Global Macro Strategist
Instrument: USDTRY
Price Target: 50% at 5.00 and 50% at 5.24
Market Price: 4.574
Note: this trade view was originally flagged on this week’s Macro Monday Call on July 10.
At the end of the day, President Erdogan won an election where he campaigned on single-digit inflation, based on lowering interest rates. There is a high probability that he ends up meddling in the independence of the Turkish central bank. At the same time, the country is reeling from running hot on government influenced stimulus (part of the re-election campaign) which may not be curbed post the elections.
Entry: 4.574
Stop:
Target: 5.00 and 5.24
Time Horizon: Strategic
Position is circa 0.25x capital, so for the Macro Monday book that is circa $2.5m
Key risk is obviously broader-based USD liquidation, Erdogan doing better than expected and lower US rates.
Trading Plan
Targeting 50% at 5.00 and 50% at 5.24. Could potentially be looking to add to the lira short if we pull back to 4.50 levels.
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