Trading Week Ahead: 18th-22nd May 2020
Key Events and Data Releases This Week
Canadian Bank Holiday
USD Fed Chair Powell Testifies
GBP BOE Gov Bailey Speaks
AUD RBA Gov Lowe Speaks
GBP Flash Services PMI
USD Flash Manufacturing PMI
Bank Holidays Switzerland, France and Germany
USD Fed Chair Powell Speaks
GBP Retail Sales
EUR French Flash Services PMI, German Flash Manufacturing PMI, German Flash Services PMI
(Times adapted to AEST timezone)
Further evidence emerged last week revealing the extremities of COVID-19 and its impact on the global economy. Job losses and unemployment jumped once again in the U.S. as well as Australia, but data came in better than expected and as a result, provided a slither of potential hope to those expecting long-term damage. U.S. unemployment hit 14.7%, while Australia’s unemployment reached 6.2%. Furthermore, the economic situation in the UK is mired in levels not seen in years, and while the pandemic continues to have a stronghold on the country, it will undoubtedly only get worse. The AUD and GBP both fell to USD last week as those worries continued to increase, with GBPUSD trading over 2.40% lower.
Trade Tensions Threaten to Boil Over
The Aussie Dollar also had to face developing trade tensions between Australia and China, which have been exacerbated further when China threatened to levy tariffs on Australia’s agricultural and mining export sectors. The U.S. and China continue to exchange barbs, as comments surfaced suggesting that the signed deal may not hold up. This was accentuated further as President Trump apparently stated, ‘Tariffs remain an option.’
U.S. Indexes Falter, as Gold Rallies
Recently, we’ve been reporting and watching the current recovery rallies on U.S. equity markets. This week we saw some early cracks develop with sellers taking back some control following the Non-Farm Payrolls surprise rallies the week earlier. The US30 (Dow) traded as much as 6% lower before fighting back late in the week.
Gold was a surprise last week, adding over 2.30%, and breaking out of a daily chart and weekly chart consolidation pattern. The next target for buyers to break is the April high. A break of this level would suggest the rally is well underway.
Chart to Watch: EURUSD
Another price point of interest to look out for this week is on the EURUSD. The 1.0800 area continues to hold support as of last week. Will this week’s European flash data set up a support break, or could we see another bout of bad data that’s not as bad as expected, which might set up a new extension high out of support?