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6 Feb 2015
Gains in USD/TRY could be difficult to sustain – Rabobank
FXStreet (Edinburgh) - Senior Currency Strategist at Rabobank Jane Foley believes the recent upside in the pair to be limited.
Key Quotes
“While prospects of higher rates in the US will support USD/TRY, the full-scale QE announced by the ECB will be the main source of downside pressure on EUR/TRY due to the significant interest rate differential”.
“A sharp deceleration in inflation offers the CBRT room to lower interest rates further following the 50bps cut in January”.
“However, if the central bank cuts too aggressively amid growing political pressure, a corrective rebound in EUR/TRY from the recent low at 2.6065 may extend well above the key pivot at 2.77~ which would force us to seriously evaluate our bearish mid-term view”.
“Given that we do not expect the Fed to raise rates until the end of 2015, recent gains in USD/TRY seem stretched”.
Key Quotes
“While prospects of higher rates in the US will support USD/TRY, the full-scale QE announced by the ECB will be the main source of downside pressure on EUR/TRY due to the significant interest rate differential”.
“A sharp deceleration in inflation offers the CBRT room to lower interest rates further following the 50bps cut in January”.
“However, if the central bank cuts too aggressively amid growing political pressure, a corrective rebound in EUR/TRY from the recent low at 2.6065 may extend well above the key pivot at 2.77~ which would force us to seriously evaluate our bearish mid-term view”.
“Given that we do not expect the Fed to raise rates until the end of 2015, recent gains in USD/TRY seem stretched”.