China’s Coronavirus Outbreak Could Weaken Demand for the Australian Dollar
The Australian Dollar (AUD) is likely to continue to be moved by geopolitical developments and general risk appetite this week. Wednesday’s Australian inflation data, whilst is expected to have improved in the 2019’s final quarter, may not be enough to boost the risk-sensitive ‘Aussie’.
China’s recent outbreak of the coronavirus will also continue to dominate headlines. If the virus appears to be spreading the ‘Aussie’ could come under further pressure.
Pound Could Slide if the Bank of England Slashes Rates
This week will see the Bank of England (BoE) announce its latest interest rate decision. The odds of the central bank slashing rates recently rose as high as 70% and the Pound could be pressured lower if the central bank does take action.
Brexit developments will also remain firmly in focus this week, with the UK officially expected to leave the European Union on Friday.
Could the Euro Rise on an Uptick in German Inflation?
We could see the Euro edge higher against the Australian Dollar this week if Germany’s economic outlook improves. Today will see the release of the German IFO business sentiment gauge for January, which is forecast to rise from 96.3 to 97, while Wednesday’s GfK Consumer Confidence Survey is also expected to see an improvement in February.
Thursday’s flash German inflation report for January, however, could provide a boost to the EUR exchange rates, with the figure expected to rise from 1.5% to 1.7%. Friday will also see the release of the Eurozone’s preliminary GDP figure for 2019’s final quarter, which is expected to come in at 1.1%.
US Federal Reserve Interest Rate Decision in Focus
US economic data will be in focus this week, with any signs of an uptick in December’s US durable goods report on Tuesday potentially bolstering USD exchange rates. This will be followed by the flash GDP figure for the fourth quarter on Thursday, which is forecast to rise from 1.7% to 1.9%. However, the main focus will be on the US Federal Reserve this week.
Wednesday’s Fed interest rate decision will set the tone for US markets throughout the rest of the week. Any dovish commentary about the US economy, which is being threatened by doubts over the US-China ‘phase one’ trade deal, would drag on the USD exchange rates.
Canadian Dollar (CAD) Could Sink on Economic Uncertainty
Due to a quiet Canadian economic calendar this week, the risk-sensitive ‘Loonie’ will remain sensitive to oil prices and geopolitical developments around US and China’s trade relations. Friday will see the release of November’s GDP report, which is forecast to rise from -0.1% to 0.1%. Such a result could lend CAD modest support.
New Zealand’s Trade Data in Focus
The New Zealand Dollar will also remain sensitive to geopolitical developments and China’s coronavirus outbreak this week.
In terms of New Zealand economic data, December’s trade balance figure, due for release on Wednesday, will provide some insight into how the NZ economy fared at the end of last year.
Data Releases
January 27th 18:30 EUR IFO Business Climate (JAN) 97