USD/TRY Outlook:
The USD/TRY rate is likely to increase as it is currently trading above its recent average and near recent highs, supported by strong US economic data.
Key drivers:
• Rate gap: The US Federal Reserve's interest rate policy remains focused on maintaining higher rates, while the Central Bank of Turkey has recently cut its benchmark rate.
• Risk/commodities: Ongoing geopolitical tensions, particularly regarding the possibility of US military action in the Middle East, are bolstering demand for the safe-haven USD.
• One macro factor: The latest US GDP growth print is anticipated to show slower growth, which may create uncertainty in the USD's sustained strength.
Range:
Expect USD/TRY to test extremes within its recent 3-month range, moving between established levels.
What could change it:
• Upside risk: A surprising increase in US economic growth data might further strengthen the USD.
• Downside risk: A significant improvement in Turkey's inflation outlook or a more aggressive monetary policy shift could support the TRY.
