Trading Week Ahead: 13th July – 17th July 2020
Key Events and Data Releases This Week
GBP BOE Gov Bailey Speaks
JPY BOJ Outlook Report, Monetary Policy Statement
CAD BOC Monetary Policy Report, BOC Rate Statement, Overnight Rate, BOC Press Conference
AUD Employment Change, Unemployment Rate
EUR Main Refinancing Rate, Monetary Policy Statement, ECB Press Conference
USD Retail Sales, Core Retail Sales
GBP BOE Gov Bailey Speaks
(Times adapted to AEST timezone)
It was another choppy week on the forex markets last week as risk first made gains but eventually saw them evaporate by Friday close. All three risk majors initially performed well but failed to hold down stronger momentum. The GBPUSD was trading 1.60% higher at one stage, while the AUDUSD tested 70 US cents before sellers moved to reverse the things late in the week.
Coronavirus still a factor
COVID-19 infection rates continue to cause concern to risk traders and once again, they helped contribute to momentum falling away as the week progressed. The USDCAD traded higher as these worries spilt into the oil markets, with the International Energy Agency (IEA) warned demand recovery could be at risk from the increase in virus infections. Oil continues to play one up, one down, as price dropped as much as 5% during the week. The hit to demand continues to be widespread with Vietnam reporting a 50% drop in apparel orders in the first half of the year. Gold has continued to revel in some of the uncertainty and a mainly weaker USD. Price remains in a solid uptrend but could be starting to become parabolic in the short term. Buyers added another plus 2% last week hitting levels not seen since 2011.
On the Stock Market
Stock indexes, excluding the Nasdaq, also had a choppy week. We saw some solid gains at the start of the week but these gains did retrace. We saw the DOW US30 trading in the red late in the week, while the HK50 Hang Seng surged 6% at one stage. Chinese shares had some excellent days early in the week, but then news hit the market that Chinese state funds started selling, and that could be a small warning sign for the markets. We saved the Nasdaq for last as it showed no real signs of slowing down adding close to 4%. That makes it 10% in two straight weeks!
This week traders, Thursday is the big day with press conferences from both the ECB and BOC, as well as US retail sales, Australian employment data and Chinese GDP all due to be announced. The markets continue to focus on the ECB for further details on European stimulus, while as parts of the country have gone back into lockdown, the focus in Australia will be on any signs of improvement in the jobs data. Chinese GDP is another one to watch, as we look out to see if there are signs of recovery after the last -6.8% figure. With nerves remaining over infection rates, traders will continue to monitor the numbers, and further jumps could continue to unsettle risk markets.