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A look at the week ahead with Giles Coghlan

Email sent: Feb 13, 2020 10:13 am

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A Look at the Week Ahead with Giles Coghlan

Giles Coghlan

Giles Coghlan
Chief Currency Analyst

"The global risk tone has been alternating between risk on and risk off this week as the market is undecided about the potential impact of the coronavirus. Midweek there was an adjustment to the way Hubei cases were classified, which led to a large spike in reported cases from the Hubei region.

The main issue going forward will be any evidence of supply chains being impacted by China’s considerable efforts to contain the coronavirus. If we start to see evidence these supply chains are being hampered, then expect global equity markets to start falling again."

Top tier events of the week


Wednesday, February 20

Will CPI data feed CAD bears?

Friday, February 21

Will Euro Manufacturing and Services PMI data start to show further falls?

Ongoing

Watch out for the latest news of the coronavirus to dictate risk sentiment

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Fundamental outlook

This week

Thursday, February 13

USD: Inflation data

The core CPI reading was 2.3% y/y vs 2.2% expected, but this inflationary uptick should be negated by recent low oil prices. The market is still expecting one Fed rate cut this year even though the Fed’s dot plot is projecting no further rate cuts this year.

Wednesday, February 12

NZD: Rate Statement

The NZD should continue to find buyers after the RBNZ adjusted their future interest rate path. The RBNZ now see the interest rate at 1.00% in June 2020 and 1.10% in June 2021. This is revising up the previous forecast of 0.9% through to March 2021.

Wednesday, February 12

EUR: Industrial Production

The EUR/USD fell this week to the lowest level since May 12, 2017. This was partly helped by the reduction in eurozone factory activity with production levels at -2.1% vs -2.0% m/m expected. Expect Euro sellers on pullbacks as expectations rise for future ECB easing.

Next week

Wednesday, February 19

CAD: Inflation data

Future markets are pricing in a 60% chance of a Bank of Canada rate cut by April. If oil markets fall further next week CAD will be pressured lower still. Inflation data on Wednesday will be key for the BoC. A weak reading here and expect USD/CAD buyers.

Friday, February 21

EUR: Manufacturing and Services PMI’s

The slowdown in the Eurozone is only set to get worse if the spread of the coronavirus impacts Eurozone manufacturing. Investors will be looking for signs of a further slowdown from Manufacturing and Services PMI data out this Friday.

Ongoing

Coronavirus: Watch out for the latest virus news

Keep alert to latest news on the seriousness of the coronavirus spread. Watch out for supply chain issues being felt from next week onwards. Finally, note that for the past two weeks, Friday has been a strong risk off day (equity selling, JPY and CHF strength) heading into the uncertainties of weekend news. Don’t get caught out!

Economic calendar

Keeping up with the news and headlines can be challenging.
Set your filters for your desired country, category and level of volatility and we'll make sure you don't miss any potentially market-moving events in the week ahead.

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Upcoming Webinar and Workshop

February 17, 12:30 - 1:30pm GMT

FX Week Ahead: Live Market Analysis

German ZEW Economic sentiment: How confident is Ger-many in the face of the coronavirus?

GBP CPI data: EU-UK trade deal still in the forefront for GBP traders

AUD labour data: Any weakening in labour data and AUD bears will accelerate

Eurozone manufacturing and services PMI are key releases for the Euro this week

US manufacturing PMI on Friday to give an insight into state of US factory output

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February 19, 12:30 - 1:30pm GMT

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Special topic of the week: "Coronavirus risk: The danger to supply chains and global GDP as the outbreak continues."

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