USD/TRY PRINTS SEVEN-DAY UPTREND AROUND 14.50 ON TURKEY’S GROWTH FEARS

• USD/TRY remains firmer around three-month high, pares intraday gains of late.
• Turkey-Israel attempts diplomatic peace for the first time in over a decade.
• World Bank raised concerns over growth of big importers of oil, including Turkey.
•  Ukraine-Russia to meet in Ankara on Thursday, markets turn cautious;y optimistic as Kyiv dumps NATO plan.

USD/TRY remains on the front foot for the seventh consecutive day around 14.53 ahead of Wednesday’s European session. In doing so, the pair ignores the USD pullback amid fears of economic growth due to the recent jump in oil prices.

That said, the Turkish lira (TRY) pair rises 0.45% intraday at the latest, around the highest levels last seen on December 20, 2021.

Given Turkey’s status as a major importer of oil, the recently strong energy prices do raise a challenge for the economy that’s already struggling with inflation. Also keeping the USD/TRY hopeful is President Recep Tayyip Erdogan’s dominance over the monetary policy, as well as dislike for higher rates.

In this regard, a World Bank official said on Tuesday that persistent high oil prices prompted by Russia’s invasion of Ukraine could cut a full percentage point off the growth off large oil-importing developing economies like China, Indonesia, South Africa and Turkey.

Elsewhere, Turkish and Israeli leaders are up for taming the age-old animosity as both the leaders gather in Ankara on Wednesday for the first time in over 10 years.

On a broader front, Ukraine’s retreat from NATO membership and confirmation of the first humanitarian corridor in Kyiv favor market sentiment. Also positive for the mood is Venezuela’s freeing of the American prisoner and the US hint of easing sanctions afterward. Though, doubts over Kyiv’s plans to join the European Union (EU) and Russian push for nationalizing foreign-owned factories that shut operations challenge market sentiment.

Amid these plays, the US 10-year Treasury yields drop two basis points (bps) to 1.85% whereas the S&P 500 Futures remain firmer on a day at the latest.

Looking forward, USD/TRY traders need to pay attention to the local politics for immediate directions. However, Thursday’s peace talks between Ukraine and Russian Foreign Ministers, as well as the US Consumer Price Index (CPI) for February, will be more important catalysts to watch.