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Powell Testimony Pushes USD/TRY Back Above 7.50

TURKEY
  • USD/TRY drifts marginally higher at the open after breaching the 7.50 handle on the back of Powell's statement yesterday that saw a lift in Treasury yields send ripples across EM Markets.
  • As highlighted yesterday, upside risks in UST yields present a structural threat to EMFX at this juncture, necessitating a tactical approach in the near-term while we experience above-average volatility in the high-yield space.
  • As expected, Powell said he did not see UST price action as disorderly, meaning limited intervention in the pipeline to stop curve steepening for now, similar to the ECB.
  • USD/TRY is likely to track broad risk sentiment for now and may trade choppily into the weekend around the 7.50 handle.
  • Protracted TRY weakness will likely slow de-dollaristaion progress, which is something the CBRT will take note of going into this next meeting on the back of higher CPI and eroded TRY carry buffers – bolstering calls for more policy tightening in the near-term.
  • Intraday Sup1: 7.50, Sup2: 7.4769, Res1: 7.5875, Res2: 7.6275
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market News
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market News

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