While the People's Republic of China is returning to the daily routine, concerns about the economic impact of the epidemic outside China remain on the front page, so investors will closely follow all reports and comments from the U.S. and European central banks, as all of the above could affect the global world economy. Traders continue to follow the dollar as it continues to update its historical records in several consecutive sessions.
The following important data is expected this week:
- G20 is calling for a joint action due to the coronavirus spreading.
Representatives of the 20 largest economies in the world called for joint solutions on Saturday because of the rapid spread of the epidemic, which could reduce China's GDP growth to 5.6%, and reduce global GDP by 0.1%, according to the IMF. At the end of last week, China published a report showing a decline in the number of new infections, but representatives of the WHO said it is too early to conclude the peak of the outbreak, as cases of coronavirus outbreaks, continue to grow in other countries. On Saturday, China is expected to publish a PMI on its business activity index, which may show the primary impact of the infection on its economy.
- Is the dollar index able to break through and consolidate above 100?
Last week, the dollar showed a real bullish rally, which caused it to reach a 4-year high against the euro, a 10-month high against the yen, and an 11-year peak against the Australian dollar. This strength of the American dollar is caused by the fact that investors all over the world consider the American currency as an asset shelter because of weak data on the Eurozone, the JPY and risks caused by the coronavirus spreading and its impact on the global world economy. In other words, it is quite logical to conclude that selling the Japanese currency means departing from the pattern of the last decade when the currency was rising in price due to geopolitical risks earlier.
- Speeches of the Federal Reserve
Vice-Chairman of the United States Federal Reserve Richard Clarida will start his speech at the conference on economic policy in Washington on 25.02, where the chief economist of the International Monetary Fund Gita Gopinath and head of the Federal Reserve System from Cleveland Loretta Mester will make an announcement as well. Minneapolis Reserve System Speaker Neel Kashkari and Dallas Fed Chairman Robert Kaplan will also speak this week.
On Tuesday, a report on consumer confidence in the States is expected to be published, with traders watching closely for the impact of coronavirus on consumer sentiment.
- EU reports
On Monday, the report on the business confidence index in Germany is expected to be published, which will be the main one for determining the rate of the European currency this week. On Wednesday, President of the European Central Bank Christine Lagarde will make a speech in Germany. On Friday, the key data will be inflation data in Germany and France.
- Earnings reports
The estimate of the financial company Refinitiv indicates a 3.1% increase in S&P500 profits for the 4th quarter, which does not meet expectations of its annual decline. In January this year, analysts predicted its decline by 0.3%. This figure does not take into account the damage from the outbreak of coronavirus, and profit growth is supported by strong data from Microsoft and Apple. This week it is expected to publish data of many consumer-oriented companies.
