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BRAZIL

Precatorios Bill May Be Voted On This Thursday

FED

Chairman Powell

EURJPY TECHS

Resumes Its Downtrend

USDJPY TECHS

Testing Its 50-Day EMA

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  • USD/TRY trades +0.03% higher this morning, having failed to deliver a new weekly low in Friday's session.
  • The cross failed to hold onto 8.30 in early trading with real yields moving into negative territory following the higher CPI print at 19.25% vs the 1wk repo at 19.00%.
  • This poses difficulties for the CBRT in next week's meeting in terms of honouring promises for above inflation rates against historic pressure from Erdogan to keep rates lower.
  • CBRT credibility will be placed firmly in the spotlight at the next meeting with any failure to hike likely being received negatively by markets, while delivering a hike risks seeing Kavcioglu follow the same fate as his predecessor Agbal – so the question remains: Will Kavcioglu cave to pressure or not?
  • In the meanwhile, the slightly reduced carry will likely dent TRY optimism at these firmer levels which has been supported in recent weeks by broad based risk on and the rebuilding of CBRT FX reserves through swap agreements & IMF SDRs.
  • For this week, the lack of local data means USD/TRY will likely be driven primarily by CBRT expectations, global risk conditions, the ECB and US PPI in the latter part of the week.
  • Intraday Sup1: 8.2969, Sup2: 8.2642, Res1: 8.3649, Res2: 8.4021