Week Ahead: Coronavirus Continues to Remain Market Focus

Coronavirus Continues to Remain Market Focus

FOREX 6

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:

Monday

  • China Caixin Manufacturing PMI
  • Global Markit Manufacturing PMI
  • US ISM Manufacturing PMI
  • ECB’s Lagarde speech

Tuesday

  • RBA Interest Rate Decision

Wednesday

  • 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

Thursday

  • Australia Trade Balance
  • ECB’s Lagarde Speech
  • ECB Economic Bulletin

Friday

  • 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.


Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.