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US SANCTIONS REVIEW 3/3 - MARKETS

TURKEY
  • Clearing the two major risk hurdles of EU & US sanctions with minor impact, the way has been cleared for cleaner one way TRY positioning.
  • Focus now shifts to CBRT where Agbal will likely be called upon to raise rates again to generate wider real yields following an upside surprises to CPI.
  • 7.795 in USD/TRY remains sticky, but with markets remaining very short $ into year end there may be scope for a breakout from its sanctions-risk induced lateral range
  • provided the CBRT continues to make all the right noises on policy orthodoxy.
  • Headline risks from Greece-Turkey tensions will likely continue to be a source of volatility, but less so now that Erdogan has breathing room until the EU reassessment in March 2021
  • However, overt signs of a more substantial approach from the EU & US should see risk premia rebuild.
  • May also see local rates regain some of the lost ground to USD, most notably in the belly of the curve.
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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