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MHP Threats of S-400 Activation a Key Tail Risk to US Relations, TRY Stability

TURKEY
  • USD/TRY held its downside momentum in yesterday's session, testing support below the 8.20 handle (61.8% Fib) before easing higher into this morning.
  • With no discernible TRY-positive catalysts in yesterday's session, the move appears to be mostly momentum/techs based on the back of possible CBRT/state bank intervention on Monday.
  • Any near-term downside in the cross is still considered corrective.
  • Comments from MHP's Bahceli RE S-400 activation are a tail risk worth noting as this would escalate US-Turkey tensions considerably.
  • Meanwhile, the virus situation has show a slight moderation from a peak of 60k cases/day but remains a concern as Turkey desperately tries to save its tourism season.
  • Focus today will be on the FOMC with the Fed expected to keep its setting on hold and fall short of reining in its accommodative stance, despite improving macro data.
  • Intraday Sup1: 8.1793, Sup2: 8.1135, Res1: 8.2538, Res2: 8.3006
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

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