THREE MONDAY TALKING POINTS: Loaded

The attention-grabber for the start of the week will be how China opens off the back of an extended halt in trading, following the severe outbreak of Coronavirus that has now racked up 14,637 confirmed cases and 305 deaths. On these numbers, they're probably understated having spoken to contacts domiciled in Shanghai. 

The reopening of markets will come with a raft of support measures, which includes a $21.7bn net liquidity injection in money markets, no night trading until further notice, and increased equity limits for insurance firms. All of this, theoretically, should help shore up spotfires and selling imbalances at the open, but given the scale of the crisis, we decide to watch and observe USDCNH and Chinese equities price action with extreme caution. 

Downside risks remain at large with the best of estimates unsure when nCoV could peak. Short JPY crosses (USDJPY, AUDJPY) therefore appear good risk/reward as portfolio flows load up on the safe-haven currency. Especially with ASX (highly correlated to AUDJPY) primed for a steep sell-off to the tune of 1.7% at the open.

It's not all Coronavirus though, with what tends to be the most significant data points for US growth  and employment taking place over the week. On one hand, the reaction to any good news will be hard to determine given US data points will have captured most of the economics pre-Coronavirus ramp up. On the other, as the response to nCoV has been unprecedented in terms of travel, tourism and supply chain disruption - bad news will surely be a double whammy to those in the "buy the dip" corner of the market. 

ISM Manufacturing PMI (est. 48.5, prev. 47.2), ISM Non-manufacturing PMI (est. 55.1, prev. 55) and Non-Farm Employment Change (est. 160k, prev. 145k) are the key data points to watch. With a material growth rebound one of the key themes that markets were looking forward at the end of 2019, there's a growing realisation this - and with it, pervasive risk asset strength - is less likely to take unfold. Especially considering the significant pull-down of China Q1 GDP forecasts recently. 
 

A significant stop on the way to Nov. 3's US Presidential Election Day, the Iowa Caucus carries significance for the Democrat nomination and momentum leading into Super Tuesday. A win here by Sanders, who currently leads in the Iowa polls, could be the catalyst for a re-pricing of his election chances - even though Trump is still clearly regarded as the favourite. If, however, a more moderate candidate in Biden were to win - this would be a relief to most of the investor community.