Week Ahead: Coronavirus Continues to Remain Market Focus
Joe Perry February 1, 2020 5:52 AM
Coronavirus Continues to Remain Market Focus
Market participants began the week wondering whether China would be able to contain the Coronavirus or if it would spread across the country and to other parts of the world. Markets quickly discovered the answer, and it wasn’t good for risk. For the most part, the FOMC was a non-event. However, the BOE did cause some excitement by leaving rates unchanged. Expectations were a 50-50 chance of a rate cut. As a result, GBP/USD has gone bid from near 1.3000 at the time of the announcement to 1.3200 at today’s close. Earnings were stellar this week for many of the top tech companies such as Apple, Tesla, Microsoft and Amazon.
As of Friday morning, China’s National Health Commission said the total number of confirmed Coronavirus cases was 9,692. That figure does not include cases outside of China and is surely to increase throughout the weekend. Reports suggest that the virus has spread to 25 countries. China has extended its Lunar New Year until Monday and many companies in China are encouraging their employees to work from home next week. In addition, some multinational companies have temporarily closed, and airlines have suspended flights to and from China. This trend is likely to continue until the rate of new cases begins to fall.
This week also brings the beginning of the primary voting season for the US Presidential Election on November 3rd. On Monday, the we get the Iowa caucuses. Current polling shows Joe Biden and Bernie Sanders in a close race for the Democratic delegates.
The US Senate continues its debate next week regarding the Impeachment of President Trump. So far, the process has had no effect on the markets. However, if that changes and markets feel there is a chance he may be impeached, risk off may ensue.
Earnings reports continue through next week with highlights including GOOG, F, DIS, BIDU, and UBER.
In addition, economic data will focus on Manufacturing PMIs, the RBA Interest Rate Decision, and Canadian and US employment data. Expected economic data for next week is as follows:
- China Caixin Manufacturing PMI
- Global Markit Manufacturing PMI
- US ISM Manufacturing PMI
- ECB’s Lagarde speech
- RBA Interest Rate Decision
- New Zealand Employment Change
- China Caixin Services and Composite PMI
- Global Services and Composite PMI
- RBA’s Lowe Speech
- Euro Area Retail Sales
- ECB’s Lagarde Speech
- Canada Trade Balance
- US Trade Balance
- US ADP Employment Change
- US ISM Non-Manufacturing PMI
- Crude Oil Inventories
- Australia Trade Balance
- ECB’s Lagarde Speech
- ECB Economic Bulletin
- RBA’s Lowe Speech
- RBA Statement on Monetary Policy
- China Trade Balance
- Germany Trade Balance
- Canada Employment Change
- US Non-Farm Payrolls
Chart to Watch: AUD/USD Weekly
Source: Tradingview, City Index
The AUD/USD has been trading lower since 2011, when it put in a high near 1.1080. The pair made a low in 2016 near .6850 and bounced to near .8125. However, in late summer of 2019, AUD/USD took out the 2016 lows and traded down to .6670 before bouncing up to near .7000. The pair is now threatening to take out the summer lows near .6670. A series of lower lows and lower highs is a downward trend! The next major level of support is near .6550, which is horizontal support from 2009. Resistance on the weekly chart is up at .7000.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.