Week Ahead – Turning a Corner on COVID-19

Investors buoyed by apparent deceleration

It’s been an eventful start to the year and not exactly in the way than anyone would have anticipated even two months ago. Once again, once the initial panic has passed, investors have taken the spread of COVID-19 in their stride, a little too much you could argue.

The initial panic was that it could be as bad as SARS and yet, it’s been worse and it turns out investors aren’t that worried after all. The stock market can be a very strange place at times.

Next week is typically among the quieter of the month which means news around the coronavirus will continue to dominate. PMIs later in the week will also be of interest, as will minutes from the Fed, ECB and RBA.

Key economic releases and events:

Monday, Feb 17th

Country Relevance Indicator Name Period Reuters Poll Prior
Japan High GDP QQ Q4 -0.9% 0.4%
Japan High GDP QQ Annualised Q4 -3.7% 1.8%
Singapore Medium GDP Final QQ Q4 0.1% 0.1%
Singapore High GDP Final YY Q4 0.8% 0.8%
Singapore Medium Non-Oil Exports MM Jan -4.5% 1.1%
Singapore Medium Non-Oil Exports YY Jan -5.5% 2.4%
Thailand High GDP Growth YY Q4 2.1% 2.4%
Thailand Medium GDP Growth QQ SA Q4 0.4% 0.1%
Russia High Industrial Output Jan 1.7% 2.1%
Indonesia High Trade Balance (Bln of $) Jan -0.27B -0.03B
Indonesia Medium Exports Growth YY Jan 1.19% 1.28%
Indonesia Medium Imports Growth YY Jan -5.66% -5.62%


Tuesday, Feb 18th

Thailand Medium Annual GDP Growth 2019 4.10%
Sweden Medium Unemployment Rate Jan 6.0%
Sweden Low Unemployment Rate SA Jan 7.0% 6.6%
Hong Kong Low Unemployment Rate Jan 3.3%
United Kingdom High ILO Unemployment Rate Dec 3.8% 3.8%
United Kingdom Medium Avg Wk Earnings 3M YY Dec 3.0% 3.2%
United Kingdom Medium Avg Earnings (Ex-Bonus) Dec 3.3% 3.4%
Germany High ZEW Economic Sentiment Feb 21.2 26.7
Japan High Exports YY Jan -6.9% -6.3%
Japan High Imports YY Jan -1.3% -4.9%
Japan High Trade Balance Total Yen Jan -1,694.9B -152.5B
Russia Low GDP YY Monthly Jan 2.4%


Wednesday, Fed 19th

Australia High Wage Price Index YY Q4 2.2% 2.2%
South Africa High CPI YY Jan 4.4% 4.0%
South Africa Low Core Inflation YY Jan 3.9% 3.8%
Sweden High CPI YY Jan 1.7% 1.8%
Sweden Not Rated CPIF Ex Energy YY Jan 1.9% 1.7%
United Kingdom Low Core CPI YY Jan 1.5% 1.4%
United Kingdom High CPI YY Jan 1.5% 1.3%
Turkey High CBT Weekly Repo Rate Feb 11.25%
Turkey High O/N Lending Rate Feb 12.75%
Turkey High O/N Borrowing Rate Feb 9.75%
Turkey High Late Liquidity Window Rate Feb 14.25%
United States Medium Building Permits: Number Jan 1.447M 1.420M
United States High Housing Starts Number Jan 1.434M 1.608M
Canada Medium CPI Inflation YY Jan 2.4% 2.2%
Canada High CPI BoC Core YY Jan 1.7%
Canada Not Rated CPI YY SA Jan 2.23%
United States Not Rated API weekly crude stocks 10 Feb, w/e #N/P #N/P


