The Week of Panic in the Markets (Weekly Review)

The first week of March 2020 will be remembered by investors for a large-scale collapse in the stock market, and consequently the indices lost a significant part of their gains of the last and current year. Thanks to the panic in the markets, investors were actively buying out traditional safe-haven assets such as the JPY, CHF and, of course, Gold. Thus, these assets showed impressive results, despite the fact that the interest rate differential is still not in their favor.

It should be mentioned, however, that the panic in the financial markets prompted the US Federal Open Market Operations Committee to hold an extraordinary meeting, which resulted in a reduction in interest rates by as much as 50 basis points. It triggered yet another blow to the USD, which, due to lower Fed rates, began to lose its attractiveness as a highly profitable asset.

Thus, aling with the USD decline and profit taking on short positions, the EUR also showed rapid growth last week, breaking strong resistance around the 1.1200 paired with the USD. It strengthened the upward momentum, and the EUR/USD reached 1.1493. Despite the Fed’s lowering the interest rates, the differential between the EUR and the USD is still there, and if the Fed refrains from lowering it again at the March meeting, the EUR may again be controlled by bears.

Schedule for this week:

Tuesday, March 10
10:00 GMT - Eurozone. GDP.

Wednesday, March 11
22:00 GMT - Australia. Reserve Bank of Australia Assistant Governor Debelle Speaks;
23:30 GMT - Australia. Westpac Consumer Confidence;
09:30 GMT — United Kingdom. GDP;
09:30 GMT - United Kingdom. Manufacturing Production;
09:30 GMT - United Kingdom. Industrial Production;
12:30 GMT - USA. Consumer Price Index (CPI);
12:30 GMT - USA. Core Consumer Price Index (CPI).

Thursday, March 12
00:00 GMT - Australia. MI Inflation Expectations;
10:00 GMT - Eurozone. Industrial Production;
12:30 GMT - USA. Initial Jobless Claims;
12:45 GMT - Eurozone. ECB Interest Rate Decision;
13:30 GMT - Eurozone. ECB Press Conference and Monetary Policy Statement.

Friday, March 13
07:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
15:00 GMT - USA. Michigan Consumer Sentiment.

Author: Anthony Porter, IAFT Analyst