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USD/TRY Retests 8.50 as FOMC Mins Allude to Expedited Taper Timeline

TURKEY
  • USD/TRY opens +0.56% higher this morning on the back of last night's broadly hawkish FOMC minutes, driving notable USD strength at the start of today's session.
  • The cross pulled back from 8.42 yesterday as USD strength ahead of the minutes dominated global price action, and may continue to create volatility in today's session as markets digest talk of expedited asset purchase tapering by year-end.
  • This comes somewhat ahead of market expectations for this to be discussed at Jackson Hole and may result in more near-term USD strength.
  • Domestically, the issue of refugee flows is becoming more pressing as polls show local distaste for more migrants with the population already composed of almost 7% refugees. This could fast become a headache for Erdogan as the opposition has favoured a firmly anti-migrant stance, and will convey Erdogan as selling Turkey to the West as a refugee camp at the expense of the domestic population.
  • The CBRT minutes are due today, but are unlikely to deviate too much from the prior statement which gave questionable promises to tighten policy, should inflation tick higher in August/September.
  • This kicked the can down the road to the next CPI print and CBRT which could deliver substantial TRY instability should the CBRT fail to hike or see Kavcioglu potentially removed by Erdogan on the decision to deliver a hike.
  • Sell side remains cautious and tactical RE TRY at this juncture, but may look to fade bouts of strength towards the next CPI print and CBRT.
  • Intraday Sup1: 8.4533, Sup2: 8.4021, Res1: 8.524, Res2: 8.5516
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage

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