On our weekly review: Gold price, Forex forecast, What affects USD/JPY.
The stock market impact of the global spread of coronavirus.
Last week was marked by a steep decline in risky assets and the strengthening of safe-haven assets amid growing concerns about the spread of coronavirus and its potential impact on global economic growth.
The number of confirmed cases of coronavirus infection exceeded 79 thousand, and the number of deaths exceeded 2600.
The outbreak of an epidemic was registered in Italy, where 4 people died over the weekend, as well as in Iran. Risks of the global spread of coronavirus caused sell-off on world stock exchanges and an overflow of capital into defensive assets, in particular, into gold.
The price of gold rose by more than $100 since the beginning of last week, reaching a 7-year maximum and approaching the psychological level 1700. The dollar index reached maximum since May 2017. The dollar has been boosted by increased demand for US bonds.
USD/JPY rose significantly and reached a 10-month maximum. The fundamental reason for this movement was weakening of the yen on the background of weak data on Japan. In the fourth quarter, the Japanese economy contracted 1.6%, indicating the growing risks of a recession.
In such circumstances, the Bank of Japan may decide to expand the quantitative easing program, which puts downward pressure on the yen.
Here are our weekly events for February 24-28
- On Tuesday, German GDP will be presented.
- On Wednesday, data on crude oil inventories will be published and ECB President Christine Lagarde will deliver a speech.
- On Thursday, US GDP and durable goods orders will be released.
- On Friday, data on unemployment in Germany and the GDP of Canada will be presented.
- The following companies will present earnings this week: Hewlett Packard, Peugeot, Bayer, Dell and Carrefour.