24/ 02/ 2020

Week Ahead | Economic Data and COVID-19 Updates to Drive the Majors

It was quite a week for the markets. The coronavirus spread gathered pace beyond China’s borders, with U.S private sector catching the markets off guard. 

Global financial markets turned into risk-off mode, in particular towards the end of the week, with heavy safe haven flows into Gold and US treasuries. Yen ended as the weakest one as the coronavirus contagion creates economic and political uncertainties Japan. Even the 2022 Summer Olympic could now be in jeopardy. Australian dollar followed as next weakest as rebound in unemployment rate added to the case of April RBA easing. Swiss Franc was the strongest one on risk aversion, followed by Canadian Dollar. Dollar was originally one of the strongest, but ended mixed, partly due to profit taking, falling yields, and speculations of Fed cut.

It’s another busy week ahead with Coronavirus updates suggest more economic disruption. The continued spread of the coronavirus and last week’s dire PMI numbers out of the U.S could get things off to a bad start.

20/ 02/ 2020

Uncontrollable Coronavirus Spread Could Force the Fed to Resume Easing

Federal Reserve policymakers were cautiously optimistic about their ability to hold interest rates steady this year, minutes of the central bank’s last policy meeting showed, even as they acknowledged new risks caused by the coronavirus outbreak. The readout on Wednesday of the policy discussion, at which policymakers unanimously voted to keep interest rates unchanged in a target range of between 1.50% and 1.75%, also showed Fed officials were skeptical about any big rethink of the central bank’s inflation target.

Ahead of the release of inflation data, the British Pound was in fact trending lower as markets reacted to an uptick in news flow concerning the latest developments between London and Brussels ahead of the commencement of what are almost certainly going to be fractious trade negotiations. EUR bouncing modestly from multi-month lows, at risk of falling. The shared currency was once again the worst performer against the greenback, with EUR falling to levels last seen in April 2017.

It’s a busy day ahead. With the Dollar sitting on top, today’s stats from the EU are going to need to impress to eat into the Dollar’s current week gains.

18/ 02/ 2020

Euro Extending Decline Ahead of Closely Watched German ZEW

The euro fell towards a three-year low versus the dollar ahead of a highly watched German survey on Tuesday, which is expected to show a sharp slump in investor confidence and fuel growing pessimism about the outlook for Europe’s largest economy. Financial markets clung to tight ranges following a U.S. public holiday on Monday, shifting the investor focus to European news and developments in the coronavirus crisis. Sentiment for the euro has worsened dramatically this month after weak manufacturing and gross domestic product data from Germany, Europe’s largest economy, suggested that the euro zone is more vulnerable to external shocks that previously thought. 

Sterling also nursed losses against the dollar and the euro due to worries about economic ties between Britain and the European Union as both sides laid out conflicting views on how to proceed with trade negotiations. Prime Minister Boris Johnson’s Europe adviser David Frost said on Monday Britain would not be threatened into following EU rules to win a free trade agreement with the bloc.

Markets are back in risk off mode in Asia after Apple’s warning. While Wuhan coronavirus cases in China might appear to have slowed, investors remain vigilant. More risks lie ahead with German economic sentiment data featured today.

10/ 02/ 2020

Week Ahead | Stats, Geopolitics & Monetary Policy to Drive the Market

Dollar ended last week as the strongest one as markets put China’s coronavius behind. Instead, strong risk sentiments lifted major US indices to new record highs. 

The euro declined against the U.S. dollar on Friday, as dollar was boosted by a strong U.S. non-farm payrolls report that followed a spate of upbeat economic data this week. Data showed U.S. nonfarm payrolls increased by 225,000 jobs last month, with employment at construction sites increasing by the most in a year given milder-than-normal temperatures. Sterling declined against dollar, as stronger dollar and worries about negotiations between Britain and the European Union for a post-Brexit trade deal weighed on sterling. Investors are nervous that Johnson is taking a hard line in the trade talks with the EU, which need to be concluded before the end of the year to avoid a potentially disruptive break in trading relations.

It’s a busy week ahead. While the stats will influence, there’s Brexit, Trump and the coronavirus to consider and the RBNZ.