A reversal of fortunes for the Turkish Lira could be imminent – Wells Fargo

FXStreet Insights Team FXStreet

Economists at Wells Fargo discuss Turkish Lira (TRY) outlook.

Sentiment toward Türkiye can improve

To be clear, we still forecast a weaker Turkish currency over the course of our forecast horizon; however, we have scaled back the magnitude of that depreciation to reflect improving and more orthodox trends in policy.

After 21.50 percentage points of tightening, we are more confident that the direction of policy will be sustained and that sentiment toward Türkiye can improve, and foreign investor capital can follow in the near future.

We also believe credit rating agencies such as Moody's, S&P and Fitch may be close to upgrading Türkiye's sovereign credit rating, or at a minimum, revising outlooks to ‘positive,’ given the latest developments.

The story surrounding Türkiye is not quite outright positive just yet, and local political and geopolitical risks remain, but should the latest trends continue and credit rating revisions materialize, we could revise TRY forecasts as well.

USD/TRY – Q4-2023 28.50 Q1-2024 29.00 Q2-2024 29.00 Q3-2024 29.50 Q4-2024 30.00 Q1-2025 30.50

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD climbs to four-day highs near 1.3250

GBP/USD rapidly reverses Friday’s small losses and challenges the 1.3250 level, or four-day tops, at the beginning of the week. Cable’s upside comes on the back of further loss of momentum in the Greenback, while traders continue to assess the geopolitical front and upcoming key events.

EUR/USD extends the advance past 1.1400

EUR/USD starts the week on a positive note, trading above 1.1400 on Monday as broad-based US Dollar weakness lends support to the pair. In the meantime, investors continue to monitor developments surrounding efforts to end the US-Iran conflict, while attention gradually shifts to the ECB's annual forum and the US NFP data.

Gold falters just ahead of $4,100

Gold remains under modest bearish pressure just above the key $4,000 mark per troy ounce on Monday. The yellow metal struggles to extend its recent gains as renewed effervescence in the Middle East revives inflation concerns and bolsters Fed rate hike expectations.

Bitcoin four-year cycle: BTC risks 75% drawdown with four months of bear market still ahead

Bitcoin price continues to trend downward below the $60,000 support zone after losing over 50% of its value since the $126,199 high in October. Bitcoin’s four-year cycle, measured from cycle tops to bottoms, suggests that four months of a bear market are still ahead.

Just like Fed, is BoJ’s independence under threat?

When talking about central bank independence, most of the focus has been on Donald Trump’s pressure on the Federal Reserve. But a similar story, a quieter one for now, seems to be happening on the other side of the Pacific: Japan’s government may be testing the Bank of Japan’s independence.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.