Turkey Turkish Rate Decision May 6 2021

What does the data mean to the market?

The Central Bank of the Republic of Turkey's (CBRT) Monetary Policy Committee votes on setting 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.

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

24 economists all forecasts today for the rate to stay at 19%

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 signalled 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

Hope this helps but please do your own analysis!!

Good luck!!

James Thatcher

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

A Huge -734 deviation with supporting +0.3 from Unemployment, crushed the US dollar across the board. I managed to take some nice profits out of this trade as the US pairs continued to slide south. I wish that the Average Earnings didn't conflict so largely, in normal times a conflict of 0.7 would have really upset the move, but not today! 

See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=50023;t=2021-5-7%2012:30:00.0;s=USDJPY;r=S2

See the video at : https://youtu.be/VcS92xPNjoU