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USD/TRY Pulls Back From Double Digits, But Dovish CBRT Likely to Continue Weighing on TRY

TURKEY
  • USD/TRY trades -0.36% lower this morning, broadly in line with its EM peers on the back of better-than-expected Chinese retail sales & Industrial production data – pulling back slightly from an early move above the 10.00 handle.
  • The cross continued to melt higher from mid-way through last week and is likely to remain biased higher going into this week's CBRT where market consensus has coalesced around another 100bp cut to the 1-wk repo.
  • Most of the sell-side have taken Kavcioglu's words on there being limited room for further easing at face value – justifying the smaller 100bp cut over another 200bp cut.
  • Here, we see at least another 100bp cut, with risks skewed to the upside for another 200bp cut, given the high degree of uncertainty and political interference in the CBRT's current reaction function.
  • This should continue to add depreciation pressure on TRY going into the meeting.
  • This will be the primary focus of the week, alongside US retail sales and industrial production data.
  • Intraday Sup1: 9.9163, Sup2: 9.8757, Res1: 10.0258, Res2: 10.0724
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
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MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage

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