Japan Services Producer Prices Rise 3.2% in June, Supporting BOJ Rate Hike Expectations 
China Inflation Cools in July as CPI Misses Forecast, PPI Deflation Eases 
BOJ Expected to Hold Rates Steady While Signaling More Hikes Ahead 
Wall Street Slips as Oil Prices Surge 5% on Iran-Hormuz Uncertainty 
Asian Currencies Steady as Markets Await U.S. Inflation Data 
US Dollar Near Two-Month Low as Markets Await Inflation Data 
UK Retail Sales Rise as World Cup and Heatwave Boost Food, Pubs and Clothing 
BOJ Minutes Signal More Rate Hikes as Inflation Risks Grow 
Oil Prices Rise as US-Iran Talks Stall, Inflation Risks Grow 
USD/TRY is expected to witness further upside this year if the Central Bank of Turkey (CBT) does not simplify its policy and tighten its main policy rate and only tries to muddle through using daily liquidity management operations.
CBT's March expectations survey highlighted an optimistic growth outlook held by market forecasters, but a deteriorating inflation outlook. GDP growth expectations are hovering around 2.9 percent for this year, which seems quite unrealistic and difficult to explain given the performance of recent quarters and the upcoming political uncertainty.
Inflation forecasts have, however, risen to 9.1 percent for this year-end, which constitutes a marked deterioration. Forecasters expect the lira, too, to weaken from here by year-end, with USD-TRY reaching 3.85, which is not dramatically different from our own 3.90 forecast. The survey shows that analysts do not expect CBT to tighten its benchmark rate this week, which matches expectations, Commerzbank reported.
"We expect CBT to only raise its marginal funding rates, such as the late liquidity rate," the report said.
