Trading Week Ahead: 27th-31st January 2020
Key Events This Week
AUD Bank Holiday - ASX200 Closed
CN Lunar New Year 3 - HK50 Closed
EUR German Ifo Business Climate
CN Lunar New Year 4 - HK50 Closed
EUR Spanish Unemployment Rate
USD Core Durable Goods Orders
Durable Goods Orders
CB Consumer Confidence
Trimmed Mean CPI
USD FOMC Statement
Federal Funds Rate
FOMC Press Conference
GBP BOE Monetary Policy Report
MPC Official Bank Rate Votes
Monetary Policy Summary
Official Bank Rate
USD Advance GDP
RMB Manufacturing PMI
Times adapted for AEDT timezone.
Release of U.S. and UK rate decisions
This week we have U.S. and UK rate decisions coming out. Both rates are expected to remain on hold and we can’t see any big surprises. The Chair of the Fed, Jerome Powell has commented about holding funds rate until the next election has passed. This week’s advanced GDP will be thoroughly examined to get an early indication of how the U.S. is tracking. The previous figure was 2.1%, so traders will be looking at if the next figure comes out as expected. A big miss could start to worsen the worries that have been circulating.
The UK is set to leave the EU this week on the 31st of January, therefore, we would be highly surprised if the Bank of England were to make any sudden changes on the eve of Brexit. This coming MPC meeting also marks the end of Mark Carney as governor of the Bank of England, with Andrew Bailey replacing him at the beginning of February. UK businesses had seen slow growth after the general election, however, positive PMI data emerged last Friday on the services and manufacturing front. This seems to have weakened the case for a rate cut.
The Brexit deal passed the final hurdle last week and has become law, after receiving the royal assent from the Queen. This has now finalised the UK’s departure date from the EU. The law was sent for the royal stamp after the House of Lords abandoned the four amendments that it had to try to confirm earlier last week.
There is no doubt that we will be keeping a very close eye on the GBP on Friday. We would think this would be priced in now, and we really shouldn’t see any volatile movements but then again you never know.
The Coronavirus has been an escalating issue over the past couple of weeks. It has rapidly worsened and has caused the Wuhan, the largest central city in China to completely shut down.
Other cities with high infection rates have also been placed in shutdown last week. The emerging pandemic has been seen as a cause for some market movements, but this also remains debatable for markets outside of Asia. Last Friday we witnessed the first real influence of the virus on the financial markets. Some Chinese indices closed sharply lower than before, both the Shanghai Composite and China A both lost over 2%. The Hang Seng was reported to have lost 1.89%, and most of that was in the final hour of trade. Traders will be monitoring how long cities are in lockdown for and also analysing how this will affect exports and manufacturing.
Let’s hope it’s a fast recovery for all that are currently affected.