Key Points From This Week
US Data Improves
The US Dollar enjoyed a better week as a spate of stronger-than-expected data helped lift the greenback. The ISM manufacturing reading for January showed a firm rebound in the factory sector which improved to 50.9, moving back into expansionary territory for the first time in six months. Later in the week, the ISM non-manufacturing reading also picked up, printing 55.5 vs 55.1 expected.
Corona-Virus Worsens / Hopes Of Cure Emerge
Market action with regards to the ongoing corona-outbreak was particularly interesting this week. Despite the spread of the virus continuing to intensify (over 500 deaths in China, 2 deaths outside of China), risk sentiment improved over the week as the first hopes of a vaccine emerged. News reports suggested that Chinese officials are close to finding a cure. Though these claims were dismissed by the WHO organisation, the market has remained optimistic.
Trump Acquitted During Impeachment Trial
In an outcome which seemed to shock no one, but disappointed many, President Trump was acquitted by the Senate. With the Republican party in control of the Senate, such an outcome was expected, and markets were firmly bid in response to news that the president will not be forced to vacate his office.
UK & EU Clash Over Trade Deal Vision
Key Events Next Week
UK GDP
January UK GDP next week will be closely watched. While the BOE held rates on hold at the last meeting, there were still deep concerns for the outlook. If growth is seen weaker over January, this might once again boost expectation of a forthcoming cut from the BOE, which will lean on the Pound.
US CPI
US inflation data will be another key release next week. Given the recent tide of better US data, a strong print should add further fuel to the USD fire. However, any weakness in the inflation reading will be frustrating for bulls, likely limiting the rally in the Dollar for now.
RBNZ February Meeting
The RBNZ meet next week and while the bank is not expected to ease, there are dovish risks in light of the global downturn and the ongoing risks from the coronavirus outbreak. However, on the back of the latest data showing a rise in inflation expectations, it is likely that we see the RBNZ follow suit with the RBA and remain on hold for now.
Keep An Eye On
Corona-Virus Updates
The rally in risk assets this week in response to initial reports of a potential cure are a clear guide as to how the market will react when a vaccine is finally announced, highlighting strong upside risks for equities and commodities prices. If there are any further reports regarding the proximity of a vaccine, asset markets will likely strengthen once again.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!