ridethepig | TRY Q3 Macro Flows 📌 The buyers constitute a formidable opponent holding the breakup and putting sellers out of action. The moves are ready, to fend off another wave of risk looks impossible now and Turkey will suffer a major hammer that may be unendurable for local banks. A break above 7.20xx will unlock the widely track 7.80xx since last year.
If buyers hold (and it looks a done deal now) for this monthly closing pattern it means we are ready to march forward in August and September to cripple EM FX. But if sellers hold at the end (seems very difficult with USD shortages entering back into play) then buyers are kept busy.
Naturally continue to follow the macro strategy, on account of the 2020 macro flow map:
Another move that would be difficult for Turkey to defend against. If you are bearish, continue sticking the knife in via buying USDTRY because it would no longer be possible to prevent the settling above 7.20xx.
📍 The other important note to make is the lack of foreign inflows... rather the opposite, heavy outflows continue with overseas participation in Turkish bonds now at record lows, as is usually the case in the end of dictatorships.
There is nowhere for the CBRT to hide.. they will have to devalue the TRY to offset the loss in access to markets. Take a look over at EURTRY which is still up at ATH's ... this retrace is profit taking in the dollar train rather than Turkey stabilisation. Stay long, look for 7.80xx as the main macro target by year-end.
As usual thanks for keeping the feedback coming 👍 or 👎
