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USD/TRY: Fed Neutralises HDP Scare, CBRT to Tighten Policy

TURKEY
  • USD/TRY took a substantial round-trip in yesterday's session after moves to close the pro-Kurdish HDP raised fears of international action against human rights abuses, before the Fed eased concerns about rate hikes in the US.
  • The net effect was more powerful from the dollar side, but domestic concerns remain over the HDP issue – proving Erdogan's human rights action plan to be nothing more than window dressing.
  • Focus today shifts to the CBRT with a +100bp hike in the 1w repo expected amid stickier than expected inflation and higher FX passthrough from a weaker TRY.
  • Continued tightening and hawkish guidance from Agbal should keep the cross heavy, but the outlook is becoming cloudier below 7.30 – and will rely largely on a normalisation in UST yields.
  • Intraday Sup1: 7.4165, Sup2: 7.3224, Res1: 7.5466, Res2: 7.6196
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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