Erdogan Looks Likely To Cling To Power But Will Need A Run-off To Secure Victory

Republished By Plato

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It’s been a relatively quiet start to the week for markets but the election in Turkey and economic forecasts from Europe have given us plenty to think about.

The Turkish election has been front and centre at the start of the week and the race for President is set to continue with a runoff in two weeks. President Erdogan performed better than the polls were expecting but fell short of the 50% needed to secure victory.

The big winner was arguably Sinan Ogan who received 5.2% of the vote and could tip the balance of the runoff depending on who he gives his backing to. That gives him a lot of power over the next couple of weeks as the potential kingmaker.

The result was a nasty surprise for Turkish markets and the currency is still down a little over half a percent on the day. Victory for Erdogan means more unconventional monetary policy, inflation, and risk, all of which we’ve seen more than enough evidence of over the last couple of years.

European Commission upbeat but inflation remains a considerable risk

The European Commission is feeling more optimistic about growth this year, revising up its GDP forecasts for the European Union to 1% from 0.8% in February. A multitude of factors contributed to the improved forecasts but it wasn’t all good news, as it also forecast higher inflation, with core inflation being a particular risk to the economic outlook.

A remarkably resilient labour market is both supportive of the economy now and a risk going forward as it complicates the job of the ECB to get inflation back to target. All considered the forecasts were positive but as EU Economy Minister, Paolo Gentiloni, noted, “risks remain too plentiful for comfort”.

Another rebound for bitcoin but is there more pain to come?

Bitcoin has recovered after a wobble late last week that saw it break below $27,000 in what could have been an interesting technical test for the cryptocurrency. It may still prove to be significant but once more we are seeing some resilience. It ran into some support around $26,000 but that could be tested again, with $25,000 being the next big test below.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.