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Bullish Price Structure Intact


Needle Points South


BLOCK, Huge 5Y Put Buy


Probes The Bear Trigger


Range Base Holds Firm

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  • USD/TRY opens -0.22% lower this morning with markets relieved that Erdogan fell short of making more destabilising comments regarding CBRT policy and inflation in his evening address.
  • The cross traded choppily following yesterday's US CPI miss, failing to strengthen in line with high-beta peers RUB & ZAR owing to light pre-CBRT positioning and concerns over Erdogan's speech.
  • Today's focus shifts to the CBRT where broad expectations align with a hold on rates at 19.00%, despite rapidly rising CPI.
  • While the CBRT may shift its guidance to convey maximum hawkishness, the market has set a high bar for any material shift in expectations for premature easing against market conditions in the coming months.
  • Although the predominant expectation is for a hold at this meeting, there may be some pre-emptive pricing in of a cut that could cause some post-statement gyrations in USD/TRY and local bonds – but nothing too major at this juncture.
  • Our base case, however, remains for markets to favour fading TRY strength in the coming months as the CBRT reaction function becomes more dovish.
  • Intraday Sup1: 8.5875, Sup2: 8.5516, Sup3: 8.5516, Res1: 8.6399, Res2: 8.6712, Res3: 8.7092