Will the Coronavirus impact markets this week?

By Eliman Dambell

Last week saw the markets reach levels of panic not seen since the crash and economic downturn of 2008/9. Although the moves seen in the markets were in some instances reminiscent of 2008, the causes couldn’t have been any more distant. On this occasion instead of a mortgage crisis, with the banks to blame. The culprit so far has been the rapidly spreading Coronavirus. So as we enter a new week. We pause and detail the potential areas traders will be looking towards, in trying to find new trading opportunities inside and outside of the Coronavirus. 

 

Fundamentals To Watch

This week we have several key fundamental news events taking place. Firstly as it will be the first Friday of March, most traders are primed and ready to go as they await the release of the Non-Farm Payrolls. The NFP will show traders the amount of non-farming jobs that have been added to the US economy in February. This, as always creates the potential for intraday rallies in the likes of Gold, and US Dollar related forex pairs. This comes as a reaction to the number which many see as being one of the main growth indicators from the world’s largest economy. So if the numbers surpass or fall short of expectations, we may see a market response in an upward or downward trajectory .

Another key point to watch will be how markets respond to the growing Coronavirus concerns. As the virus began to spread rapidly outside of China, we saw Italy, Iran and other Asian countries disclose the number of rising casualties. Global cases reported now stand close to 85,000, with a death rate of around 4% of those infected. 

With many industries such as the travel industry suffering huge declines as nations attempt to contain the spread, Oil prices have suffered huge declines as a result. However many optimists believe the recent sell offs could create buying opportunities for the longer term traders hoping that when the panic ends, markets will revert back to a bullish trajectory.

To conclude this week, Tuesday in particular will be interesting for traders paying attention to the Euro Zone post Brexit. The EU Consumer Price Index report is set to be released, which traditionally would impact price moves in Euro related markets. However this Wednesday’s number may truly highlight the impact of the recent damage to the consumer market within Europe. Creating more potential trading opportunities.

 

Fundamental Events 

–  Monday: USD ISM Manufacturing (FEB)

–  Tuesday: EUR Euro-Zone Consumer Price Index Core (YoY) (FEB P)

–  Wednesday: CAD Bank of Canada Rate Decision (MAR 4)

–  Thursday: GBP BOE’s Carney Speaks in London.

–  Friday: USD Unemployment Rate (FEB)

 

Three Markets to Watch

  • Gold

Gold has been one of the main movers during the Coronavirus crisis . Acting as the world’s safety blanket currency. In the last week we saw the metal move upwards over $100 as investors fled the stock market in panic. However after reaching a near 10 year high of $1,700 – Gold prices started the downward descent on Friday. Many may hope this trajectory continues as we find stability, or even a cure to the Coronavirus. 

 

The world’s most traded currency pair was certainly that and more last week, as both European and US markets were hit hard by the Coronavirus epidemic The Dollar, which had been at its strongest point against the Euro since April of 2017, significantly weakened as it headed from $1.07 – $1.10. This pair seemed unable to breach the further resistance line, however how long could that be held?

 

  • Crude Oil

With global travel slowing down and an increase in flight cancellations as many hope to avoid getting embroiled into the chaos surrounding the Coronavirus, Oil prices have fallen considerably. Last week saw a $6 decline. Which was the biggest 1 week drop in some years. Now with Oil at its lowest since September. The question here for this week is, when could this begin to stabilise? Or could there be yet more opportunities for sellers?

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