- USD/TRY resumes offers to reverse Friday’s pullback from the 3-month high.
- Russia and Ukraine ready for further talks after citing progress, Moscow attack slammed.
- US Treasury yields propel the DXY amid rising hopes of a 0.50% Fed rate hike on Wednesday.
- China’s covid cases bolster safe-haven demand for the US dollar.
USD/TRY renews its intraday high around 14.90 as buyers hold the reins near three-month highs ahead of Monday’s European session. In doing so, the Turkish Lira (TRY) pair reverses Friday’s U-turn from the multi-day high amid broad US Dollar strength.
That said, the US Dollar Index (DXY) is showing a three-day bullish trend while trailing firmer US Treasury yields. Concerns over diplomatic efforts to tame the Russia-Ukraine crisis amid escalating bombardment of Moscow also underpin the greenback.
Recently, the Russian Foreign Ministry said, according to RIA Novosti, “There is no reason for UN peacekeepers to be sent to Ukraine.” The news also adds: “Further progress in regulating the situation there will depend on Kyiv’s willingness to compromise.” Over the weekend, negotiators in Moscow and Kiev both cited progress and expressed readiness to step up diplomatic efforts to end the war in Ukraine, as Reuters has suggested.
Elsewhere, China is reporting the highest daily infections since May 2020 and has announced a lockdown for the city of Shenzhen. New fears of the coronavirus in China renew the first woes of the pandemic and reinforce the strength of the dollar. In addition, record inflation expectations in the United States ahead of this week’s Federal Open Market Committee (FOMC) are also keeping greenback buyers optimistic amid rising expectations for a rate hike. 0.50%. U.S. inflation expectations, as measured by the 10-year breakeven inflation rate according to data from the Federal Reserve Bank of St. Louis (FRED), hit a record high of 2.94% at the end of from Friday’s North American session.
At home, Turkish President Tayyip Erdogan is ready for a meeting with German Chancellor Olaf Scholz in Ankara. Recently, Turkish President Erdogan is racing to improve diplomatic relations with his global counterparts. The national leader celebrated the first meeting with Israel in more than two decades over the past week and also held talks with Greek Prime Minister Kyriakos Mitsotakis on Sunday.
Amid these plays, five-year US Treasury bond yields are renewing to a record high above 2.0%, while the 10-year bond coupon is also renewing a one-month high of around 2.0%. .04% at the latest. However, gains in the S&P 500 Futures appear to be challenging greenback buyers lately.
Going forward, the talks between Moscow and Kyiv will be important going forward, while the Fed’s efforts to balance inflationary fears and geopolitics will also come into play.
A daily close above an upward sloping resistance line from 03 Jan near 14.90 at press time becomes necessary for USD/TRY bulls to hold the reins. Otherwise, a pullback towards the February high of 14.66. However, the 10-DMA around 2:35 p.m. looks like strong near-term support to watch as the price continues to weaken.