Week Ahead – Virus Watch, China data to rebound while the world braces for pain, and why the dollar looks so vulnerable

Thanks to swift action worldwide by central banks, global equities avoided a disastrous place, a possible combination of a 1930’s like depression and the 2008 financial crisis.  In just a matter of weeks, massive monetary and fiscal stimulus was injected into the global economy, showing financial markets central banks and government leaders were not taking any chances with the shock that was about to hit consumption and production, also providing key relief to funding markets.

The unprecedented actions by the Fed has put a tentative top for the dollar, however the flight to safety could return if the duration and severity of the economical and financial disruptions worsen over the next couple weeks.

The focus next week will remain on the spread of the virus in Europe and the US.  Unfortunately, it seems that stringent mitigation measures have not helped the curve as much as many have hoped for in the US, Italy and Spain.

A good amount of attention will also fall on the US labor market.  Following the meteoric rise in last week’s jobless claims, traders will look to see if the number of unemployment filings continues to surge.  Friday’s non-farm payroll report will also be closely watched as the US economy is about to have its first negative reading since October 2010.

US Politics

Congress got the job done getting a $2 trillion stimulus package and now markets will try to figure out all the details.  The calls for the fourth phase of stimulus will start to pick up as the virus spread intensifies across the US, but the passing of the massive economic support package has bought Congress some time for now.

The next few months will be key for the Presidential election and if the virus starts to test the healthcare systems of several red states, expectations could shift for a Biden upset in November.


The UK is in lockdown, unfortunately the measures weren’t implemented in time to save the Prime Minister and his Health Secretary, both of whom have tested positive. If only there was something they could have done. The pound fell 1% on the news – for some reason – but has since rebounded to trade 2% higher on the day. I’m not sure that’s even particularly irregular in these bizarre times.

The number of cases and fatalities is rapidly rising in the UK now and the hospitals are already overwhelmed, with emergency facilities now being set up in various cities and former NHS staff coming out of retirement to assist with the crisis. This is likely to get much worse before it gets better but now that the country is in lockdown and taking it seriously, the peak may not be too far away.


This was looking like a turnaround week for Italy until Friday when the country recorded 919 more deaths, taking the total to 9,134. There were positive signs this week though but the fear is that the virus has taken hold in the south – with many of the cases until now in the north – which is poorer and potentially less able to deal with the spread. This could be a very worrying phase two for Italy which has already suffered considerably.


Spain is still some way behind Italy in terms of fatalities but the numbers are rising at an alarming rate. The country reported 769 deaths on Friday, taking the total to 4,858. Spain has the fourth highest number of cases and has threatened to become the European epicentre but recent efforts may bear fruit.


Once again, the eurozone is showing why it’s years away from being anything resembling the United States of Europe. In times of need, rather than being decisive, countries are squabbling over whether to collectively raise funds to support the regions economy with “coronabonds”, as other countries are doing, or use a bailout mechanism which typically imposes strict conditions on a country. This is not going to help any anti-euro feeling within these countries as the block shows that, once again, in times of desperation, it can’t be relied upon.


While the rest of the world grapples with the spread of the coronavirus, China is looking to see signs that their economy is bouncing back.  On Tuesday, China’s March official PMI reading could rebound strongly as many parts of the economy in March have resumed production.

The yuan will closely be watched following its worst week against a basket of its major trading partners since August.  The PBOC may remain active in defending the yuan in order to keep markets calm.

Hong Kong

The focus in Hong Kong will primarily remain on the coronavirus and the increased efforts on thwarting its spread.  While Mainland China is having much progress with the virus, Hong Kong just saw its biggest daily increase.  On Tuesday, Hong Kong’s February retail sales readings will show how bad of a hit tourism and domestic demand had due to the coronavirus. February and March data are expected to be terrible for Hong Kong and most of that is already priced in.


On Monday, the Monetary Authority of Singapore is widely expected to act aggressively and ease poliy further by both re-centering and reducing the slope of its currency band.


India could not wait to cut rates and boost liquidity.  In what is becoming a recurring theme for central banks, the RBI acted on Friday, a full week in advance of their regularly scheduled policy meeting.  The RBI is making sure markets know that they are being aggressive and that they still have tools they can use if the outlook deteriorates further.

India’s current lockdown measures will likely see the data get terrible in April, with hopes that a rebound will start in May.     


Australia is in wait-and-see mode.  They are preparing for several months of social distancing and anticipate further fiscal and monetary stimulus will be needed shortly.  Traders may not put much weight with the upcoming retail trade and housing prices data.  On Wednesday, some focus will fall on the minutes to the RBA’s emergency meeting.

New Zealand

The spotlight for New Zealand will primarily remain on the spread of coronavirus cases.  The country has raised their lockdown level to four and incremental updates on the escalation of cases will likely be met with calls for further action by the RBNZ.

On Tuesday, the ANZ Bank New Zealand will release the business confidence index that will show a sharp decline in confidence and with the outlook.


Now that the Olympics have finally been postponed, investors are going to anticipate that the upcoming economic data and surveys will be a very high baseline that are not yet reflecting the coronavirus impact and minimal boost the Olympic games were to provide the economy.

The release of the BOJ Q1 Tankan Survey and February industrial production data will probably not move the needle. 



This week has provided some welcome reprieve for oil prices, although even now they’re not trading too far off the lows. Even stabilization is welcome after an extraordinary period, with the impending global recession being compounded by the oil price war to smash prices to bits. The sell-off may have slowed but there’s still a lot of vulnerability to the downside and while $20 may have provided support so far for WTI, I wonder whether that will continue to be the case in the coming weeks.


Gold is holding onto its recent gains after rebounding strongly earlier this week as the Federal Reserve announced its unlimited, open-ended, quantitative easing program. That, combined with other measures, eased the upside pressure on the dollar and saw it pull back around 4%, aiding the rally in gold back to levels you would expect to see in times like this. It’s still seeing resistance around $1,640 but as long as we don’t see any more sharp shocks in equity markets, this will likely come under much more pressure.


Not a lot has changed as far as bitcoin is concerned over the last few days. It is continuing to trend higher but momentum has been dropping as it faces difficulty around $7,000. The improvement in general sentiment in the market appears to be supporting moves in cryptos but that may change. A break of $7,000 could be the catalyst for more sharp rallies but it could still see some resistance around $7,500.

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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 TradeTheNews.com, 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