Article / 18 April 2017 at 7:00 GMT

Morning Markets: EU questions 'neither fair nor free' Turkish vote

Head of Editorial Content / Saxo Bank

Morning Markets


  • US: Housing starts (1330 GMT)
  • US: Building permits (1330 GMT)
  • US: Industrial production and capacity utilisation rate (1415 GMT)

Tensions between North Korea and the US remain high with US vice-president Mike Pence in the region, but the State Department's remarks that it is not seeking regime change, coupled with Saturday's lack of a missile launch following Pyongyang's military parade, has served to signal something of a step back from the brink.

Asian markets were mixed Tuesday, with the Japanese Topix index edging higher while Hong Kong and Shanghai edged slightly lower; Australia's ASX 200 fell 0.9% on a decline in the energy and materials sector. 

The materials slump saw major mining shares such as Newcrest and Fortescue plunge by around 5% as the gold spot price retreated overnight to the $1,282/oz level before rising towards $1,284/oz into the European bell. 

European markets are expected to head higher into Tuesday but the outcome of Turkey's Sunday referendum that saw Ankara scrap its parliamentary structure has European leaders concerned as reports of voter fraud continue to emerge. 

The European Union sent a team of 20 observers to Turkey ahead of the vote, and they have expressed serious reservations about the outcome, calling the ballot "neither fair nor free". 

USDTRY spiked on the referendum result, approaching 3.72 during Monday's US session and again overnight, but the pair appears to be retracing into today's bell and currently trades just shy of 3.70. 

Market signals

Asian session

  • Asian markets traded mixed; geopolitical jitters had an uneven impact on sentiment
  • The Nikkei 225 gave up some early gains; it was up 0.32% to 18,418.59 at close
  • US VP Pence met with Japan's Deputy PM today as part of his tour of Asia
  • The Shanghai Composite was down 0.01% to 3,221.742 at 0534 GMT
  • Home prices in China's major cities rose 0.6% in March, adding to asset inflation worries
  • Former South Korean president Park Geun-hye was indicted for bribery on Monday
  • Tumbling iron ore prices hurt top miners and dragged the S&P/ASX200 into the red
  • Australia's S&P/ASX200 was down 0.9% to  5,836.70 at close
  • The Reserve Bank of Australia minutes flagged housing risks and jobs
  • Housing collapse fears could hobble Australian monetary policy
  • US Treasury Secretary Steven Mnuchin said USD strength was a 'good thing'

Forex ahead

  • EURUSD is trading in an ascending pattern just shy of 1.0650
  • USDJPY is poised to slide below the 109.00 handle into the European bell
  • USDTRY is trading lower again after a massive post-referendum surge
  • GBPUSD is redoubling its efforts to take the 1.26 handle approached Monday
  • USDCAD is lower on solid oil price data, trading around 1.3318
  • AUDUSD is trading down to the 0.7550 region on weak materials, iron ore

From the Floor

Dashed hopes. This week is all about disappointment with the Trump trade,” says Hardy.

Go figure.Geopolitical risk may be on the rise but it’s been a calm session in Asia,” says Garnry. 

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

Narrow win
The Aussie share market was poised to move up, but the resilience of gold and falling iron ore and oil prices were negative factors at play today, writes Saxo's Sydney team.

Dollar strength
The US dollar rallied slightly after the US Treasury Secretary Steven Mnuchin said USD strength was a 'good thing', says Saxo's Singapore trading team.

Beware a round one hit
A first round outcome that leaves Marine Le Pen and leftist candidate Jean-Luc Mélenchon ahead could send EURUSD tumbling, says Kay Van-Petersen in his Macro Monday update.

The Italian job

The European periphery's EUR issues are well known, but more troubling perhaps are the risk posed by Italy's continual economic weakness and debt, writes Stephen Pope.

Turkey's Tayyip Erdogan has rejected the "crusader mentality" of the West after European monitors criticised the referendum that cemented his grip on power. Photo: Shutterstock

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