By Deepta Bolaky
The markets were surprised by the postponement of the US-China trade deal meeting this weekend. Amid a relatively muted calendar, the focus will, therefore, turn to key economic data and the deadlock in the US over the coronavirus relief package.
Investors are concerned over the standoff by US lawmakers over the stimulus package as any delay in agreeing over a plan will be at the detriment of the economic recovery. The FOMC minutes are therefore expected to provide more clues and actions to be taken if the recovery continues to slow down. Housing data, Manufacturing surveys, PMIs and Jobless Claims will also be eyed during the week.
Similarly in Australia, aside from the PMI figures and housing data, attention will be on the RBA minutes. The New Zealand dollar emerged as the worst-performing currency last week following the RBNZ meeting. The Antipodeans will be mostly left at the broader sentiment of the markets amid a muted economic calendar.
In the UK, Inflation and Retail Sales figures will be the highlights of the week. Over the past month, the British Pound has rallied lifted by the broad optimism in the markets, improving economic data following reopenings, and a weaker greenback.
Similarly, Retail Sales and Inflation data will be eyed in Canada as well. The loonie has a stellar performance lately, and traders will likely monitor key data to determine the progress of the recovery.
The rally in the stock market is not surprising given the amount of stimulus injected in the economy. Investors also found support on Russian’s coronavirus vaccine last week. However, the momentum is concerning as investors fret over a potential sell-off. Further delays by Congress in striking a stimulus package could weigh on risk sentiment.
In the pandemic-induced environment and escalating geopolitical tensions, gold rallied to new highs. However, the precious metal has its first weekly decline since June as traders booked-in profits. The positive vaccine updates and the broad optimism have sent gold tumbling on earlier this week. After a great run to the upside, some correction was inevitable. Bulls and bears are to monitor the support levels for fresh trading impetus.
By Deepta Bolaky
|Tuesday, 18 August 2020
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