Trading Week Ahead: 17th – 21st February 2020
Key Events This Week
USD Presidents Day Holiday
AUD Monetary Policy Meeting Minutes
EUR German ZEW Economic Sentiment
AUD Wage Price Index
USD FOMC Meeting Minutes
AUD Employment Change, Unemployment Rate
GBP Retail Sales
EUR ECB Monetary Policy Meeting Accounts
CAD Core Retail Sales, Retail sales
USD Flash Manufacturing PMI
(Times adapted to AEDT timezone)
Will the AUD/USD move into a new 5-month low?
The Aussie Dollar saw a boost last week, as buyers started a fightback after six straight weeks of declines that hit a low close to 6660 US cents. The RBA holding rates supported buyers and price continued to build during last week. This week, traders will be keeping an eye out for the release of further key data. The policy meeting minutes, the wage price index and Thursday’s employment data are predicted to play significant roles in the ongoing fightback. Weaker data could set up a new continuation lower in the current weekly downtrend. If the data is strong it could reinforce the current momentum setting up a deeper counter-rally. We will have to see what happens with the RBA hold stance, if the employment data comes out weaker than expected it could ruffle the hold stance. Moreover, 6660 remains a key point for the AUDUSD if we see a break of that level then will move back into new 5-month lows.
Key comments from the ECB
Sellers kicked on last week which extends the decline to two weeks in a row, shaving off over 2% in value of the EURUSD pair. A large factor behind this is the comments made by the central bank. Some could argue that Christine Lagarde hasn’t been the best thing for the EURUSD since taking over as head of the ECB. The speech made last Tuesday really didn’t do much to evoke confidence in the pair. Key comments that were made included.
“Monetary policy cannot, and should not, be the only game in town.”
“When interest rates are low, fiscal policy can be highly effective.”
“The longer our accommodative measures remain in place, the greater the risk that side effects will become more pronounced.”
With the EURUSD remaining around six-month lows, eyes will be looking to this week’s data, especially with the key Flash PMI coming out this Friday for France and Germany. With questions remaining on the state of the German economy could we see the EURUSD sink lower towards the 1.07 handle?
The coronavirus remains a very serious issue for obvious reasons but last week, markets showed signs of discounting it before seeing an influence after negative updates. The JPY and Gold remain the go-to points. This week traders will need to keep some attention on this as it continues to induce volatility.