JamesThatcher
Well-known member
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
September 23 2021 Today we got the type of trade I live for, a surprise cut to the Turkish interest rate.
With only one out of twenty-three economists predicting a change to the rate, the forecast was to remain at 19%. Last time we saw a shock move of more than 0.5% we saw 900 pips immediately after.
Today, I'm delighted to say we saw the same again a shock cut to 18 % and over a 1000 pips banked.
Check out the price action here:
TR One-Week Repo Rate 2021-09-23 11:00:00.0
TR One-Week Repo Rate 2021-09-23 11:00:00.0
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March 18 2021 Today we saw a +1.0 positive deviation from the forecast, which gave a nice move of 750 pips in the first minute, then great continuation afterwards, too!
Check out the price action here:
TR One-Week Repo Rate 2021-03-18 11:00:00.0
TR One-Week Repo Rate 2021-03-18 11:00:00.0
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December 24 2020 Today we saw a +0.5 positive deviation from the forecast, which gave 475 pips in one minute. Brilliant.
Check out the price action here:
TR One-Week Repo Rate 2020-12-24 11:00:00.0
TR One-Week Repo Rate 2020-12-24 11:00:00.0
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I will use forecasts of:
Benchmark Rate 17.00
Today's trade plan
With some political interference from Turkeys President Erdogan dismissing three of the monetary policymakers at Turkeys Central Bank, it is strongly believed this was a deliberate move to ensure another rate cut today to boost credits and exports. Although such interference is widely frowned upon, I'm interested in how much they will cut by how the market will react as the Lira is already at an all-time low.
We have varying estimates for a cut today between 17.0% and 17.5%, but I'll take the lower end forecasts, and I'll take a buy or sell on 1.0 on either side of this.
If it remains at 18%, I'll take a buy
If they cut to 16%, I'll take a sell.
If this hits, I'll be looking to bank somewhere in the region of 800 - 1000 pips, but I'll not hang around as I expect some volatility under the circumstances.
Tradable pairs
EURTRY
USDTRY
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.
