- Summary:
- USDTRY trades lower as Turkey posts its first positive GDP reading in four quarters. However, it could resume its uptrend if US data beat forecasts.
USDTRY is holding on to support at last week’s lows at the wake of Turkish GDP numbers. The currency pair initially sold off by 19 pips from its Asian session highs at 5.75. As of this writing, the currency pair is still steadily trading at 5.73.
Data released by the Turkish Statistical Institute showed that, for the third quarter of 2019, the local economy grew by 0.4% from the previous quarter. On an annual basis, the economy expanded by 0.9%. The consensus was for a 1.0% annualized growth rate. However, despite it missing expectations, the Turkish lira still managed to find bids at the wake of the report. This is because the figures represent the first positive reading that we have seen on Turkey’s GDP for the past four quarters.
Meanwhile, the manufacturing PMI for November came in at 49.5. The report from the Istanbul Chamber of Industry showed that business activity improved during the month after coming in at 49.0 in October. It also topped forecasts at 49.4.
This week is going to be a busy one for the currency pair.
Tomorrow, Turkey’s inflation data is due for release. It’s CPI data for November is seen to print a 11% uptick from last year. Meanwhile, the monthly reading is seen at 0.7%.
For the US, the much-anticipated non-farm payrolls report is due at the end of this week. The official government report on the labor market will likely cause some volatility on the charts because it’s the same data the Fed looks to before making changes to monetary policy. The NFP for November is estimated to print at 189,000.
USDTRY Outlook
On the hourly chart, we can see that the currency pair is testing support at the rising trend line (connecting the lows of November 19, November 21, and November 22). The area also coincides nicely with the 50% Fibonacci level (drawing from the low of November 21 to the high of November 27) and the 200 SMA.
Better-than-expected data from the US later could be enough for support to hold. Remember that at 3:00 pm GMT, the ISM manufacturing report for November will be released. It is eyed to come in at 49.2.
On the other hand, worse-than-expected data could push USDTRY lower. A close below the Asian session lows at 5.72 could mean that the currency pair may soon test support at 5.68 which is where it bottomed on November 21.Download our latest quarterly market outlook for our longer-term trade ideas.