2020-02-03 • Updated
Last month was mostly driven by market sentiment. The beginning of January was highlighted by the geopolitical crisis between the US and Iran. After the markets calmed down, the coronavirus that appeared at the end of 2019 spread causing depreciation of the risky assets and appreciation of the refuge assets. Will this month be driven by economic releases or external factors?
February 4, 5:30 MT time - Cash Rate, RBA Rate Statement
February 6, 2:30 MT time - Retail Sales m/m, Trade Balance
February 7, 2:30 MT time - RBA Monetary Policy Statement
February 18, 2:30 MT time - Monetary Policy Meeting Minutes
February 20, 2:30 MT time - Employment Change, Unemployment Rate
The AUD/USD pair has been suffering since the beginning of the year. Negative market sentiment was the most important driver of the pair. Currently, the coronavirus is the factor that will keep affecting the AUD. However, traders should keep looking at economic data.
Although the RBA is not expected to change the interest rate, markets anticipate the bank to be cautious. It may pull the currency down. Following economic releases may change the situation if the actual data outperform forecasts.
On the weekly chart, the pair has been trading at the lows of September 2019 of 0.6680. In the case of the breakthrough, the pair will target the next level at 0.6340. However, it’s far, so we expect the formation of additional lows. The RSI indicator and Stochastic oscillator are in the oversold area. As soon as the indicators signal the upward movement, the pair will move towards the range of 0.6877-0.6913, 0.70.
February 4, 23:45 MT time - Employment Change q/q, Unemployment Rate
February 12 3:00 MT time - Official Cash Rate, RBNZ Monetary Policy Statement
February 12 4:00 MT time - RBNZ Press Conference
February 24 23:45 MT time - Retail Sales q/q
The US-Iran tensions and coronavirus had a negative impact on the NZD, too. The New Zealand dollar has been depreciating against the USD since the beginning of the year. The decline may continue if the effect of the virus extends. A pullback may happen if only the economic data signal economic improvement.
The RBNZ is expected to keep the rate on hold through 2020. Nevertheless, the mood of the bank will be important for the direction of the NZD. Economic figures will either prove or disprove the bank won’t change the rate. Encouraging figures will help the Kiwi to rise.
On the weekly chart of NZD/USD, we see the pair has been moving to the support at 0.6428. The next supports are at 0.6325 and 0.6250. The Stochastic Oscillator is already in the oversold area, while the RSI has been moving to it. If the indicators give signals of the reversal, the pair will get a chance to move up. The first psychological resistance range of 0.6716-0.6761 is far. The pair will form resistances before it.
February 19 11:30 MT time - CPI y/y
February 21, 11:30 MT time - Flash Manufacturing PMI, Flash Services PMI
Last month, the GBP was supported by the Brexit deadline. Let us remind you the UK left the European Union on January 31. Although it’s not the end and the transition period will last until December 31, 2020, bringing more uncertainties, the GBP felt well.
In February, Brexit headlines are expected to be one of the key drivers of the currency as the risks of the longer transition period are high. Traders should take into consideration comments from both sides: Britain and Europe. If the investors see any clues on the raised uncertainties between parties, market sentiment will pull the British currency down.
Indicators of the economic environment will have a strong impact on the domestic currency. In its last meeting, the BOE warned of slow growth after Brexit. If the economic figures are bad, the GBP will slide.
On the weekly chart of GBP/USD, the pair has been trading in the consolidation zone of 1.2980-1.32. If the GBP weakens after the Brexit euphoria, we will see the fall to 1.2771, 1.2558. If the pound is boosted, the pair will break above the upper boundary of the zone, rising towards 1.3327, 1.3475, 1.3587.
February 7, 15:30 MT time - Average Hourly Earnings m/m, Non-Farm Employment Change, Unemployment Rate
February 13, 15:30 MT time - CPI m/m, Core CPI m/m
February 14, 15:30 MT time - Core Retail Sales m/m, Retail Sales m/m
February 19, 21:00 MT time - FOMC Meeting Minutes
The beginning of the year was positive for the US dollar. The currency managed to pull back from the lows of July 2019. Although the US dollar lost its status of the safe-haven asset, the risk-off sentiment encouraged the strengthening of the USD. Economic releases will affect the strength of the American currency as traders are waiting for any signals on the future monetary policy of the Fed. The Federal Reserve is forecast to keep the rate unchanged. Nonetheless, the decision may change if the economic data are too weak.
On the weekly chart of EUR/USD, the pair has been suffering since January due to the strength of the USD and the risk-off sentiment. EUR/USD rebounded from the support at 1.10. However, the rise was limited. If the pair breaks below 1.10, the next strong supports are at 1.0929 and 1.0871. Nevertheless, the price and Awesome Oscillator has formed a hidden bullish divergence. The pair may rise towards, 1.1172, 1.1331-1.1379.
February 7, 15:30 MT time - Employment Change, Unemployment Rate
February 19, 15:30 MT time - CPI m/m
February 28, 15:30 MT time - GDP m/m
The Canadian dollar that strongly depends on the oil market suffered due to negative market sentiment. The USD/CAD pair has surged since the beginning of the year. The market data may help the CAD to recover, but the strength of the USD will be more important.
Currently, USD/CAD has been moving up to the psychological level of 1.3320. If the rebound doesn’t happen, the pair will increase to 1.3430, 1.3519, and 1.3635. In the case of the fall, previous resistances will become supports. Additional levels are at 1.3080, 1.2978, and 1.2877.
To conclude, the coronavirus will keep affecting markets during the month. If risks of the virus spread don’t decrease, risky assets will suffer more, while safe-haven one will be boosted. Economic releases will be important for currencies too. The effect won’t be long-term. Nevertheless, they may change the direction of the pairs at least for a while.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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