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USD/TRY Drifts Lower as Sell-Side Makes Hawkish Adjustments to CBRT, CPI Forecasts

TURKEY
  • USD/TRY opens a fraction lower, mirroring early weakness in the BBDXY.
  • The cross traded choppily in yesterday's session around the upside CPI surprise, but managed to close -0.31% lower on the day.
  • A swathe of sell-side revisions also emerged in the aftermath of the CPI print, with institutions trimming the size of cut estimates for 4Q21 and upgrading year-end inflation estimates.
  • The net-effect of yesterday's print seems to be a hawkish one with markets pricing out premature cuts until 4Q21, reinforced by uncharacteristically supportive comments from Erdogan on inflation overnight.
  • Markets, however, will still be concerned about Erdogan's influence on policy and prior comments RE easing in July-August – leaving a high bar for Kavcioglu to provide support to the lira by continuing the CBRT's hold stance amid rising CPI.
  • For now, the cross continues to drift slowly towards 8.60 support, driven mostly by USD-side weakness ahead of the FOMC minutes.
  • Intraday Sup1: 8.6399, Sup2: 8.5808, Res1: 8.6378, Res2: 8.6927
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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