The Vaccine Era

The S&P 500, Dow Jones and NASDAQ indices all slumped on Friday, to complete the worst weekly selloff in three months. The sharp tumbles were triggered by speculative excess along with ongoing pandemic concerns and the continued inability of US and global health systems to effi-ciently distribute vaccines. Expect these conditions to remain firmly in play as the trading week be-gins on Monday.

Worries that hedge funds would reduce market liquidity after taking a beating from retail traders and investors using social media platforms such as Reddit to drive a series of short-squeezes against fund short-targets such as GameStop (NYSE:GME) and AMC (NYSE:AMC) among others has been gaining traction. GME jumped 400% last week, while AMC gained 278% for the week.

Here are the key market moving factors for the week:

The US

• The dollar was slightly down on Monday morning in Asia, with investor wariness remaining as the Wall Street battle between hedge funds and retail investors continues to rage on.
• The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.01% to 90.523 by 10:59 PM ET (3:59 AM GMT). The index was little changed at the beginning of trade in Asia on Monday but has recently been largely range-bound, after climbing from a nearly three-year low of 89.206 at the start of 2021.

EUROPE
• In a welcome news kicking-off a new month, Ursula Von der Leyen, President of the European Commission tweeted out on Sunday, AstraZeneca will start deliveries of its COVID-19 vaccines one week earlier than expected.
• The EU Chief added that the Anglo-Swedish pharma company will deliver nine million more dos-es of its vaccine to the Union in the first quarter of this year, making a total of 40 million for the period.

The UK
• The U.K. government has announced that it is applying to join the Comprehensive and Progres-sive Trans-Pacific Partnership (CPTPP), one of the world’s largest free-trade areas made up of 11 developed and emerging economies in the Pacific, under its post-Brexit plans.
• Joining the CPTPP reflects the U.K.’s post-Brexit Pacific tilt and is dubbed as a critical part of the Prime Minister Boris Johnson led government’s wider trade strategy, which aims to deepen links with faster-growing parts of the world and partnering with countries who believe in free and fair trade, including India.

JAPAN
• The Japanese government is expected to hold a meeting of its experts this week to announce an extension to the coronavirus induced state of emergency for Tokyo and other prefectures, public broadcaster NHK said on Monday.
• The government may also consider lifting the state of emergency in some less-populated areas such as Tochigi Prefecture, which has seen a decline in cases, the local media outlet reported.
• Japan’ Sankei newspaper recently reported that the government is set to extend the virus emer-gencies to March 7. The decision on the extension will be taken Tuesday.
• Meanwhile, Japanese Finance Minister Taro Aso and US Treasury Secretary Janet Yellen are scheduled to hold phone talks for the first time later on Monday, Kyodo news agency reported.

AUSTRALIA
• Australia RBA Commodity Index SDR (YoY) climbed from previous 11.7% to 19.7% in January.
• The Reserve Bank of Australia will also hand down its policy decision on Tuesday.

CHINA
• The volume-weighted average rate of China’s benchmark overnight repo has declined to 2.55% from the five-year high of 3.13% on Friday.
• The short-term money rates spiked after the People’s Bank of China unexpectedly sucked out a net 78 billion yuan (US$12 billion) via open-market operations early last week.
• The central bank responded by launching a CNY 5 billion facility on Friday, allowing banks to pledge perpetual bonds to obtain three-month liquidity, according to regulationasia.com.
• The yuan is currently trading at 6.46 per US dollar. The Chinese curency gained ground on Thursday and Friday, possibly tracking the uptick in the money market rates.
• The manufacturing PMI was 51.3, against the 51.6 in forecasts prepared by Investing.com and December’s 51.9. The non-manufacturing PMI came in at 52.4, against December’s 55.7.

Market Overview:

Gold
• Friday’s price action in gold was amidst shrinking open interest and volume, hinting at the likeli-ness that further gains could lose momentum in the very near-term.
• That said, the 100-day SMA around $1,880 per ounce emerges as the next interim resistance for the time being.

Oil
• Oil prices edged higher on Monday after a weak start, holding on to the past three months of gains, although patchy coronavirus vaccine rollouts, new infections and the discovery of new var-iants are keeping a lid on prices.
• Brent crude futures were up 10 cents at $55.14 a barrel by 0233 GMT, while U.S. West Texas Intermediate (WTI) gained 1 cents to $52.21. Both benchmarks gained nearly 8% in January.
• Oil prices have been boosted by vaccination programmes getting underway in hard-hit countries and output cuts by major producers like Saudi Arabia. But euphoria over a possible end to the pandemic has been undermined by the slow pace of vaccinations and the rise of new variants of the coronavirus.

Below are the major market moving events for the week:

All times listed are EST

Monday
3:55: Germany – Manufacturing PMI: seen to slip to 57.0 from 58.3.
4:30: UK – Manufacturing PMI: likely remained steady at 52.9
10:00: US – ISM Manufacturing PMI: predicted to edge lower to 60.0 from 60.5.
22:30: Australia – RBA Interest Rate Decision: forecast to remain at 0.10%.

Tuesday
16:45: New Zealand – Employment Change: anticipated to remain flat at -0.80% QoQ.
20:45: China – Caixin Services PMI: probably slumped to 51.1 from 56.3.

Wednesday
3:00: Eurozone – ECB Monetary Policy Statement
4:30: UK – Services PMI: likely to remain at 38.8.
5:00: Eurozone – CPI: to advance to 0.5% from -0.3% YoY.
8:15: US – ADP Nonfarm Employment: seen to surge to 45K from -123K.
10:00: US – ISM Non-Manufacturing PMI: to slip to 56.8 from 57.7.
10:30: US – Crude Oil Inventories: predicted to soar to 0.430M from -0.910M.

Thursday
4:30: UK – Construction PMI: to slump to 52.9 from 54.6.
7:00: UK – BoE Interest Rate Decision: anticipated to stay at 0.1%.
8:30: US – Initial Jobless Claims: expected to improve to 4,750K from 4,771K.
19:30: Australia – Retail Sales: printed at -4.2% in November.

Friday
8:30: US – Nonfarm Payrolls: forecast to soar to 50K from -140K.
8:30: US – Unemployment Rate: seen to remain flat at 6.7%.
8:30: Canada – Employment Change: to rise to -55.0K from -62.6K.
10:00: Canada – Ivey PMI: previously came in at 46.7.

Based on the above factors and the events lined up for the week, the analyst at RvR Ventures suggests you to Trade responsibly; invest only as much as you can lose. All the profits and losses due to the above data are your own personal responsibility. Kindly practice money management & risk mitigation while trading.

Chat with us to know more: https://wa.me/971581958582

Register to open your account: http://bit.ly/OpenFxAccount

Join Our Telegram Channel: https://t.me/ForexFundManagers

Subscribe to Our YouTube Channel: https://youtu.be/AnTlQd-FQxc