Forex Today: Coronavirus fears persist, Japanese economy squeezes, cryptos climb down
|Here is what you need to know on Monday, February 17:
China has announced it will stimulate the economy in the face of the coronavirus outbreak, including lower corporate taxes and increased spending. While most factories have returned to work, Beijing has tightened restrictions on movements in the Hubei province as the number of infections has topped 70,000 and the death toll is around 1,700. Outside China, the largest infection is on the Princess Diamond cruise ship. Markets are relatively calm with limited movements in currencies and gold.
The Japanese economy squeezed by 1.6% in the fourth quarter, according to the preliminary release. A contraction – in response to an increase in a sales tax – was expected. However, the scale has disappointed and some fear the world's third-largest economy is set for an outright recession. Prime Minister Shinzo Abe's approval rating dropped to 43%, yet mostly due to the government's handling of the coronavirus.
Brexit: David Frost, Chief UK negotiator, has laid down an initial stance that includes significant demands. The EU has yet to respond ahead of official talks which kick off in March. GBP/USD is holding above 1.30 as investors seem to be waiting for substance. Jean-Yves Le Drian, France's foreign minister, said that the EU and the UK face months of bitter negotiations.
EUR/USD has started the new week close to the lowest levels since April 2017. The German central bank releases its monthly report later today after the country reported stagnation in the fourth quarter.
Cryptocurrencies have been extending their losses after a weekend that saw substantial sell-offs. Bitcoin is trading around $9,800, Ethereum around $250, and XRP below $0.30.
US markets are on holiday due to Presidents' Day, implying low volume.
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