Forex Signals US Session Brief, Feb 17 – Quiet Markets to Start the Week
Skerdian Meta • 4 min read
Financial markets have been pretty quiet today. Although, we anticipated them to be so, because the initial panic of the first two-three weeks from coronavirus wore off last week, despite the number of infected people keeps going up. The total number of infected people has gone above 70k, while deaths above 1,7k. But, it seems like markets have gotten used to the virus now and are not to shocked. As a result, traders are standing on the sidelines today and the lack of economic data has made things pretty boring in forex.
Chinese stock markets turned pretty bullish earlier in the Asian session though, as China kept up the stimulus measures to help the economy a this difficult time. Although, Chinese officials seem more optimistic today, as the pace of the spread has slowed in recent days. China’s NHC (national health service) said earlier this morning that new coronavirus is preventable and treatable. Sure, there have been quite a few people who have recovered, but it still is a tough virus, otherwise China would have dealt with it. So in other words, they are trying to change the public mindset to get the economy back up and running once again. On the other hand, Xinhua reported that Beijing will build a new mask factory within six days to meet the soaring demand for masks. This tells the opposite story of what the Chinese officials are trying to tell us.
The European Session
- Bundesbank Economic Forecasts – The Bundesbank released its forecasts for the German economy earlier today. The headline comments seems optimistic, but the other comments further below show that they are worried about the coronavirus and the impact it might have on the German economy. Below is the report:
- Bundesbank says that it sees no fundamental change in the German economy for Q1
- Exporters likely to suffer from coronavirus outbreak in China
- The virus impact threatens to disrupt global supply chains
- It poses a ‘cyclical downside risk’ for Germany
- A temporary decline in overall Chinese demand could dampen German export activity
- China’s Official Measures on Coronavirus – The coronavirus keeps progressing in China particularly and in other countries as well. Regarding the economy, it’s still too early to tell since the data for January hasn’t started to come out yet for many sectors of the global economy, but chances are that the Chinese economy in particular will suffer in the coming months. Although, Chinese officials seem more optimistic today, as the pace of the spread has slowed in recent days. China’s NHC (national health service) said earlier this morning that new coronavirus is preventable and treatable. Sure, there have been quite a few people who have recovered, but it still is a tough virus, otherwise China would have dealt with it. So in other words, they are trying to change the public mindset to get the economy back up and running once again.
- Coronavirus Update –
China 70,553 +2,053 1,771 +106 11,270 11,272 Cruise Ship 454 +99 17 19 Singapore 77 +2 24 4 Japan 66 +7 1 18 19 Hong Kong 60 +3 1 2 7 Thailand 35 +1 15 2 S. Korea 30 +1 10 Taiwan 22 +2 1 2 Malaysia 22 9 Germany 16 3 Vietnam 16 7 USA 15 3 Australia 15 10 France 12 1 4 Macao 10 5 U.A.E. 9 3 1 U.K. 9 8 Canada 8 1 Philippines 3 1 2 India 3 3 Italy 3 2 Russia 2 2 Spain 2 2
The US Session
- Canadian International Securities Transactions – The securities flows data from Canada
- Foreigners sold a net C$9.57B of Canadian securities
- Canadians bought net C$13.8B of foreign securities
- Prior was -$1.75B
- Net outflow was $23.4B, the largest since Dec 2015
- Reuters Expects Inflation to Remain Muted in Europe – According to a recent Reuters poll, the ECB’s decision to maintain interest rates in the negative territory will not harm the Eurozone economy but will also not succeed in raising inflation to near its target. Interest rates by the central bank have remained negative since 2014 in a bid to bolster the weak inflation rates and anemic economic growth, a move that has received much flak in recent years from officials, analysts and banks.However, over 67% of the economists polled stated that the negative rates are not damaging economic growth in the Eurozone region so far. The ECB is widely expected to hold rates steady this year even as the new President Christine Lagarde undertakes several reviews of existing policies of the central bank in the near future.
Trades in Sight
- The main trend is still bearish since early January
- Coronavirus is keeping the sentiment dovish for this pair
- The retrace down is complete on H4 chart
The 20 SMA should turn into resistance again now
EUR/GBP has been bearish since August last year, but after going through a consolidation period in December, it resumed the bearish trend again towards the middle of January, as the sentiment turned negative due to Coronavirus. The Euro follows the sentiment as a risk currency, while the GBP is mostly concentrated on Brexit and the economic impact, which has been positive after the UK elections.
So, the trend has been bearish as the sentiment has been negative. The sentiment improved in the first week of this month and we saw a retrace higher on the H4 chart, but it ended pretty quick and EUR/GBP resumed it’s bearish trend, making some new lows last week. Today we are seeing another retrace higher, but buyers seems exhausted now, since they haven’t been able to make new highs for several hours. It seems like we will see the same scenario unfold, as we did on Friday last week. Some, we decided to take this chance and open a sell forex signal in this pair, now waiting for the bearish trend to resume.
Markets continue to remain really quiet today and I expect them to die out, as we head towards the end of the day. US markets are already closed due to President’s Day, while the economic data has been minimal. On the other hand, traders seem uncertain about the coronavirus right now, whether it will be brought under control or if it will turn into a global pandemic, God forbid, so everything is on standstill.