Trump, BoE Decision and Coronavirus
This week the markets will be watching President Trump's impeachment trial, the BoE rate decision, corporate earnings from the big tech companies and of course the progression of the Coronavirus. Here's what you need to know, in under 5 minutes.
The Coronavirus is becoming more of an issue and a new report of the speed of it spreading is now becoming a serious problem. It has an alarmingly fast transmission rate, along with the fact that it can be passed on from one person to another with no symptoms along with remaining undetected for up to two weeks, has now made it one of the market’s major worries.
China has put whole cities in lockdown in an effort to contain its spread. This could result in a significant drop in activity which could cause a negative shift in China’s GDP and other major economic indices.
The impeachment trial resumes Monday, after President Trump's legal team argued that Democrats failed to make the case for his removal. The trial could end as early as later in the week if Democrats are unable to achieve enough votes to bring in additional witnesses and documents.
The ECB interest rate decision in the past week where no rate move was delivered as expected. Christine Lagarde did set a dovish tone in the Q&A session. The Eurozone inflation remains low and as long as this is the case, the ECB will continue to be very accommodative. The Bank of England interest rate decision will take place on Thursday. The market is already pricing roughly a 50-50 chance of a 25bp cut.
Oil just can’t seem to find any traction at all, as the Coronavirus brings danger and is a strong negative influence. Precious metals rallied tentatively as the market tries to digest the recent news. They should perform well during risk-off and uncertainty.
Cryptocurrencies has been rather strange, as theoretically they should have done well in the face of global uncertainty from the Coronavirus. Even though price retraced Bitcoin still maintained above $8000 and if panic sets in, we could see a more bullish signal.
Finally, the week ahead is expected to be volatile as any developments with the Coronavirus will instantly affect risk markets and as a result many of the major FX pairs. It’s a big week for the UK, with the official Brexit day on the 31st January.