29/ 01/ 2020

The FED Puts the U.S Dollar in the Spotlight as Coronavirus Continues to Fallout

The Year of the Rat has started off disastrously in China, as the coronavirus outbreak has claimed over 100 lives, with over 4500 confirmed infections. The virus has now reached at least 14 countries, including a host of Southeast Asian nations, the United States, Germany and France. Chinese authorities have scrambled to deal with the epidemic, which originated in Wuhan, a city in eastern China. Officials have quarantined the city and also halted public transportation. China’s economy, which is already in the midst of an economic slowdown due to the trade war with the U.S. and weak global demand, will take a hit from the coronavirus, and the repercussions could be felt worldwide.According to Mark Williams, chief Asia economist at Capital Economics, “the outbreak is developing too rapidly to predict with any confidence the final extent of the economic damage. But it is now certain that the outbreak will have a significant impact on China’s GDP this quarter.”

Looking ahead, German consumer confidence and corporate earnings are in focus ahead of the FED’s 1st policy decision of the year. Updates on the coronavirus will also influence

26/ 01/ 2020

Week Ahead | Coronavirus Outbreak Remains in Focus with Britain, FED and the BoE in Action

The euro declined against the U.S. dollar on Friday, as lackluster PMI data weighed on single currency. Euro zone business activity remained lackluster at the start of the year, a survey showed, a day after ECB rate-setters did not make any policy change, standing by their pledge to keep buying bonds and, if needed, cut interest rates until euro zone inflation headed back to their goal. Sterling declined against dollar as some investors still expected an interest rate cut next week even though business surveys pointed to a post-election bounce in the UK economy. The ‘flash’ early readings of the IHS Markit/CIPS UK Purchasing Managers’ Index (PMI) showed Britain’s vast services sector returned to growth in January for the first time since August, while a downturn in manufacturing eased. Sterling jumped to as high as $1.3180 immediately after the surveys were released before falling back.

The dollar strengthened against the Japanese yen, although gains were limited by lack of direction from China and rising death toll and case count from a new coronavirus. Trading volumes were thin, with financial markets in China, Taiwan and South Korea closed for the Lunar New Year. The World Health Organization (WHO) declared the virus outbreak an emergency for China but stopped short of declaring it an international concern, offering some comfort to investors.

It’s a big week ahead. Britain leaves the EU, Trump’s defense team is in action, corporate earnings are in focus, and the FED and the BoE are in action.

23/ 01/ 2020

The Coronavirus, the ECB and Economic Data to Test the Majors

The U.S. dollar was unchanged against a basket of currencies on Wednesday as safe-haven demand ebbed along with worries about whether the spread of a flu-like coronavirus would hurt the global economy. The dollar index, which measures the greenback against six other major currencies, was flat at 97.534. Deaths from China’s new flu-like virus rose to 17, with more than 540 cases confirmed, leading the city at the center of the outbreak to close transport networks and urge citizens to stay home to limit the spread of the contagion. China’s response and candor, in contrast to how it handled the 2002-03 Severe Acute Respiratory Syndrome (SARS) epidemic, reassured investors concerned about possible global fallout.

Among the majors, Britain’s pound was the biggest mover, rising 0.65% against the dollar as investors debated whether the Bank of England would cut interest rates next week. The Canadian dollar was down about 0.5% against the greenback after the Bank of Canada maintained its key overnight interest rate at 1.75% as expected, but opened the door to a possible cut should slow growth continue. Democrats accused President Donald Trump at his impeachment trial on Wednesday of a corrupt scheme to pressure Ukraine to help him get re-elected and warned that America’s global prestige would suffer if the U.S. Senate acquits him. U.S. President Donald Trump threatened to impose high tariffs on imports of cars from the European Union if the bloc doesn’t agree to a trade deal.

It’s a busy day on the Eurozone economic calendar. While key stats are limited to Eurozone consumer confidence figures due out late in the session, the ECB is in action. Any revisions to growth forecasts and details on revisions to the ECB’s monetary policy framework will be key drivers. Through the ECB press conference, ECB President Lagarde could deliver a more optimistic outlook, which would be market positive. There will be concerns over the coronavirus and possible tariffs on EU cars, however, to test the more optimistic

22/ 01/ 2020

Risk Aversion Remains with the BOC and Monetary Policy in Focus

Euro rose against the U.S. dollar on Tuesday, as investors awaited European Central Bank (ECB) meeting on Thursday where it is expected to launch a comprehensive review of Central Bank strategy, including the ECB’s inflation target. The ECB’s first meeting of the year is most likely to launch a rethink of an inflation goal the bank has failed to meet since 2013. The scope and scale of the review will be a key focus for markets given the far-reaching implications for monetary policy. Sterling was seen trading higher against the Euro, Dollar and a host of other major currencies on Tuesday, Jan. 21 after the release of official labour market figures that showed both a jump in employment and wages in December. The strong numbers come in defiance of a recent run of soft economic statistics, and will give policy makers at the Bank of England reason to keep interest rates unchanged and cast into doubt growing market expectations for a January 30 interest rate cut.

Yesterday’s economic forum which is taking place at Davos, Switzerland Trump did state that they are not going to back down from the Chinese Taxation process regardless of the Phase signed out peacefully.

It could be a choppy day ahead as the markets monitor the news wires for more details on the coronavirus and chatter from Davos. The Bank of Canada and the Loonie are in focus, with economic data on the lighter side elsewhere.