Economic calendar for today lacks top-tier macro releases from the world's major economies but there is an event scheduled that is worth FX investors' attention. The Central Bank of the Republic of Turkey will announce a monetary policy decision at 12:00 pm BST and the event is likely to boost volatility on the TRY market. In spite of TRY sinking to record lows and inflation in the country running rampant, the market expects CBRT to cut rates from 18.0% to 17.5%. Such a forecast should not come as a surprise given actions by the Turkish President Erdogan earlier this month. Namely, Erdogan fired 3 CBRT members who opposed the latest rate cut. Such an action suggests that remaining CBRT members do not have issues with the unorthodox monetary policy view of the Turkish President and are likely to play along. CBRT delivered an unexpected 100 basis point rate cut last time and it cannot be ruled out that the central bank will surprise today as well.
As we have mentioned earlier, Turkish lira reached new record lows against EUR and USD following the latest CBRT rate cut and sacking of central bankers. While both USDTRY and EURTRY managed to pull back from record highs this week, both pairs began to climb higher again today. Taking a look at the EURTRY chart, we can see that a pullback was halted at around 10.74 - the lower limit of market geometry (purple box). Note that the pair has launched an over-6% upward move following the latest test of the lower limit of geometry (October 10, 2021) and it cannot be ruled out that the story will repeat itself, especially if CBRT delivers a bigger-than-expected rate cut today.
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Source: xStation5
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