The Week Ahead – Central Banks, OPEC + and Governments prepare to cushion the coronavirus impact

Fears of coronavirus pandemic spreading delivered a global equity rout that took all the major indexes into correction territory with some seeming poised to enter a bear market.  Volatility is back in a big way as financial markets have no idea how to price in what will be the global impact of the virus.  The moves in Treasuries was phenomenal with the 10-year yield falling to fresh record lows while the 5-year fell below 1%.

The economic shock of the coronavirus may yield a quick global contraction that will likely see rapid action by central banks and governments.  The Fed is now widely expected to deliver rate cuts as any lack of action would tighten financial conditions.  President Trump is also preparing a tax cut package to help market sentiment.

Expectations are for the economic damage from the coronavirus to be temporary and that we will eventually see markets snapback at some point this year.  The virus may not deliver long-term damage to the economy but until the World Health Organization starts lowering the assessment of the coronavirus, we could see investors remain bearish.

In addition to trading off every major virus update, traders will focus on Super Tuesday, a couple of key rate decisions from Australia and Canada, and the OPEC + decision on how much more they will cut production.


Wall Street is preparing for a wrath of profit warnings and further strain on the credit markets.  Company earnings from Autozone, Campbell Soup, Ciena, Kohl’s, Costco and Kroger will draw much attention.  The promise of fresh stimulus from the Fed and other central banks will likely provide modest support for stocks.  Pandemic fears will continue to be the primary driver for all the major asset classes.

US Politics

Democrats will have a better idea on who is likely to win their nomination after Super Tuesday.  With more than a third of the delegates up for grabs, Wall Street wants to know if we need to start pricing in Sanders nomination.  The field will narrow tremendously after Tuesday and we will finally see if former NYC mayor Bloomberg’s limitless spend worked on Western voters.  Former VP Joe Biden needs a strong outing, while Pete Buttigieg will quickly find out if he was able to win over minority voters.  Financial markets would pleased to see Bloomberg or Biden win the ticket, but if Bernie continues to outperform, investors could have another reason to hit the sell button.  In a head-to-head matchup, Wall Street is still confident President Trump will get re-elected, but polls in the battleground states show Bernie has a chance.


Michel Barnier and David Frost, EU and UK Brexit negotiators, respectively, will hold talks this week as both sides begin the ambitious task of agreeing a new trade relationship by the end of this year. Both sides have been talking tough in the run up to the negotiations, with the UK in particular not wanting to be taken lightly. Boris has warned that should significant progress have not been made by June, the UK would walk away from the talks. This is a rather vague and possibly empty threat, part and parcel of an aggressive PR campaign intended to position the government as a serious opposite number in the negotiations. The EU hasn’t taken to kindly to the latest views coming from the UK, particularly on items committed to in the political declaration. Needless to say, it’s early days so much of what we’re hearing can be taken with a pinch of salt, simple posturing. It hasn’t stopped the pound slipping back to recent lows though.


The coronavirus has arrived on European shores and the numbers in Italy – primarily in the north in Lombardy and Veneto – have spiked over the last week, with more than 500 infected and 14 dead. While Italy has seen the most rapid acceleration on the continent, cases are popping up everywhere which doesn’t bode well for the coming weeks. Strict measures are already being imposed in parts of Italy and tourism is being impacted. Events are also being cancelled or played behind closed doors in a bid to reduce the risk of spread. The economic consequences won’t be fully understood for a number of weeks but it could tip Italy back into recession while others are also at risk of a similar fate.


While we may getting some better news out of China on CoVid-19, with the number of new cases reducing daily, the same cannot be said outside China’s borders.

Chinese equity markets have out-performed this week (down about 3% so far while Wall Street has slumped more than 10%), but the hold seems fragile and could accelerate quickly. The China manufacturing machine is mostly back to work but there is no doubt Q1 GDP, and other activity-related indicators will take a hit this month/quarter.

Next week’s data releases include PMI numbers, both from the Statistics Bureau and from Caixin, for February, with surveys anticipating a deterioration. We also get the trade data for February next Saturday.

If the recent improvement in the number of virus cases is only a lull and not a reversal, Chinese equities and the yuan will echo the moves seen elsewhere.

Hong Kong

This week’s budget included lots of assistance and giveaways for companies and individuals, but is unlikely to produce any near-term significant benefits to the local economy. Retail sales on Monday are expected to continue the recent run of negative prints, though the timing of the Lunar New Year celebration may make the headline number look not so bad. Surveys suggest an improvement may be seen in the PMI numbers for February, though that risks a downside miss.

The virus threat still hangs over the economy, with schools shut until Easter, though the number of confirmed cases remains relatively small at 93.

