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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
TURKEY
- USD/TRY trades +0.21% higher at the open, broadly in line with a firmer BBDXY and sustained bullish momentum from yesterday's session.
- The cross rose +1.34% yesterday following the surprise -100bp cut that wrongfooted markets completely as Erdogan pressure to reduce the key rate finally broke Governor Kavcioglu's resolve.
- This is a massive blow to CBRT credibility and autonomy with the reasons for the cut being questionable at best amid rising inflation pressure which were simply deemed as being transient.
- Not a single analyst had envisioned a 100bp cut, which may spark fears of an aggressive cut cycle in the coming months at 100bp or larger increments, irrespective of market conditions.
- CPI data will be key to monitor from here as higher dollariastion, inflation expectations and TRY weakness pass through to pricing dynamics.
- 8.8008 resistance came under immediate pressure post-decision, and may give way in today's session as negative sentiment accelerates.
- The question from here is how the CBRT moves to manage currency volatility from here – whether that be with the burning of reserves or other unconventional monetary policy measures.
- Nevertheless, the trajectory is concerning. Erdogan comments on S-400s will do little to soothe fears of CAATSA sanctions, especially with the Erdogan-Putin meeting on 29 September.
- Intraday Sup1: 8.7487, Sup2: 8.7248, Res1: 8.8008, Res2: 8.90, Res3: 9.00
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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