Despite weaker oil overall and recovery in Europe (sort of) Turkey has been one of the worst performing EM markets this year and has totally missed the recent EM rally, especially on the currency side. …And THAT is what makes Turkey an interesting “catch up “trade in the EM world:
There is a central bank meeting next week were we think the CBT will keep rates unchanged and maintain a tighter approach to liquidity which will support the currency . Recently there was chatter that they might cut rates (in line with President Erdogan’s policy demands) which spooked the market in the last few days and took the Turkish Lira significantly lower while other EM currencies were showing renewed bravery versus the US Dollar. This sets up the $TUR as a tactical trade relative to the EEM which has been moving sideways to higher.
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