Outspoken speculations regarding the topic of coronavirus seem to continue to be featured in news reports. Moreover, everything that happens around this is clearly under the control of the interested parties. Moreover, all the noise, as a rule, begins with the American mainstream media. All this recalls the continuation of the active phase of the trade war between Washington and Beijing.
Everything that revolves around this topic stubbornly suggests that the United States will try to squeeze as much profit as possible out of this tragedy, which is actually pretty much inflated, as the death toll from ordinary flu is about the same as that of coronavirus. And the interest of the United States is to “squeeze” Beijing and make it buy more goods produced in the States. Earlier, D. Trump has repeatedly stated that it is necessary to correct the deficit trade balance between countries to a surplus. However, America cannot do this by economic measures; therefore, all sorts of, sometimes “dirty” methods are used to solve this problem.
Today, Asian markets show positive dynamics in the stock markets, which is due to the expectation of Beijing’s commitment to reduce tariffs on US imports in the amount of $ 75 billion. It is likely that these sentiments will be transmitted to the sales in Europe and the United States. At least, the dynamics of futures for major stock indexes is positive before the opening of trading in Europe.
Today, the focus of the market will be the publication of important data: German GDP, the eurozone, as well as the value of retail sales and their volumes in the States. German GDP is expected to add 0.2% in annual terms against 0.1%, but its quarterly value will remain at the same level of growth of 0.1%. As for the forecast of the Eurozone GDP, no surprises are expected here – annualized growth of 1.0% and quarterly growth of 0.1%.
On the other hand, weak eurozone GDP will push the ECB to pursue a “soft” monetary policy, which means that the euro will face a promising decline, at least in the short term, against the US dollar.
It can be assumed that the dollar can also get support today if the values of retail sales and their volumes in America show growth above forecasts. It is expected that the basic retail sales index in January will decrease in growth to 0.3% from 0.7% in December, while retail sales will maintain a growth rate of 0.3%.
Investors, in turn, will also focus their attention to the data from the University of Michigan’s consumer sentiment and expectations index.. A slight decrease is expected here. Nevertheless, the reaction of the market may be positive for the dollar if the values of these indicators are higher.
Forecast of the day:
EUR/USD is trading below the level of 1.0840. We believe that weak GDP data from Germany and the eurozone will put pressure on the pair and it will continue to decline to our target level of 1.0800.
Gold on the spot has every chance to turn down if the statistics from the US turn out to be better than expected, and the risk appetite will grow in the stock markets. In this case, the price may decline to the level of 1563.00 after falling below the level of 1572.35.