Article / 18 July 2016 at 6:59 GMT

Morning Markets: Turkish coup failure boosts lira

Editor / Saxo Bank
Denmark

Morning Markets: Prices


Watchlist

  • US: Housing Market Index (1400 GMT) 

Today's session opened in the wake of two very serious geopolitical events in the form of Friday's terrorist attack on France and the abortive Turkish coup seen over the weekend.

Sunday night saw the Turkish lira recover much of its vertiginous, coup-sparked drop versus the US dollar while Asian bourses (excluding Japan, which is out for a national holiday) ignored the uncertainty to head further into the green, extending the risk-on trend that appeared to be faltering Friday. 

Today sees the release of US housing market index data, which are expected to post their highest reading since January, a development that would likely be dollar-positive as US investors and the Federal Reserve look for growth to justify re-embarking on the policy normalisation path largely set aside following June's disastrous nonfarm payrolls print. 

From Australia, Saxo Capital Markets reports that further zinc shortages may push up prices. Oil traders, meanwhile, will start the week in the red on the back of an oversupply-fuelled decline following last week's rally.

Saxo Bank head of forex strategy John J Hardy's call for a weaker NZD was boosted by low inflation data that drove the kiwi lower versus both the USD and the AUD.

Market signals

Asian session

  • NZ's June-quarter CPI came in at 0.4%, lower than the 0.5% expected
  • Britain's monthly Rightmove house price index fell 0.9% since mid-June
  • Markets are closed for a national holiday in Japan today
  • Home prices in China's 70 major cities rose 7.3% in June from a year earlier
  • The monthly rise slowed slightly to 0.8% in June versus 0.9% in May
  • The Turkish lira led a rebound among emerging market currencies
  • The lira jumped 1.6% in early trading to 2.9331/dollar
  • Asian stocks outside Japan rose for a sixth day following the failed Turkish coup 
  • ASX 200 index gains 0.53% as risk sentiment returns

Forex ahead

  • The kiwi fell more than 1% when NZ inflation came in weaker than expected
  • In Asia trade the AUD slipped about 0.3% against the greenback, at US75.78 cents
  • USDTRY falls overnight to low 2.90s after the coup attempt drove it well above 3.00
  • Asian session gains push USDJPY back to Friday levels
  • USDZAR tumbles on the back of emerging market weakness
  • EURUSD posts 20-pip decline ahead of European open

From the Floor

Cash in hand? "I think Bank of japan-covered stimulus is more likely than true helicopter money," says Hardy

Risky business. "The Turkish coup attempt is a reminder of the risks facing emerging market investors," says Boye

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

In opinion

1..2..3
The monthly US Housing Market Index is expected to record its highest reading since January as sentiment points to moderately higher growth, writes James Picerno.

Zinc in the pink
Zinc continues to remain the favourite of investors this year, who expect shortages to bite after the closure of major mines, explains the team at Saxo Capital Markets (Australia).

Turmoil subsides

Asia got off to a fine start as if the Turkish coup never really happened, adding to last week's gains. The Turkish Lira also gained strength, reports Saxo's Singapore team

Options in focus

Amazon may be setting up for a profitable options trade via a long straddle says Saxo Bank's product manager for options Georgio Stoev and Saxo's Marius Røsand.

l;l;

 The weekend's failed coup in Turkey didn't overly
upset Asian markets on Monday. Photo: iStock

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