{"id":293283,"date":"2020-05-25T02:23:21","date_gmt":"2020-05-24T16:23:21","guid":{"rendered":"https:\/\/www.gomarketingteam.com\/articles\/week-ahead-reopening-economies-vs-new-cold-war\/"},"modified":"2021-02-19T12:13:48","modified_gmt":"2021-02-19T01:13:48","slug":"week-ahead-reopening-economies-vs-new-cold-war","status":"publish","type":"post","link":"https:\/\/www.gomarkets.com\/en\/weekly-summaries\/week-ahead-reopening-economies-vs-new-cold-war\/","title":{"rendered":"Week Ahead: Reopening Economies vs \u2018New Cold War\u2019"},"content":{"rendered":"

By Deepta Bolaky<\/strong>
\n\u00a0@DeeptaGOMarkets<\/a><\/p>\n

In the middle of a pandemic, the world\u2019s two most powerful economies are embroiled in a series of clashes which could take both countries to the brink of a \u201cnew cold war\u201d. The latest fallout is about China\u2019s move to pass a national security law in Hong Kong which could compromise the independence of the city.<\/span><\/p>\n

China is facing an international backlash given that the controversial law might tighten its grip over the former British colony. As a dominant Asian financial center, the law is poised to muddle with the free and democratic capitalist system of the city. The security law would likely place autonomous Hong Kong governing under \u201cone country two systems principle\u201d under greater control of China which prompted political figures around the world to swiftly condemn the move.<\/span><\/p>\n

The US will likely impose sanctions if China moves ahead with the Hong Kong law even if China is insisting that it remains an internal affair and there should be no meddling from the international community.<\/span><\/p>\n

The heightened tensions between the two countries have returned to the fore of the markets at a time where investors were buoyed by the reopening economies narrative.<\/b><\/p>\n

Forex<\/b><\/h5>\n

It will be a muted start to the week with holidays in the UK and the US on Monday. Even though the gradual easing lockdown measures is an important positive theme for the markets, the brewing tensions between the US and China will gather much attention at the beginning of the week.<\/span><\/p>\n

US Dollar<\/b><\/h5>\n

After the US dollar struggled to find a firm upside direction following the latest stimulus measures announced by the Fed, the greenback cautiously edged higher towards the end of last week due to its haven status. Amid the US-China tussle, the greenback could gather strength against its peers if the war of words persists.<\/span><\/p>\n

Antipodeans<\/b><\/h5>\n

Commodities and sentiment-linked currencies, the Australian and New Zealand dollar were among the best performers last week. However, both the AUDUSD and NZDUSD pairs are seesawing between a tight range. With a relatively empty calendar, the Antipodeans will likely remain at the broader sentiment of the markets and be driven by geopolitics and virus updates.<\/span>\u00a0<\/span><\/p>\n

NZDUSD and AUDUSD (Daily Chart)<\/b><\/p>\n

\"\"
\nSource: GO MT4<\/span><\/p>\n

The Pound Sterling<\/b><\/h5>\n

The Pound struggled to edge higher despite a weaker US dollar dragged by dismal economic reports and the heightened expectations of negative rates in the UK following the BoE\u2019s comments. Brexit is also fueling the downward pressure on the Pound. The negations between the EU has stalled and the UK is preparing for a no-deal scenario. Unlike its peers, the UK is viewed as slow in easing lockdowns given its high COVID-19 mortality rate. The GBP pairs may remain on the backfoot faced by pressures from the economic and political fronts.<\/span><\/p>\n

The Euro<\/b><\/h5>\n

The fact that Europe may have gone through the worst phase of the coronavirus has somewhat eased the downside risks of the shared currency. But the current geopolitical tensions with China and the massive EU recovery fund proposed by Chancellor Angela Merkel and President Emmanuel Macron may not bode well with the recovery of the Euro.<\/span><\/p>\n

The recovery plan might further highlight the differences between the Northern and Southern member states and worsen the political atmosphere within the Eurozone. Given that the COVID-19 fund puts additional pressure on the EU, the upside momentum of the shared currency could be contained.<\/span><\/p>\n

EURUSD (Daily Chart)<\/b><\/p>\n

\"\"
\nSource: GO MT4<\/b><\/p>\n

Commodities<\/b><\/h4>\n

As global activities slowly started to pick up, the prospects of increasing oil demand are also improving. A combination of production cuts and buoyant inventory reports are, therefore, providing a better supply-side narrative.<\/p>\n

Demand and supply fundamentals are getting better which is helping the oil market to recover from the coronavirus plunge. However, geopolitical tensions have overshadowed the recovery of oil prices. Traders will likely keep monitoring the weekly oil reports and US-China war of words for fresh trading impetus this week.<\/p>\n

