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Analysts at Rabobank suggest that this week will see more focus on Turkey, which Qatar has temporarily bailed out with USD15bn.

Key Quotes

“However, both S&P and Moody’s downgraded its sovereign credit rating Friday, with the former saying “We forecast a recession next year.” Friday also saw a Turkish court refuse to release jailed American pastor Andrew Brunson, and President Trump tweet “Turkey has taken advantage of the United States for many years.  They are now holding a wonderful Christian Pastor, who I must now ask to represent our Country as a great patriot hostage. We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!“).”

“Yet Turkish President Erdogan told a rally over the weekend:  “”¦some people are trying to threaten us through the economy, through interest rates, foreign exchange, investment and inflation. We are telling them: we’ve seen your games, and we are challenging you”¦We did not and will not surrender to those who act like a strategic partner but make us a strategic target.”

As if tension between Turkey and the US was not already high, CNNTurk has reported that shots were fired at the U.S. Embassy in Ankara from a car around 5am Turkish time. One of the bullets hit the window of embassy’s security booth, but thankfully no one was hurt. It remains to be seen how President Trump reacts to this serious incident, which may escalate already serious diplomatic spat between Ankara and the White House.   The scepticism expressed by all three major rating agencies about recently announced measures to stabilise the currency may reignite the selling pressure on the lira.”