Risk appetite took a beating during the first month of 2020, mostly driven by concerns about the epidemic in China with the economic toll still unclear.
Investors continued to worry about the economic hit from a deadly virus outbreak in China. On the other hand, they were relieved that Britain officially left the EU on Friday, ending years of financial and political uncertainty over the exit. British Prime Minister Boris Johnson is now set to negotiate a trade deal with the EU.
Meanwhile, data showed that manufacturing activity in the euro zone improved slightly better than expected in January.
The Federal Reserve held its monetary policy meeting on Wednesday last week. As widely expected, the central bank left the short-term interest rates unchanged. The decision was surprisingly unanimous.
With the economic toll of the coronavirus outbreak still unclear worries over the spreading coronavirus epidemic sparked a rush to safety.
The EUR/USD managed to record a winning week, its first in five weeks. The pair posted considerable gains at the end of the week, coming close to the 1.11 level.
GBP/USD climbed close to 1 percent last week, its best weekly performance since early December. Pound had ended January on a high, with the best weekly gain in a month after the BoE and kept interest rates steady at 0.75%.
The AUD/USD lost ground for a fifth successive week, declining by 2.0%.
The Dollar/yen recorded considerable losses last week, as the yen climbed to a 3-week high.
Gold, which posted its best month in five in January, slipped 1% to $1,574.5 an ounce. By comparison, gold rose 1.8%, while the Japanese yen notched a 1.6% gain, and the dollar edged lower.
START TRADINGLQDFXperts – The week ahead – Epidemic in China and Brexit still hot
The week ahead will be marked by some strong economic reports coming out from across the globe. Traders will keep an eye on the start of a U.S. state-by-state process to pick presidential nominees. ISM manufacturing PMI as well as non-Manufacturing PMI reports are due over the week.
- Monday (03.01) brings final PMI readings (Spain, Italy, France, Germany, Euro-zone, UK) are expected to confirm in the initial releases from late January.
- On Tuesday (04.01) the RBA will be holding its monetary policy meeting. RBA is expected to maintain the benchmark rate at 0.75%. Investors will be keeping a close eye on the rate statement, as the tone of the statement could have a significant impact on the movement of AUD/USD.
- On Wednesday (05.01) investors will focus on Services PMIs (Spain, Italy, France, Germany, Euro-zone, UK).
- On Thursday (06.01) all eyes are on Australia’s Trade Balance. Australia continually posts monthly trade surpluses. The estimate for December stands at A$5.60 billion.
- On Friday (07.01) the Labor department will be releasing the latest U.S. jobs numbers, regarded as a key economic indicator.
Follow this week’s economic calendar.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, CNBC, FX street