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Having been battered for years by a monetary policy that favored economic growth over price stability, investors had high hopes for the new direction taken by the Turkish central bank. But when expectations are high, the risk of disappointment is particularly high. Despite raising its main policy rate by 650 basis points (!) to 15%, the TRY plunged further against other currencies. It has to be said that, with inflation set to reach 72% by 2022 and still estimated at over 40% this year, the move is somewhat timid. It does, however, mark a notable inflexion in Ms. Erkan's monetary policy which, if confirmed, should eventually bear fruit. With the USDTRY rising exponentially, a technical correction is bound to materialize.
In other currencies, the EURO underperformed against the CHF, hitting its 200-day moving average at 0.9837, signaling the end of the rebound initiated in early June. At the same time, it is also weakening against the US dollar, having failed to reach 1.1068, and is currently testing initial support at 1.0847, which should be held to avoid a further fall.
The other key development comes from the Aussie. After touching our target zone at 0.6890/6910, it reversed sharply to the downside, reentering the 0.6781 level, resistance below which a new bearish sequence is expected in the direction of 0.6327/0.6288.
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*Staying with commodity currencies, USDCAD broke through the lower limit of its flat consolidation channel in progress since October 2023, now resisting at 1.3270/1.3362, opening up new downside potential on 1.3024/1.2939. As for the Kiwi, it hit key resistance at 0.6234/49, below which a new bearish salvo should materialize, with initial support at 0.6023.
To conclude this overview with the scandies, the USDSEK is running into resistance below 10.9128, with a first target around 10.51/45, a breach of which would open up greater downside potential towards 10.16. Lastly, the NOKSEK has just hit horizontal resistance around 1.01, with a return to 0.9525 in the months ahead.
