Stock Indices Gained Back Part of the Losses, and the USD Was Subject to Sale (Weekly Review)

Due to the spread of coronavirus and an increase in the number of infected and dead, especially in Italy and Spain, tension in the financial markets last week continued. The United States of America also could not isolate itself from the whole world and protect itself, and can become the next epicenter of a pandemic. Nevertheless, stock markets were able to win back a considerable part of the losses during the week, and the USD, considered to be a safe haven asset in crisis situations, underwent a massive sale.

The US Federal Reserve lowered interest rates and launched an asset purchase program, which eased fears of a deficit in the USD supply, helped restore stock indices and profit-taking on long USD positions. Under these conditions, many currencies, including the EUR, the GBP, the AUD, and the NZD, were able to recover on average half of the losses incurred earlier, but the risks of resuming their sales still remain.

Oil futures remain under the complete control of the bears, since Saudi Arabia and Russia are in no hurry to give quotes in the war, which poses a real threat of futures renewing lows. At the same time, bears should take into account high risks, because the parties can agree at any time, and then one can suggest a sharp rebound in prices, but a sharp decline in energy demand will remain a significant bearish factor. Indices are also in an increased risk zone, and a decline in the USD can be used for buying.

Schedule for this week:

Monday, March 30
12:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
12:55 GMT - USA. US President Donald Trump Speaking;
14:30 GMT - USA. Dallas Fed Mfg Business Index (Mar).

Tuesday, March 31
23:30 GMT - Japan. Unemployment Rate;
23:50 GMT - Japan. Retail Sales;
23:50 GMT - Japan. Industrial Production;
01:00 GMT - PRC. NBS Manufacturing Purchasing Managers Index (PMI) (Mar);
06:00 GMT – United Kingdom. GDP (QoQ) (Q4);
07:55 GMT - Germany. Unemployment Rate;
07:55 GMT - Germany. Unemployment Change;
09:00 GMT - Eurozone. Consumer Price Index (CPI);
09:00 GMT - Eurozone. Core Consumer Price Index (CPI);
12:30 GMT - Canada. GDP;
14:00 GMT - USA. Consumer Confidence.

Wednesday, April 1 
01:45 GMT - PRC. Caixin Manufacturing Purchasing Managers Index (PMI);
06:00 GMT - Germany. Retail Sales;
12:15 GMT - USA. ADP Nonfarm Employment Change;
14:00 GMT - USA. ISM Manufacturing Employment;
14:00 GMT - USA. ISM Manufacturing Purchasing Managers Index (PMI).

Thursday, April 2
12:30 GMT - USA. Initial Jobless Claims;
12:30 GMT - USA. Trade Balance;
14:00 GMT - USA. Factory Orders.

Friday, April 3
00:30 GMT - Australia. Retail Sales;
08:00 GMT - Eurozone. Markit Composite Manufacturing Purchasing Managers Index (PMI);
08:30 GMT – United Kingdom. Markit Services Purchasing Managers Index (PMI);
09:00 GMT - Eurozone. Retail Sales;
12:30 GMT - USA. Unemployment Rate;
12:30 GMT - USA. Nonfarm Payrolls;
12:30 GMT - USA. Average Hourly Earnings;
14:00 GMT - USA. ISM Services Purchasing Managers Index (PMI).

Author: Anthony Porter, IAFT Analyst