Week ahead – Market volatility here to stay

Coronavirus fears continue to drive investors

It’s been a truly chaotic couple of weeks in financial markets, with the number coronavirus cases and fatalities accelerating outside of China, prompting authorities around the world to up their game.

This week, it was the Fed that set the tempo, cutting interest rates by 0.5% outside of a scheduled meeting. The move got people’s attention but did little to quench the thirst of investors who demanded more. Several other rate cuts around the world combined with pledges from the IMF and World Bank was just enough to prevent a full blown meltdown but it’s only half time.

Authorities will have to do much more in the coming weeks. Already, another 0.5% rate cut is priced in from the Fed and much more is expected from governments around the world.

Key Economic Releases and Events

Saturday, Mar 7th

Local Start Date Country Relevance Indicator Name Period
7 Mar 2020 China (Mainland) High Trade Balance USD Feb

Sunday, Mar 8th

8 Mar 2020 Japan High GDP Rev QQ Annualised Q4
8 Mar 2020 Japan High GDP Revised QQ Q4

Monday, Mar 9th

9 Mar 2020 Switzerland Medium Unemployment Rate Adj Feb
9 Mar 2020 Czech Republic Medium Unemployment Rate Feb
9 Mar 2020 Mexico Medium Headline Inflation Feb

 Tuesday, Mar 10th

10 Mar 2020 China (Mainland) High CPI YY Feb
10 Mar 2020 China (Mainland) Medium CPI MM Feb
10 Mar 2020 Norway High Consumer Price Index YY Feb
10 Mar 2020 Norway Medium Core Inflation YY Feb
10 Mar 2020 Denmark High CPI YY Feb
10 Mar 2020 Denmark Low Inflation (HICP) YY Feb
10 Mar 2020 Czech Republic High CPI YY Feb
10 Mar 2020 Hungary Low Core CPI YY Feb
10 Mar 2020 Hungary Medium CPI YY Feb
10 Mar 2020 Euro Zone High GDP Revised QQ Q4
10 Mar 2020 Euro Zone High GDP Revised YY Q4
10 Mar 2020 United States Not Rated API weekly crude stocks 2 Mar, w/e
10 Mar 2020 South Korea Low Unemployment Rate Feb
10 Mar 2020 China (Mainland) Low FDI (YTD) Feb

 Wednesday, Mar 11th

11 Mar 2020 Sweden Low Reg Unemployment Rate Feb
11 Mar 2020 Turkey High Current Account Balance Jan
11 Mar 2020 United Kingdom High GDP Est 3M/3M Jan
11 Mar 2020 United Kingdom High GDP Estimate MM Jan
11 Mar 2020 United Kingdom High GDP Estimate YY Jan
11 Mar 2020 United Kingdom Medium Industrial Output YY Jan
11 Mar 2020 United Kingdom Medium Manufacturing Output YY Jan
11 Mar 2020 United States Medium Core CPI YY, NSA Feb
11 Mar 2020 United States Medium CPI YY, NSA Feb
11 Mar 2020 United States Not Rated EIA Weekly Crude Stocks 2 Mar, w/e

 Thursday, Mar 12th

12 Mar 2020 Singapore Low Unemployment Rate Final SA Q4
12 Mar 2020 Sweden High CPI YY Feb
12 Mar 2020 Sweden Not Rated CPIF Ex Energy YY Feb
12 Mar 2020 South Africa Medium Mining Production YY Jan
12 Mar 2020 Euro Zone Medium Industrial Production YY Jan
12 Mar 2020 South Africa Low Manuf Production YY Jan
12 Mar 2020 India Medium CPI Inflation YY Feb
12 Mar 2020 India High Industrial Output YY Jan
12 Mar 2020 United States High Initial Jobless Claims 2 Mar, w/e
12 Mar 2020 Euro Zone High ECB Refinancing Rate Mar
12 Mar 2020 Euro Zone High ECB Deposit Rate Mar
12 Mar 2020 New Zealand Medium Manufacturing PMI Feb

 Friday, Mar 13th  

13 Mar 2020 Germany High HICP Final YY Feb
13 Mar 2020 Turkey Low Industrial Prod Adj YY Jan
13 Mar 2020 Sweden Medium Unemployment Rate Feb
13 Mar 2020 Czech Republic Medium Retail Sales YY Jan
13 Mar 2020 Mexico Medium Industrial Output YY Jan
13 Mar 2020 United States High U Mich Sentiment Prelim Mar




UK trade talks with the EU are going exactly as you would expect in these early stages. There’s huge gaps between what both sides would like the future relationship to look like and frictions are growing by the day. It’s all-too familiar by now though and, understandably, hasn’t really been making the headlines it may otherwise have.

