A volatile start to 2020 – MacroWatch

Intermediate
  • A truncated trading week to end 2019 and start 2020 last week, with global markets observing holidays during the turn of year.
  • 2019 ended and 2020 initially started by echoing the “risk on” tone from the whole of last year with global stock averages extending the December, Santa rally through the end of year, albeit with a small dip at year end and then a surge on Thursday to start 2020.
  • US equity averages hit record highs on Thursday 2nd January with other global stock indices also strong, after positive soundings that the US-Sino trade deal will be signed on 15th January.
  • However, the start of year bullish sentiment was quickly dented by the increase in geopolitical risks from the US airstrikes on Iran.
US airstrikes on Iran
  • Global averages plunged lower to end last week on Thursday-Friday, whilst the safe haven Japanese Yen rallied (USDJPY lower) and with “risk currencies”, the Australian and New Zealand Dollars selling off (AUDUSD and NZDUSD lower). Oil spiked higher!
  • This leaves markets in a “risk off” theme going into the first full trading week of the year.
  • Furthermore, there has been a renewal of tensions over the holiday period between the US and North Korea.
  • Elsewhere, the U.S. impeachment process is in a “wait and see mode”, as the House of Representatives voted for two articles of impeachment at the end of 2019, though the articles of impeachment have yet to be transmitted to the Senate, so as yet no dates or agenda have been agreed for the Senate impeachment trial.
Senate impeachment
  • The impact on financial markets of the impeachment process remains negligible, as the Republican controlled Senate is unlikely to vote with the two-thirds majority required to impeach the President.

Key this week

  • The geopolitical focus will be on both sides of the Iran-US conflict, with any developments likely to have significant impact on financial market assets.
  • Also, markets will be watching North Korea and separately any developments for the impeachment trial agenda.
  • And regarding data, the key foci will be on Monday’s Global Markit Services and Composite Purchasing Managers Index (PMI), Tuesday’s US ISM Non-Manufacturing PMI and Friday’s US Employment report for December.
Date Key Macroeconomic Events
06/01/20 Global Markit Services and Composite Purchasing Managers Index (PMI)
07/01/20 Euro Zone Retail Sales and Consumer Price Index (CPI); US ISM Non-Manufacturing PMI
08/01/20 US ADP Employment Change  
08/01/20 China CPI
10/01/20 US and Canada Employment reports

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

Comment on this video

Your email address will not be published. Required fields are marked *


Latest Related News

US Dollar stays firm, aiming higher

Pound respects major resistance (GBPUSD)Euro breaks down (EURUSD)Positives appear in Dollar-Yen, as it de-correlates from equities (USDJPY) Continued

USDJPY aiming back lower (USDJPY forecast)

Global financial markets have shifted back to more of a “risk off” phase since the start of Q2 into April, with stock averages lower (see our recent reports on the DAX and S&P500 ).In turn, this “risk off” phase has seen broader US Dollar strength resuming, except against the Yen, with the safe haven Japanese currency probing lower against the US Dollar.Despite a small USDJPY… Continued

Q1 – CHART PACK: A Shock Start!

In this special report, we review some of the major moves across global assets (excluding G-10 FX – Stay tuned for an exclusive FX Chart Pack for Q2) that have shocked the entire mkt in Q1 2020. We will go through interesting Global Equity Benchmarks, Emerging Markets, Commodities and Bonds. COVID-19 – The Catalyst It was all tranquil before the Coronavirus outbreak spread across China… Continued

Dollar reverses, breaks key support (DXY)

Euro breaks up (EURUSD)Pound hits major resistance (GBPUSD)Dollar-Yen refuses to rise with equities (USDJPY) Continued

US Dollar surges in flight to quality; GBPUSD hits multi-decade low

The COVID-19 coronavirus continues to spread, with a global surge in cases and the inevitable fatalities.The still more aggressive spread of the virus in the UK, across European nations and also throughout the USA has seen multiple countries go into some form of lockdown, with restrictions on public movement and work from home rules enforced. Panic buying has broadened globally, reflecting fears amongst the general… Continued

Forex Brokers in your location