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ARGENTINA

Beef Exports Deal Expected, CPI Due

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  • USD/TRY trades flat to slightly lower this morning, having gained some firm downside traction in yesterday's session on the back of broad-based $ selling.
  • Yesterday's CBRT came in directly in line with expectations with many analysts pleased about its more cautious sounding phrasing, retaining the rates kept above inflation component and noting
  • "the current stance will be maintained until the significant fall in the April inflation report's forecast path (12.2% y/y) has been achieved."
  • However, the recognition of a peak in CPI and the changed wording on the impact of tightening "has begun to be observed" was concerning among local analysts, who said the data did not support this on the loan growth front – opening the door to premature cuts.
  • While the CBRT has won back some credibility by holding rates, concerns RE premature cuts will remain partially priced into TRY assets.
  • Inflation metrics will be monitored closely in the coming month for signs of a cyclical peak and scope for premature easing in 3Q-4Q21.
  • Intraday Sup1: 8.2538, Sup2: 8.2046, Res1: 8.3006, Res2: 8.3319