Weak data or an escalation in virus cases would add pressure to the HK33 index and USD/HKD is at risk of a return to the upper half of the 7.75-7.85 trading band.



US President Trump’s visit to India this week was a disappointment on a number of fronts. First off, there were no announcements of any agreements made, specifically relating to India’s preferential trade status under the GSP, which was rescinded by the US last June. In addition, bloody protests in New Delhi against the visit hit the headlines.

PM Modi is still struggling with an under-performing economy and the threat of a CoVid-19 spread in the densely-populated country. India currently has only 3 confirmed CoVid-19 cases, but that can change quickly.

A surge in CoVid-19 cases would hurt the IN50 index and pressure the Indian rupee.

South Korea

South Korea grabbed the headlines this week with a dramatic surge in the number of virus cases. This led many to believe the central bank would ease policy at Thursday’s meeting, but it wasn’t to be. BOK remains quite sanguine about the virus, acknowledging the economy will take a hit but won’t be panicked into a rush to a zero-interest-rate policy.

Again, a continued acceleration in new virus cases would hurt the KOSPI and won.


There has been more talk of deeper negative interest rates from BOJ members when faced with CoVid-19. Q4 GDP was bad and Q1 will likely be similar given the supply chain disruptions. Elementary, junior high and high schools have been ordered to close from Monday until the end of spring break, typically early-April, to try to prevent the spread of the virus.

Data would suggest the yen should be weaker, but its safe-haven status amid the stock market rout is preventing this from happening. The Nikkei has taken a hit, like other indices.


Not much to report for Australia, though the Australian dollar had fallen to 11-year lows versus the greenback amid a broad risk-off trade this week. Australia’s Prime Minister Scott Morrison has indicated the government is now considering targeted stimulus for sectors of the economy most severely impacted by the coronavirus outbreak, encompassing tourism and education.

The RBA meeting on Tuesday is expected to result in an unchanged benchmark rate. Note Q4 GDP data on Wednesday is before the wildfires took hold and the impact of CoVid-19 had been felt. As a result, the anticipated better numbers may be discounted, and would probably not help the Aussie too much.


A weaker Australian dollar makes Australia’s exports attractive, but that’s useless if nobody is buying. Weaker GDP numbers ahead of an expected drop in Q1 would apply extra pressure on the Aussie.

New Zealand

Nothing to report.


Not applicable



Gold’s selloff during the worst trading week of stocks since the financial crisis is being attributed to hedge fund selling.  Gold volatility will remain intense.  If panic selling with stocks continues next week, gold will likely reassert its safe-haven status or if markets show signs of stabilizing, we could see the broad based commodity plunge ease.


OPEC + will have to deliver a deeper production cut as oil prices remain in freefall.  How much support that will provide prices will likely be limited as the oil trade remains focused on the global spread of the virus.  Next week, will be key for oil prices as any further downward pressure will ignite calls for WTI crude to retest the lows seen during the financial crisis.


Financial markets showed the crypto space what they really think of them.  Bitcoin is not a safe-haven and the institutional community abandon the trade to make up for shortcomings with other investments.  Bitcoin seems forever trapped in tight range and will not attempt to break out higher until the overall appetite for risk improves.


Economic Releases and Events

Sunday, March 3rd

8:00pm China Caixin Manufacturing PMI: 46.0e v 51.1 prior


Monday, March 2nd

10:00am US ISM Manufacturing PMI: 50.5e v 50.9 prior

10:30pm Reserve Bank of Australia (RBA) Interest Rate Decision


Tuesday, March 3rd

7:30pm Australia Q4 GDP Q/Q: 0.4%e v 0.4% prior; Y/Y: 2.0%e v 1.7% prior


Wednesday, March 4th

8:15am USD Feb ADP Employment Change: 170ke v 291k prior

10:00am Bank of Canada (BOC) Interest Rate Decision: Expected to keep rates steady at 1.75%

10:30am DOE US Crude Oil Inventories Data

12:00pm UK BOE Governor Mark Carney speaks at University College London.

2:00pm US Federal Reserve releases Beige Book


Thursday, March 5th

178th (Extraordinary) Meeting of the OPEC Conference

12:45pm Bank of Canada’s Poloz gives Economic Progress Report


Friday, March 6th

8th OPEC and non-OPEC Ministerial Meeting

8:30 am USD Feb Nonfarm Payrolls: 175Ke v 225K prior; Unemployment Rate: 3.5%e v 3.6% prior

8:30 am USD Feb Average Hourly Earnings M/M: 0.3%e v 0.2% prior

8:30 am CAD Feb Net Change in Employment: No est v 34.5K prior; Unemployment Rate: No est v 5.5% prior


This article 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 Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya