Turkish lira spikes against dollar, hits 4-month high

The Turkish lira, U.S. dollar exchange rate dropped to TL 3.5305 Tuesday, marking the lowest level it has seen this year. According to recently released U.S. data, personal spending remained stable in March while personal income rose by 0.2 percent. The Personal Consumption Expenditures (PCE) price index, the U.S. Fed's favorite inflation index, fell by 0.2 percent in March despite expectations of a decrease by 0.1 percent. The annual PCE price index fell to 1.8 percent in line with expectations. According to analysts, the tightened monetary policy and the 11.8-percent interest rate, which signifies further tightening in the policy as well as increasing volume in global markets, following International Workers' Day, led the lira-dollar exchange rate to fall below 3.55.

The domestic markets are now focused on inflation data set to be released today. Analysts predict a slight rise in the headlines inflation, which will necessitate further tight monetary policy. In that regard, the movement area of the dollar-lira exchange rate will hover between 3.55 and 3.50.

"In the wake of the downward break of 3.5410 support, the support area of 3.50 - 3.4980 can be targeted in the parity. 3.50 is also a support level. A move on 3.5850 resistances will also be important in terms of breaking the downward trend," Kapital FX's Deputy Research Manager Enver Erkan said.

The U.S. Federal Reserve's interest rate will be monitored today and experts do not expect an interest rate hike from the Fed this month. According to forward contracts, the probability of an interest rate hike in June is more likely while in September the interest rate is priced as 100 percent. Friday's non-farm payrolls data in the U.S. is also one of the highlights of this week.

Borsa Istanbul keeps breaking records

The Borsa Istanbul stock exchange's BIST 100 index reached an all-time high with 95,330.25 points. The BIST 100 index, which began the new week on Tuesday due to the official holiday on May 1, increasing by 0.6 percent from last week's closing, and rose to the highest level of all time with 95,330.25 points.

The index, which had a positive start to the week with increased risk appetite in global markets, was stabilized at 95,200 points as of 11:40 a.m. Analysts said the fact that the announcement made by the Central Bank of the Republic of Turkey's (CBRT) President Murat Çetinkaya on the last trading day last week, conveyed a message of maintaining the tight stance regarding the markets while the increased risk appetite of the global markets led to a fall in exchange rates and the strengthening of purchases in share markets.

They also noted that U.S. President Donald Trump's use of softer rhetoric when speaking about North Korea over the weekend lowered the risk perception of investors, adding that the demand for assets in developing economies increased accordingly.

Pointing out that the dollar-lira parity has fallen to its lowest; analysts predicted that new targets in the BIST 100 index will be 95,500 and 97,700 if the downward trend continues.