Equities<\/b><\/h4>\n

Global equities have experienced a staggering recovery in the past month. However, the pace of the rally in the stock market is ebbing as investors are cautious. The escalating tensions between the two largest economies could have more lasting impacts than the negative effect of the coronavirus and the threat of a second wave of outbreak.<\/p>\n

MSCI World Index<\/b>\u00a0<\/span><\/p>\n

\"\"
\nSource: Bloomberg<\/b><\/p>\n

The Asian region will be closely watched as the controversial security law for Hong Kong which will likely disrupt one of the biggest financial hubs. Hang Seng index dived on the news and will likely drag down sentiment in broader Asia.<\/span><\/p>\n

Key Events Ahead<\/strong><\/h4>\n

Monday<\/strong>
\nLeading Economic Index (Japan)
\nGross Domestic Product, IFO Business Climate, Current Assessment and Expectations (Germany)
\nIndustrial Production (Switzerland)
\nBoC Governor Poloz Speech (Canada)<\/p>\n

Tuesday<\/strong>
\nTrade Balance and Exports (New Zealand)
\nAll Industry Activity Index (Japan)
\nGfk Consumer Confidence Survey (Germany)
\nCore PCE, Chicago Fed National Activity Index, Housing Price index, S&P\/Case Shiller Home Price Indices, New Home Sales, Consumer Confidence and Dallas Fed Manufacturing Business Index (US)<\/p>\n

Wednesday<\/strong>
\nEU Financial Stability Review (Eurozone)
\nZEW Survey – Expectations (Switzerland)
\nRichmond Fed Manufacturing Index (US)
\nRBNZ Financial Stability Report (New Zealand)<\/p>\n

Thursday<\/strong>
\nBusiness Climate (Eurozone)
\nHarmonized Index of Consumer Prices (Germany)
\nDurable Goods, Gross Domestic Product, Jobless Claims, Non-defense Capital Goods Orders, Pending Home Sales and EIA Crude Oil stocks (US)<\/p>\n

Friday<\/strong>
\nGfk Consumer Confidence (UK)
\nTokyo CPI, Jobs\/Applicants Ration, Unemployment Rate, Retail Trade, Industrial Production, and Large Retailers’ Sales (Japan)
\nRetail Sales (Germany)
\nKOF Leading Indicator (Switzerland)
\nConsumer Price Index (Eurozone)
\nCore PCE, Personal Income & Spending, Chicago Purchasing Manager’s Index and Michigan Consumer Sentiment Index (US)<\/p>\n

By Deepta Bolaky<\/strong>
\n\u00a0@DeeptaGOMarkets<\/a>
\n<\/a><\/p>\n\n\n\n\n\n\n\n
Tuesday, 26 May 2020<\/strong>\u00a0<\/strong>
\n<\/strong>Indicative Index Dividends
\nDividends are in Points<\/sup><\/em><\/td>\n<\/tr>\n
ASX200<\/strong><\/td>\nWS30<\/strong><\/td>\nUS500<\/strong><\/td>\nUS2000<\/strong><\/td>\nNDX100<\/strong><\/td>\nCAC40<\/strong><\/td>\nSTOXX50<\/strong><\/td>\n<\/tr>\n
0<\/td>\n0.053<\/td>\n0.021<\/td>\n0<\/td>\n0<\/td>\n0<\/td>\n0<\/td>\n<\/tr>\n
ESP35<\/strong><\/td>\nITA40<\/strong><\/td>\nFTSE100<\/strong><\/td>\nDAX30<\/strong><\/td>\nHK50<\/strong><\/td>\nJP225<\/strong><\/td>\nINDIA50<\/strong><\/td>\n<\/tr>\n
0<\/td>\n0<\/td>\n0<\/td>\n0<\/td>\n0<\/td>\n0<\/td>\n0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n


\n<\/a><\/p>\n

Disclaimer: Articles and videos from GO Markets analysts are based on their independent analysis. Views expressed are of their own and of a \u2018general\u2019 nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs. \u00a0Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice. For more information of trading, check out our forex trading courses<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

By Deepta Bolaky \u00a0@DeeptaGOMarkets In the middle of a pandemic, the world\u2019s two most powerful economies are embroiled in a series of clashes which could take both countries to the brink of a \u201cnew cold war\u201d. The latest fallout is about China\u2019s move to pass a national security law in Hong Kong which could compromise […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[128],"tags":[],"yoast_head":"\nWeek Ahead: Reopening Economies vs \u2018New Cold War\u2019 - GO Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.gomarkets.com\/en\/weekly-summaries\/week-ahead-reopening-economies-vs-new-cold-war\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Week Ahead: Reopening Economies vs \u2018New Cold War\u2019 - GO Markets\" \/>\n<meta property=\"og:description\" content=\"By Deepta Bolaky \u00a0@DeeptaGOMarkets In the middle of a pandemic, the world\u2019s two most powerful economies are embroiled in a series of clashes which could take both countries to the brink of a \u201cnew cold war\u201d. 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