Introducing USDTRY
The USDTRY is made up of two currencies: the US dollar and the Turkish lira. The United States dollar, abbreviated as USD, is the United States’ official currency. The Turkish lira (TRY) is Turkey’s official currency. They combine to form the USDTRY currency pair. Because Turkey is still considered a developing country and is paired with the US, this currency pair is deemed exotic. In the forex sector, it is also the tenth most popular exotic currency pair. The USDTRY currency pair is so popular because both of these currencies are highly connected with one another. The USDTRY has extreme volatility, making it a great pair for day traders to use the scalping method.
The United States Dollar
Although the presentation of the dollar is not needed, it would be inconsiderate not to do so. The US dollar, abbreviated as USD, is the most actively traded currency in the world. It is the most widely used currency and is frequently used as a reference currency for all monetary evaluations. The Federal Reserve Bank, or “Feds,” as they are more often known, issues this money.
The first paper dollar was made in 1862 after they ran out of coinage to pay for the Civil War. The USD is now extensively recognized as a form of payment in many financial markets worldwide. In order to better relations with this big powerhouse, several nations have changed their currencies to become dollars as well. New Zealand, Canada, and Australia are among these countries. Because the US dollar is the most commonly used currency in the world, it is affected by any big economic event that occurs anywhere around the globe.
The Turkish Lira
The Turkish Lira goes by TRY in the forex space. It is the national currency of Turkey. It was established originally in 1844 by replacing the previous currency, kurus. Lira was based on both gold and silver up to 1881. After 1881, it was only based on the gold standard. After 1914, it left the gold standard and was fixed with the pound sterling and French franc for quite a while.It was only in 1946 when the Lira was fixed to the US dollar. It got free from the dollar in 1960 and faced quite a few years of devaluation. This is because Turkey suffered from major inflation at the time. They did manage to stabilize themselves but faced another devaluation in 2005 after which they issued the new Turkish lira which is what’s in use today.
Why Trade USDTRY
The United States and Turkey have a long love-hate relationship with each other. There are times when they’re inseparable and there are times when they can’t stand each other. This is all the more reason why this currency pair is so intriguing to trade. Here is why you should trade the USDTRY pair:
Exotic Currency Pair
The USDTRY is an exotic pair in the forex markets. An exotic currency pair is one that includes both the US currency and the currency of a developing or less popular country. In this scenario, the United States is joined by Turkey to establish the USDTRY currency combination. An exotic currency pair introduces new trading circumstances to the forex market. Major and minor currency pair market moves might become repetitive to observe all of the time. Traders spice up their trading routine by trading unusual currency pairs. The USDTRY is one of the most popular exotic currency pairs on the market, as well as one of the most exciting to trade.
Market Volatility
The USDTRY is an exotic forex pair. As a result, it experiences quite different market circumstances than the majority of the other currency pairs. Most of the time, the USDTRY enjoys extremely stable market circumstances. This is mostly owing to Turkey’s relatively calm state, which does not host many major economic events. It does, however, demonstrate instability on occasion when a large event occurs. The plus side is that these volatile moments are highly predictable. This suggests that specialists are already ahead of the dynamic duo and can forecast when this currency pair will face unstable market conditions. As a result, the USDTRY is quite popular with scalpers, who use these instances of volatility to earn a quick profit.
Market Correlations
Another compelling incentive to trade currency pairings such as the USDTRY is their strong connections with other assets in the market. This is seen in the Turkish Lira, which has strong linkages with commodities such as textiles and automobiles. This is because Turkey is a major exporter of these goods. It is also true for the US Dollar, which is linked to commodities such as aircrafts and ships. As a result, trading this pair becomes even easier since if we understand the direction of the commodities market, we can easily grasp the direction of the USDTRY market as well. We’ll go into more depth later on how these commodities will affect the movement of the USDTRY.
USDTRY Trading Tips
As we’ve mentioned earlier, the US and Turkey are known to have a perplexing relationship with each other. This can often lead to unusual trading conditions for their currency pair. Here are some top tips for trading the USDTRY:
Day Trading
Day trading is a trading strategy in which a trade is opened and closed on the same day. All transactions, whether successful or not, must be completed before the market stops. Scalping is a common trading strategy for this trading style. Traders would open a BUY and SELL position at the same rate for the same currency pair. This enables them to profit regardless of how the market evolves. When the market falls, they profit from their opposing position. This strategy is great for the USDTRY, which may be somewhat volatile at times. Day trading, particularly scalping, is a great way to profit from changing market conditions during times of volatility.