Thursday, Fed 20th

Australia High Unemployment Rate Jan 5.2% 5.1%
Germany Medium GfK Consumer Sentiment Mar 9.8 9.9
Denmark High Consumer Confidence Feb 4.5
United Kingdom High Retail Sales YY Jan 0.6% 0.9%
Russia Low Retail Sales YY Jan 1.9% 1.9%
Russia High Unemployment Rate Jan 4.7% 4.6%
United States High Initial Jobless Claims 15 Feb, w/e 210k 205k
United States High Philly Fed Business Indx Feb 12.0 17.0
Euro Zone High Consumer Confid. Flash Feb -8.0 -8.1
United States Not Rated EIA Weekly Crude Stocks 14 Feb, w/e 7.459M
Australia High Manufacturing PMI Feb 49.1
Australia High Services PMI Feb 48.9
Australia High Composite PMI Feb 48.6
Japan High CPI, Core Nationwide YY Jan 0.8% 0.7%
Indonesia High 7-Day Reverse Repo Feb 5.00%
Indonesia High Deposit Facility Rate Feb 4.25%
Indonesia High Lending Facility Rate Feb 5.75%


Friday, Feb 21st  

Japan High Jibun Bank Mfg PMI Flash Feb 48.8
Switzerland Not Rated Industrial Production YY Q4 8.0%
France High Markit Mfg Flash PMI Feb 50.7 51.1
France High Markit Serv Flash PMI Feb 51.2 51.0
France High Markit Comp Flash PMI Feb 51.0 51.1
Germany High Markit Mfg Flash PMI Feb 44.8 45.3
Germany High Markit Service Flash PMI Feb 54.0 54.2
Germany High Markit Comp Flash PMI Feb 50.8 51.2
Euro Zone High Markit Mfg Flash PMI Feb 47.5 47.9
Euro Zone High Markit Serv Flash PMI Feb 52.2 52.5
Euro Zone High Markit Comp Flash PMI Feb 51.0 51.3
United Kingdom High Flash Composite PMI Feb 52.7 53.3
United Kingdom High Flash Manufacturing PMI Feb 49.7 50.0
United Kingdom High Flash Services PMI Feb 53.4 53.9
Euro Zone High HICP Final MM Jan -1.0% 0.3%
Euro Zone High HICP Final YY Jan 1.4% 1.4%
Canada High Retail Sales MM Dec 0.0% 0.9%
United States High Markit Comp Flash PMI Feb 53.3
United States High Markit Mfg PMI Flash Feb 51.4 51.9
United States High Markit Svcs PMI Flash Feb 53.5 53.4
United States High Existing Home Sales Jan 5.48M 5.54M



This should have been a pretty normal week in the UK, compared to what we’ve become accustomed to, but it didn’t quite go according to plan. The cabinet reshuffle was largely as boring as is to be expected, until Chancellor Sajid Javid resigned. In a different time, a different country perhaps, that may be seen as bad news but investors in the UK were buoyed.

While there appears to be a number of reasons behind the resignation, including demands by Boris Johnson that “no self-respecting” minister would accept, investors are considering what it means for the budget. It’s clear that, at the very least, the government will look to push the boundaries of their fiscal rules but perhaps this indicates something more. So the market reaction suggests anyway.


Will Wall Street start pricing in the risk of a democratic president? Right now, the answer seems to be no. The Democrats are in the very early stages of the primary season and right now Bernie Sanders and Pete Buttigieg are gaining momentum. The focus shifts to the February 22nd Nevada caucuses and the February 29th South Carolina primary, with Super Tuesday on March 3rd being the main event.

Financial markets may start to get nervous if Democrats start feeling the Bern, but if Biden, Buttigieg or Bloomberg get the nomination, we may see optimism for a much higher stock market remain roughly in place.


Coronavirus and its global spread is still the hot topic. Thursday’s review of the data methodology caused a mild downturn in risk appetite as case numbers spiked dramatically. Central bankers appear to be viewing the virus effect as a mere speed bump for local economies, with the RBNZ basing its current monetary policy outlook on the assumption it would last six weeks, while the Fed is still on track to remain on hold throughout this year.

After the so-called good new up to Wednesday was decimated by Thursday’s revision, investors will require either a slowdown in the increase in the number of confirmed cases or a total decline to continue the relentless pursuit of returns via equities.

