending order from the 18.33 levels
• Place the stop loss point and close the lowest support levels 18.55.
• Move the stop loss to the entry area and follow the profit with the price moving by 50 points.
• Close half of the contracts with a profit equal to 55 points and leave the rest of the contracts until the strong resistance levels at 17.70.

Best buy entry points

• Entering a buy deal with a pending order from the 17.98 levels
• The best points for placing a stop loss close at 17.74 levels.
• Move the stop loss to the entry area and follow the profit with the price moving by 50 points.
• Close half of the contracts with a profit equal to 55 points and leave the rest of the contracts until the support levels 18.31

Analysis of the Turkish Lira

The price of the Turkish lira stabilized against the US dollar during early trading this morning, as the lira continues to trade within a narrow trading range amidst interventions by the Turkish Central Bank to control its price.

This is clearly seen during last weekend’s trading, where the lira was barely affected by the rise of the dollar against most of the major and emerging currencies, after Federal Reserve Chairman Jerome Powell’s statements about sticking to the policy of monetary tightening until reaching the FED’s inflation target.

On the other hand, the Turkish Central Bank has stuck to a stimulus policy after lowering the interest rate by 100 basis points during the current month. In the meantime, reports revealed a government crackdown on independent institutions that aim to track the real inflation rate in the country, which reflects the decline in transparency in government economic data, as many analysts believe that it is unreal figures and manipulated. It is mentioned that the inflation rate in the country is at its highest level in 25 years.

On the technical level, the USD/TRY settled at its highest levels during 2022, after the pair broke through the 18.10 levels, where the pair traded at the top of the narrow trading range, which is illustrated by the chart. The pair is also trading above the 50, 100 and 200 moving averages respectively on the four-hour time frame as well as on the 60-minute time frame, indicating a long-term upward trend. The pair also traded above the support levels which are concentrated at the levels of 18.08 and 17.98 respectively. While the pair is trading below the resistance levels at 18.20 and 18.33, which are above the pair’s levels recorded at the end of last year respectively.

 The chance of the lira rising against the dollar is still weak as the pair is moving in a generally upward direction. Since every decline for the pair represents a good opportunity to buy please adhere to the numbers in the recommendation, while maintaining capital management.

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On Wednesday, the  Australian Bureau of Statistics reported the preliminary retail sales figure, which showed that retail sales dropped by 4.2 percent (month-to-month) in September, after climbing by 3.2 percent on the previous month.

Last week, the Australian Dollar went down by 3.59 percent against the US dollar, breaking a two-week gaining streak.

The Reserve Bank of Australia deputy governor Guy Debelle expressed his concerns about the value of the Australian dollar on Tuesday, going against the analysts’ expectations, who thought that he wasn’t going to comment on the issue given the belief that the Australian Dollar late performance has been mainly linked with the US dollar weakness. Last week the US dollar recovered against a bundle of its main competitors, gaining 1.85 percent and recovering from the previous week’s losses.

Debelle highlighted that a lower exchange rate would benefit the economy, which the markets interpreted as opening up the possibility of intervening in the foreign exchange market to lower the Australian Dollar value, something similar to what the Swiss National Bank has been doing to stop the appreciation of the Franc.

The Deputy Governor also left the doors open for further interest rate cuts, which implies that the RBA eventually may consider imposing negative cash rates, though he pointed out that there is still room to bring down the cash rates without entering into the negative territory. About this alternative Debelle commented that the evidence is mixed concerning its effects on the exchange rate.

“The empirical evidence on negative rates is mixed. In the short-term, they can contribute to a lower exchange rate. In the medium term, the effectiveness can wane including through the effect on the financial system,” he said, adding that it can encourage households to save more, especially in an environment where they’re inclined to do so.

The Reserve Bank of Australia’s monetary policy committee is expected to meet next week and announce its monetary policy decision afterward. Until then, it may not be clear whether they’re willing to consider this alternative or not.

Last week the markets got important information about the state of the Australian economy. On Tuesday, the Commonwealth Bank of Australia together with market economics released the preliminary Commonwealth Bank Services PMI for September, which stood at 50, showing an expansion of the services sector. In August the indicator stood at 49, signaling a contraction in the sector, while the analysts foresaw it to be at 48.4. The Manufacturing PMI, which stood at 55.5, showed a faster expansion of the manufacturing sector, given the 53.6 of the previous month. Analysts foresaw a contraction, as they expected it to be at 48.3.

The composite PMI stood at 50.5, showing an expansion of the business sector. The previous month’s figure signaled a contraction, as it stood at 49.4. On Wednesday, the  Australian Bureau of Statistics reported the preliminary retail sales figure, which showed that retail sales dropped by 4.2 percent (month-to-month) in September, after climbing by 3.2 percent on the previous month.

On Friday, the Australian Bureau of Statistics published that the preliminary trade balance for August registered a surplus at $4,294 million, after being at $4607 million in the previous month. Imports fell by 7 percent after climbing 7 percent in July, while exports dropped by 2 percent after falling by 4 percent in the previous month.