Summary:
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CBRT will have another chance to save TRY
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API data expected to show decent drop in inventories
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European PMIs to draw attention in the morning
After calm Monday comes quite a busy Tuesday. Investors will be offered PMI readings from euro area and the US therefore additional volatility on the EURUSD may spur. However, the main focus will be on CBRT decision scheduled at noon given that the Turkish currency has reached new all-time lows recently. Apart from that, commodity traders will be served weekly oil inventories data from API.
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Create account Try a demo Download mobile app Download mobile app9:00 am BST - European PMIs for July. The PMI indices from Europe have deteriorated greatly after peaking at the beginning of the year. However, the services gauge managed to tick higher in June. Nevertheless, economists surveyed by Bloomberg point for a minor decline in both services and manufacturing gauges. The reading will be watched closely as ECB has already signalled that the rate hike will be data-dependant. Keep in mind that this will be a preliminary reading.
12:00 pm BST - CBRT decision. It is hard to question a view saying that CBRT has betrayed the Turkish lira by failing to address the inflation properly with interest rates. Nevertheless, the monetary authorities will have another chance to save domestic currency today. The Bank is expected to deliver a 100 bp rate hike that would put the one-week repo rate at 18.75%. However, this may not be enough to save lira once and for all given the current pace of price growth in Turkish economy.
2:45 pm BST - US PMIs for July. While in Europe PMIs deteriorated the same cannot said about the US. Services and manufacturing indices marched higher since the beginning of the year reinforcing Fed’s message that the economy is strong. However, the manufacturing gauge unexpectedly slumped in June. Trade wars may have taken toll on this economy sector as according to the market consensus we are set for a slight drop in July as well. On the other hand, the services data should upheld the previous reading at 56.5 pts. Just as in the case of Europe this will be preliminary readings.
9:30 pm BST - Weekly API crude oil stocks. The last week’s oil inventories reading saw an unexpected build. However, it looks like geopolitics has taken control of this market once again with US-Iran dispute intensifying recently. While this theme is likely to impact prices the most in the upcoming days oil traders should also pay attention to regular news flow. Economists suggest that today’s API reading should show a 3.2 mb drop.
USDTRY pulled back from its fresh ATH at 4.98 recently. The pair reached the lower limit of the short term support zone ranging 4.74-4.80. In case CBRT fails to deliver a satisfying monetary move during today’s meeting we may witness the pair breaking above the mentioned zone once again. Source: xStation5
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