06/ 02/ 2020

The Economic Calendar Puts the EUR and the Greenback in Focus

It was another particularly bullish day on Wednesday, an ever-rising number of coronavirus cases did little to dampen the demand for riskier assets. News from China that a research team had found a possible treatment for the coronavirus supported the moves on the day. While economic data out of the Eurozone was not impressive, it was on an upward trend, which limited the drag on the majors. The euro declined against the U.S. dollar yesterday while sterling strengthened against dollar after better-than-expected service activity data offset fears of a hard Brexit. From US, we saw the jobs market kicked off 2020 in grand fashion, adding 291,000 in private payrolls for the best monthly gain since May 2015, according to a report Wednesday from ADP and Moody’s Analytics. The ADP count comes two days ahead of the government’s more closely watched nonfarm payrolls report, which includes government jobs that ADP does not count. 

The economic calendar is a busy day ahead for the EUR with key stats due out of the Eurozone include December factory orders out of Germany. We can expect the figures to provide direction ahead of the ECB’s Economic Bulletin and the EU’s economic forecasts. Both reports will give some more color on the outlook and whether the Eurozone economy did, in fact, bottom out at the turn of the year. While, key stats due out of the U.S include 4th quarter unit labor costs and nonfarm productivity numbers. The weekly jobless claims figures are also due out later this afternoon. The numbers will need to be on the positive side to continue supporting the Dollar at current levels. News updates on the coronavirus will also be in focus, however.

04/ 02/ 2020

Brexit Woes Hit the Pound as the Market Braces for another Rollercoaster Year for the Pound

Focuses in the forex markets turned temporarily from China’s coronavirus outbreak to Brexit. Both EU and UK expressed strong positions regarding up coming trade negotiations.

The euro declined against the U.S. dollar yesterday, as dollar rebounded after unexpected rebound in U.S. manufacturing boosted greenback. The Institute for Supply Management (ISM) said its index of U.S. factory activity increased to 50.9 last month, the highest level since July, from an upwardly revised 47.8 in December. A reading above 50 indicates expansion in the manufacturing sector, which accounts for 11% of the U.S. economy. British pound declined against dollar, after British Prime Minister Boris Johnson set out tough terms for EU talks, rekindling fears Britain would reach the end of an 11-month transition period without reaching a trade deal. The currency had ended January on a high, with the best weekly gain in a month after the Bank of England kept interest rates steady at 0.75%, surprising some who had expected a 25 basis-point cut.

It’s a relatively quiet day ahead on the economic data front, with U.S factory orders the headline stat.

03/ 02/ 2020

Week Ahead | RBA Meeting and US Payrolls in Focus as Virus Worries Linger

Fear of China’s coronavirus outbreak was the major theme in the global markets last week. At the time of writing, number of confirmed cases were close to 12,000. While the majority of the infected in China, the virus has spread to at least 23 countries already. And, most important, there appears to be no sign of a slow down yet. Global equities suffered crash-mode selloff while safe haven flows pushed bond yields sharply lower. In the currency markets commodity currencies ended as the weakest naturally, with Australian Dollar leading the way. European majors were the strongest, as led by Sterling. However, it should be noted that after late selloff, Dollar has indeed ended as the fourth weakest. Traders drastically increased their bets on a Fed rate cut, on follow stocks and yields, as well ass worsening yield curve inversion. There are also talks that China wouldn’t be able to fulfil it’s trade obligations to the US considering the trouble it’s facing.

Looking ahead, Reserve Bank of Australia (RBA) is the sole major central bank that will meet this week but that doesn’t mean the calendar is light, as there’s a cascade of crucial economic data to keep things exciting. The US employment report will reveal whether the recent ‘cracks’ in the labor market were just outliers in an otherwise healthy trend, or early signs of weakness. The answer could determine whether ‘king dollar’ will continue to reign over the FX market. More broadly, risk sentiment will remain sensitive to any virus-related news.

30/ 01/ 2020

Major Central Banks Steps up to the Center Stage while WHO discusses Prevention Acts

The euro declined against the U.S. dollar on yesterday, as investors regained their confidence in the market after an outbreak of coronavirus in China. The newly identified coronavirus has created alarm because it is spreading quickly and there is little known about it. The death toll rose sharply to 132 on Wednesday, with nearly 1,500 new cases identified for a total of nearly 6,000. Sterling held near 1-week lows against dollar on Wednesday as investors awaited knife-edge rate decision by Bank of England. Money markets currently price a 46% chance of a 25 basis point rate cut to the BoE’s 0.75% policy rate - compared to around 70% at the start of last week. While the UK elections provided a dose of clarity about Brexit, the UK's upcoming exit from the EU – due one day after the bank's decision – has left its scars on the economy. It is still unclear what shape future EU-UK elections will have.

It’s a busy day ahead, with economic data from the Eurozone and the U.S in focus. On the monetary policy front, the BoE and the Pound are in action.