Pullback Trading
Pullback trading happens when the market deviates from its trend for a brief period of time, allowing you to enter the market at a cheap cost. To trade a pullback, you must first predict when the market will pull back. If USDTRY is in an uptrend and briefly breaks and falls, you have an opportunity to enter the market at a decent price with a BUY transaction. Similarly, if the market is in a downtrend and briefly breaks and climbs considerably, you have an opportunity to enter the market at a reasonable price using a SELL trade. In a nutshell, this is a simple yet effective strategy for the USDTRY currency pair.
Factors Affecting USDTRY
Both the United States and Turkey are impacted by very different factors and have correlations to different markets. Therefore when placed together, all these factors join together to make a volatile currency pair. Here are the top factors impacting USDTRY:
The Textile Industry
Turkey is among the largest producers and exporters of knitting and crotchet products. Therefore their economy greatly depends on the export of these textile products in order to thrive and increase in value. Any changes to the market for these commodities such as demand or prices will have a direct impact on the USDTRY pair.If the demand for crotchets increases, Turkey will export them more often, and therefore, USDTRY will decrease in value. If the demand for crotchets decreases, Turkey will suffer as they wouldn’t be able to export them as much, and therefore, USDTRY will increase in value.
The Aerospace industry
The United States is a major manufacturer and exporter of planes and their parts. As a result, its economy is heavily reliant on the export of these items in order to prosper and grow in value. Any changes in the aircraft market, like as demand or prices, will have an immediate influence on the USDTRY pair. If demand for planes rises, the United States will export them more frequently, causing the USDTRY to appreciate in value. If demand falls, the US suffers since it will be unable to export as much, causing the USDTRY to fall in value.
The Automotive Industry
Turkey is among the largest producers and exporters of valuable commodities such as auto vehicles and their parts. Therefore their economy greatly depends on the export of these auto equipment and transport vehicles in order to thrive and increase in value. Any changes to the market for these commodities such as demand or prices will have a direct impact on the USDTRY pair. If the demand for auto vehicles increases, Turkey will export them more often, and therefore, USDTRY will decrease in value. If the demand for auto vehicles decreases, Turkey will suffer as they wouldn’t be able to export them as much, and therefore, USDTRY will increase in value.
The Ships Industry
The United States is a major manufacturer and exporter of boats, ships, and ship parts. As a result, its economy is heavily reliant on the export of these important goods in order to exist and grow in value. Any changes in the market for these items, such as changes in demand or prices, will have an immediate influence on the USDTRY pair. If the demand for ships rises, the United States will export them more frequently, causing the USDTRY to appreciate in value. If demand for boats falls, the US would suffer since it will be unable to export as many, causing the USDTRY to fall in value.
The Gold Industry
Turkey is among the largest producers and exporters of valuable commodities such as gold, silver, and other precious. Therefore their economy greatly depends on the export of these valuable commodities in order to thrive and increase in value. Any changes to the market for gold such as demand or prices will have a direct impact on the USDTRY pair.
If the demand for gold increases, Turkey will export them more often, and therefore, USDTRY will decrease in value. If the demand for gold decreases, Turkey will suffer as they wouldn’t be able to export them as much, and therefore, USDTRY will increase in value.
Financial Institutions
Both the Federal Reserve Bank and the Central Bank of the Republic of Turkey are majorly responsible for any instability in the USDTRY marketplace. The FRB and CBRT release monthly reports and statements regarding updates to any policy changes. These reports also display the economic and monetary forecasts for the upcoming short-term. Any positive results from the FRB will have a positive impact on the USDTRY currency pair. However, any positive results from the TRY will have an inverse impact on the USDTRY currency pair.
The representatives of these individual banks also hold speeches frequently where they explain these results in more detail. These speeches are just, if not more, important in determining the direction of the USDTRY market. From FRB, Jerome Powell who is the Chairman of the institution is highly looked upon for his speeches. From TRY, Şahap Kavcıoğlu who is the Governor of the institution is highly looked upon for his speeches.
The Tourism Industry
Turkey is among some of the world’s most popular tourist destinations. Muslims from all over the world have it on their bucket list to visit Turkey at least once in their lifetime. Any changes in the number of visitors visiting Turkey will have a considerable influence on the value of the TRY currency. If Turkey faces an influx of tourists, the value of the TRY will increase which will cause USDTRY to also increase in value. If Turkey faces a quiet holiday season, the value of TRY will fall which will cause USDTRY to also drop in value.
Gross Domestic Product
GDP, or Gross Domestic Product, is a measure of a country’s overall economic performance. It has a substantial impact on the USDTRY pair’s volatility. A positive GDP statistic shows that the economy is thriving. This, in turn, would encourage investors to invest in the country’s economy, raising the value of the country’s currency. If the US has a good GDP, the US Dollar will appreciate, prompting the USDTRY to appreciate as well. In the case of the Turkish lira, however, the opposite is true. If Turkey’s GDP was positive, the TRY would appreciate, leading the USDTRY to decline in value.