Week Ahead 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:

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, FOREX.com

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.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.