Weekly Market Overview – Inflation Data In Focus


During the upcoming trading week, financial markets will digest a slew of high-impacting financial data, with global growth numbers headlining the economic docket. What other events will drive the market this week? Stay updated as HYCM’s analyst has shared his insights on this weekly market overview.

17 February 2020 | HYCM – The global risk tone has been alternating between risk-on and risk-off this week as the market is undecided about the potential impact of the coronavirus. Midweek there was an adjustment to the way Hubei cases were classified, which led to a large spike in reported cases from the Hubei region.

The main issue going forward will be any evidence of supply chains being impacted by China’s considerable efforts to contain the coronavirus. If we start to see evidence that these supply chains are being hampered, then expect global equity markets to drop again.

Key events from the past week

USD: Inflation data, Thursday, Feb 13. The expected core CPI reading was 2.3% y/y vs 2.2%. Nevertheless, recent low oil prices should nullify inflationary uptick.

The market is still expecting one Fed rate cut in 2020. However, the Fed’s dot plot is projecting no further rate cuts this year.

NZD: Rate Statement, Wednesday, Feb 12. The NZD should continue to find buyers after the RBNZ adjusted its future interest rate path.

The RBNZ now sees the interest rate at 1.00% in June 2020 and 1.10% in June 2021. This brings up the previous forecast of 0.9% through to March 2021.

EUR: Industrial Production, Wednesday, Feb 12. The EURUSD fell this week to the lowest level since May 12, 2017.

The reason is due to the reduction in eurozone factory activity with production levels at -2.1% vs -2.0% m/m expected. Expect Euro sellers on pullbacks as expectations rise for future ECB easing.

Feb 19 & 21 weekly market overview

Wednesday 19 February, Inflation data. Futures markets are pricing in a 60% chance of a Bank of Canada rate cut by April. If oil markets fall further next week, CAD will be pressured lower still. Inflation data on Wednesday will be key for the BoC. A weak reading here and expect USDCAD buyers.

Friday 21 February, Manufacturing and Services PMI’s. The slowdown in the Eurozone will get worse if the spread of the coronavirus impacts Eurozone manufacturing. Investors will be looking for signs of a further slow-down from Manufacturing and Services PMI data out this Friday.

Coronavirus: Watch out for the latest virus news. Keep alert to the latest news on the seriousness of the coronavirus spread.

Watch out for supply chain issues being felt as from next week. Finally, note that for the past two weeks, Friday has been a strong risk-off day (equity selling, JPY, and CHF strength) heading into the uncertainties of weekend news. Don’t get caught out!

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