Eyes turn to Turkey as.............>

EMERGING MARKETS: Eyes turn to Turkey as substantial policy action expected

-TRY trades relatively mixed as markets sit on the sidelines ahead of the CBRT

rate decision at 1200BST/0700ET. Policy action is expected after the previous

governor got the sack, but there are a very wide range of estimates, with some

looking for cuts as deep as 800bps. Overnight vols suggest markets are pricing

in a substantial move in USD/TRY today, with break-evens on an ATM straddle

implying a move of over 600 pips.

-Elsewhere, ZAR sits weaker as Moody's issued a broadly negative judgement on

the government's plans for Eskom, with the new funding blueprints seen worsening

the deficit materially. USD/ZAR hit the week's highs at 13.9776 on the news.

-In Asia-Pac markets, the KRW followed the KOSPI lower and was the worst

performing currency in the region. USD/KRW continues to trade either side of the

50-dma, however, with a momentum pick-up in either direction now needed to

confirm the next move. A lower, flatter Russian sovereign yield curve has also

worked in favour of the RUB as markets position for the Russian central bank

decision on Friday.