European Open: Turkey could be headed for a runoff election

Asian Indices:

• Australia's ASX 200 index rose by 3.3 points (0.05%) and currently trades at 7,260.00
• Japan's Nikkei 225 index has risen by 228.24 points (0.78%) and currently trades at 29,616.54
• Hong Kong's Hang Seng index has risen by 27.44 points (0.14%) and currently trades at 19,654.68
• China's A50 Index has fallen by -44.1 points (-0.34%) and currently trades at 12,968.69

UK and Europe:

• UK's FTSE 100 futures are currently up 8 points (0.1%), the cash market is currently estimated to open at 7,762.62
• Euro STOXX 50 futures are currently up 5 points (0.12%), the cash market is currently estimated to open at 4,322.88
• Germany's DAX futures are currently up 10 points (0.06%), the cash market is currently estimated to open at 15,923.82

US Futures:

• DJI futures are currently down -2 points (-0.01%)
• S&P 500 futures are currently up 0.75 points (0.02%)
• Nasdaq 100 futures are currently down -0.75 points (-0.01%)

• Japan’s producer prices continued to slow as raw material costs continue to moderate, with its 5.8% y/y rate being its lowest in 23 months. However, it was below the 5.4% expected.
• German wholesale prices are released at 06:00 which could further weigh on EUR/USD if it contracts (it has fallen from 23.8% y/y to 2% in 11 months)
• Swiss producer prices are then released at 06:30, followed by eurozone industrial production data at 09:00
• Fed members are scheduled to speak every day this week, with Bostic, Kashkari, Barkin and Cook on the roster today
• BOE Chief economist Hue Pill is also set to speak at 16:00 BST
• Volatility remained very low for currencies overnight as they took a breather following a particularly volatile end to the week
• The US dollar index rose to a 5-week high with a bullish engulfing week, whilst • Bearish engulfing weeks formed on CAD, EUR, GBP and CHF
• Copper prices fell -4% last week following a slew of weak data from China, which undermines the economies progress towards GDP ~5% in 2023
• The Turkish lira sank to a fresh record low against the US dollar as President Erdogan remained in the lead, although has yet to enjoy an outright majority

No outright majority for President Erdogan:

With 91.9% of the ballot counted, President Erdogan has a slight lead over his rival Kilicdaroglu but falls short of an outright majority. And that means Turkey could be headed for a runoff election, which some suspect Erdogan has the slight edge. There had been high hopes that the President of the past 20 years could be ousted and form a market perspective that brings the potential for a reversal of unorthodox monetary polies and a stronger Lira. Either way, it could take a couple of weeks for the election to be finalised.

US debt-ceiling talks to resume Tuesday:

Biden and McCarthy have agreed to resume debt-ceiling talks on Tuesday, which keeps alive some hopes that it will be raised. The fact that Wall Street remains near its highs suggests an assumption the issue will be resolved, and it can also be argued that it could trigger a risk-on rally should that be the case. Yet other markets are les confident, with gold remain supported above $2000, the US dollar catching a bid from safe-haven flows and yields remaining suppressed

EUR/USD 1-hour chart:

EUR/USD trades within an established downtrend on the 1-hour chart and within a bearish channel. Friday saw a solid break below 1.0900 on high volume, with a decent chunk of trading activity occurring around 1.0884 to suggest initiative selling.

Prices have drifted higher during Asian trade, and if prices continue higher we would be interested in bearish setups around resistance levels such as the daily pivot point. Upper trendline or 1.0884 VPOC.

Economic events up next (Times in GMT+1)

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge