What does the data mean to the market?
The Central Bank of the Republic of Turkey's (CBRT) Monetary Policy Committee votes on where to set the overnight interest rate. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.
A higher than expected rate is positive/bullish for the TRY (Turkish Lira), while a lower than expected rate is negative/bearish for the TRY.
Historic Deviations and Their Outcome
March 18 2021 +1.0 positive deviation from the forecast, which gave a nice move of 750 pips in the first minute, then great continuation afterwards, too!
See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=34208;t=2021-3-18%2011:0:00.0;s=USDTRY;r=S10
December 24 2020 +0.5 positive deviation from the forecast, which gave 475 pips in one minute.
See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=25738;t=2020-12-24%2011:0:00.0;s=EURTRY;r=M1
October 22 2020 -1.75 negative deviation from the forecast, which created a great move! With over 900 pips in the first minute.
See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=23557;t=2020-10-22%2011:0:00.0;s=EURTRY;r=M1
I will use forecasts of:
Benchmark Rate 19
Today's Trade Plan
25 forecasts today. This is broken down here:-
23 forecast for the rate to stay at 19%
1 forecast for a cut to 18.5%
1 forecast for a cut to 17%
Last time there was an unexpected hike in rates, President Erdogan sacked the central bank governor. Today is the first policy announcement from the new governor Sahap Kavcioglu, who's under pressure to cut rates. So far, he has signaled he won't cut yet but let's see!
Realistically the only feasible outcome from today is a possible cut. So if we get a deviation of 1.0 or more, we can expect a continued and prolonged weakening in TRY pairs.
Tradable Pairs
EURTRY
USDTRY
Hope this helps but please do your own analysis!!
Good luck!!
James Thatcher
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