Next week we’ll get the budget from the new Chancellor, Rishi Sunak, which comes at a time when many are pondering the prospects of a coronavirus-driven recession for the UK. These budgets have become quite dull affairs in recent years but this one may be a little different for numerous reasons. The Bank of England has also been very quiet as other central banks have eased monetary policy to support the economy. Policy makers may just be waiting for the next meeting although maximum impact could arguably come alongside an expansionary budget.


We are under two weeks from the next FOMC meeting and that along with coronavirus incremental updates will remain the key focal point for many traders. All of Wall Street is trying to price in what will the Fed do on March 18th. Money markets are pricing in another 50-basis point cut and if that expectations remains in place, the freefall with Treasury yields could continue. The virus fallout trade has provided some eye-dropping moves and that volatility could persist. The overall risk aversion theme could remain in place until we start to see Treasury yields stabilize.

The bond market has delivered some historic moves and the Fed could very well see their debt join the negative yielding club. While it still seems unlikely the 10-year yield will fall to negative territory, the majority of the curve could in fact trade negative.

Investors could remain fixated with the bond and volatility trade until financial markets have a firm grasp of the economic impact of the coronavirus outbreak rippling across the world. The dollar could remain in the house of pain as the high carry trade has been wiped away with sudden shift with rate expectations. The dollar is slowly becoming a funding currency and could remain vulnerable until the Fed signals they are done cutting.

US Politics

On March 10th, the next major wave of Democratic primaries is up for grabs. Former-VP Joe Biden looks to keep the momentum going with strong wins in Michigan and Missouri. Bernie Sanders needs a strong outing following his Super Tuesday setback. Wall Street would prefer to see Biden win the Democratic nomination and if he wins most of Tuesday’s 352 delegates, insiders will say he has it in the bag.


Feb Balance of Trade released over the weekend. Expected to collapse from $47.0 bio to $$13.0 bio, but most of the bad news seems priced into China for now. New coronavirus cases are plummeting.

Better than expected BoT could cause an upward surprise. A resurgence of coronavirus cases, especially outside of Hubei, could cause a sudden currency and stock sell-off.

Hong Kong

Economy mired in a deep recession due to coronavirus slowdown. On the plus side, protests have subsided to almost nil. No significant data or events next week.

Negative headlines from China and/or the US will impact the stock market negatively. India Yes Bank, the 5th largest private bank in India was taken over by the government today. Depositors limited to INR 50,000 withdrawals. ($700). Been on the cards for a while but will negatively impact stocks in India and may see credit markets freezing there.

Ongoing protests over citizenship laws weigh on investor sentiment. Remarkably low incidence of coronavirus cases so far. No data of significance. Risk A sudden spurt of coronavirus cases overwhelms health system. Fall in INR and Nifty as investors flee.


Consumer confidence released Tues and Wed, but bad news priced in. High beta to China and with 30% of its exports, acutely exposed to serious slowdown there. Currency under sustained pressure after RBA cut this week. Rally in stockmarkets has halted the slide for now. Signs of panic buying of consumer staples. Risk A jump in risk aversion sentiment (probably due to coronavirus) could see AUD sell-off resume with force and also hit the stock market.

New Zealand

Very quiet on the data front next week, with high beta to China the main risk.


GDP released Monday, expected to collapse to -1.6-%. Grappling alongside South Korea with some of the highest numbers of coronavirus infections. Schools closed, Olympics could be postponed. A new stimulus package may be announced next week. Risk Worse than expected GDP fall from coronavirus slowdown sees Nikkei fall aggressively. Yen strongly appreciated over the last week on repatriation/haven flows. That could accelerate if the virus situation does not improve domestically, or most importantly, it accelerates internationally.



The dollar has been smashed over the last couple of weeks as the coronavirus spread dramatically increased the probability of rate cuts and the central bank obliged earlier this week with an emergency 50 basis points outside of the normal meeting. A similar cut is now likely in a couple of weeks and quantitative easing is likely to be back on the table.


Oil has been slammed again at the end of an already dreadful week after OPEC and its allies failed to come to an agreement on both an extension and an increase. The current cuts expire at the end of March, after which there will be no more restrictions. I doubt this is the end of the discussion, with Saudi Arabia in particular keen to prevent prices falling too far.


Gold was just starting to act rationally again, rallying as risk aversion grew and global central banks pumped stimulus into the system. The dollar dropping to a 12-month low also aided the effort. And then Friday afternoon arrived and gold started falling again even as the other conditions showed no improved.

It was suggested that last week’s dislocation in gold may have come as a result of loss covering or margin calls. Whatever the reason, the dislocation is clearly not a thing of the past in these volatile markets and we can probably expect more of this kind of behaviour.


Bitcoin has been fairly stable by its standards at a time when the rest of the market is losing its head. It’s traded between $8,000 and $9,000 for more than a week and while it’s trading at the top end of this range now, the lower may not be out of the woods just yet. It’s certainly represents the greater risk after the market appeared to top of in the near term just above $10,000. As ever though, this is a highly unpredictable market.

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.

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
Craig Erlam

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