It has been pointed out by a colleague that it could be a win-win outlook for equities going forward – if the virus accelerates, central banks will ease policy thus supporting equities, while if the virus vanishes, the global economy can get back on track, which would again be supportive of equities.

A lack of good news on the spread and death toll from the Wuhan virus this week and next would take the edge off risk appetite, capping the equity rally and forcing flows into the usual safe havens of gold, the yen, Swiss franc, the US dollar and US Treasuries. It would again be negative for oil and industrial metals.

Hong Kong

Nothing to report from Hong Kong this week. Still “only” 50 virus cases reported to Thursday, but the second country in the league table behind China. Hong Kong data is still dismal and Tuesday’s release of January’s unemployment rate has probably got more upside potential than down.

The Hong Kong dollar is holding up well, despite the coronavirus effect and a firmer US dollar. USD/HKD is trading close to the lower limit of its trading band and it’s possible that any escalation in the coronavirus outbreak, could push USD/HKD back to the upper half of the trading band and pressure the HongKong33 index.


India economic data continues to disappoint with industrial output dropping 0.3% in December

India still has only three coronavirus cases. Should the RBI be forced into further easing, it could pressure the rupee.


Tuesday’s release of RBA minutes is unlikely to be a headline-grabber, while Thursday’s employment report for January will be the main event. Headline numbers have been bullish of late, but most jobs added are only in the part-time category. Another strong number (with a full-time bias) and markets will consider a hawkish shift from the RBA. Mean reversion to a lower jobs number would hurt the Aussie.

New Zealand

A hawkish feel to the RBNZ’s unchanged rate announcement sent the kiwi soaring this week.

An extended virus period (Chinese are currently barred from entering NZ) would hurt the tourism sector and pressure the kiwi.


The week kicks off with Q4 GDP data, which is seen weaker overall, according to the latest surveys. The cruise ship quarantined off Japan is getting more headlines than the economy, BOJ or government. A bigger-than-expected drop in GDP would hurt equities but could benefit the yen on safe haven flows.


Singapore’s close links with China have brought the city state to the forefront of coronavirus news, with 50 reported cases (third behind Hong Kong). The MAS has already said there is room within the NEER trading band to ease policy and we may see an inter-meeting adjustment given the next policy meeting is not scheduled until April. The Singapore dollar weakened to the lowest level since September versus the US dollar this week. Policy easing amid rising virus cases would pressure the SGD further.



The US economy will likely remain in a good place, but we could start to see markets become nervous on a few fronts.  On Friday, February 21st, the flash manufacturing PMI releases will show how much of a slowdown is hitting the US economy in February.  Incremental updates with the US-China trade war seemed destined for a sudden turn for the worse, but so far, all signs are pointing that may not be the case.

The third concern to the outlook is Fed tightening.  The Fed has started announcing cuts to the size of the overnight repo operations and as the balance sheet growth grinds to a halt, sentiment for risky assets may take a blow.


The oil recovery is gathering momentum as the week draws to a close. Naturally, any bounce was likely to be decent given the scale of the declines that preceded it but we’re now on the fourth day of gains as optimism grows among traders that the fight against COVID-19 has turned a corner, despite the setback of the midweek spike. The next test for Brent comes around $58, with WTI facing a similar test in the $53.50-54.50 region.


Undeterred by its other failures already this year, gold is creeping higher and approaching the heavily guarded $1,600 barrier. The events in the middle east last month saw gold briefly break through the defence but this was short-lived and it hasn’t really come close since.

Back at $1,580 now, with the next test being where it fell at the last attempt, earlier this month, around $1,590. If it can get through here then perhaps the bullish case will grow.


Bitcoin has found its way above $10,000 and is holding above at the moment but that may not last. It’s been on an impressive run this year, up around 45% already, but as ever with this instrument, it has the feel of buy now, work out why later. The list of reasons for the rally so far is endless from “safe haven” to “halving” and everything in between.

The only word that hasn’t been used is hype and that’s probably the most accurate explanation, which is fine. Should it break above $11,000, interest may pick up. $10,000 attracts a lot of attention for obvious reasons but $9,000 and $11,000 have arguably been more significant.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam