Market Review - 14/02/2020 00:46GMT
Dollar ends mixed on jump in new coronavirus cases, euro hits near 3-year lows
The greenback ended mixed on Thursday and fell against safe-have Japanese yen after China reported of a sharp increase number of new coronavirus cases. The single currency contnued its recent losing streak and hit a near 3-year troigh of 1.0835 on broad-based weakness in euro. Sterling rallied across the board on hopes that a bigger March budget would be approved by new UK Finance Minister Rishi Sunak after Sajid Javid resigned from the post.
Rueters reported the Chinese province at the epicentre of the coronavirus outbreak reported a record rise in the death toll on Thursday, as global health experts warned the epidemic could get far worse before it is brought under control.
Health officials in Hubei province said 242 people had died from the flu-like virus on Wednesday, the fastest rise in the daily count since the pathogen was identified in December, and bringing the total number of deaths in the province to 1,310. The previous record rise in the toll was 103 on Feb. 10. But the 2,015 new confirmed cases reported in mainland China on Wednesday was dwarfed by the 14,840 new cases reported in Hubei alone on Thursday, when provincial officials said they had adopted a new methodology for counting infections. It was not immediately clear how the new methodology affected the results, nor why the death toll rose so sharply.
Reuters reported U.S. underlying consumer prices picked up in January as households paid more for rents and clothing, supporting the Federal Reserve's contention that inflation would gradually rise toward its 2% target. The Labor Department said on Thursday its consumer price index excluding the volatile food and energy components rose 0.2% last month after edging up 0.1% in December. The so-called core CPI was up by an unrounded 0.2423% last month.
Underlying inflation in January was also lifted by increases in the prices of airline tickets, healthcare, recreation and education. In the 12 months through January, the core CPI increased 2.3%, rising by the same margin for four straight months.
Versus the Japanese yen, dollar met renewed selling at 110.09 in Australia and quickly dropped to 109.81 ahead of Asian open due to active safe-haven buying after news reported a sharp jump in the number of new coronavirus cases in Chain's Hubei province before rebounding to 109.98 in Asian morning but only to fall again to session lows of 109.63 in Europe. However, the pair then recovered to 109.86 in New York on rising U.S. Treasury yields.
Although the single currency moved sideways in Asia and then rebounded to 1.0888 in European morning, price met renewed selling there and easily penetrated Wednesday's 1.0866 low and later hit a 33-month low at 1.0835 in New York on cross-selling in euro, especially versus sterling before stabilising.
The British pound went through a volatile session. Cable initially retreated to 1.2945 in Asia before renewed buying emerged and lifted price to 1.2988 in Europe. Despite a brief drop to 1.2963 on news that British Finance Minister Sajid Javid has resigned, the pair then rallied to a 1-week high at 1.3069 in New York as traders cited the news as positive that UK Prime Minister Boris Johnson's ambitious March budget would get approved before retreating on profit-taking.
Reuters reported British Finance Minister Sajid Javid has resigned his position, the Sun newspaper's political editor Tom Newton Dunn said on Twitter without citing sources. Prime Minister Boris Johnson is reshuffling his senior ministers on Thursday.
In other news, Reuters reported there is too much uncertainty about the fast-moving coronavirus to forecast its impact on the Chinese and global economy, but the IMF on Thursday said it hopes to have more insights when G20 countries meet in Saudi Arabia later this month.
International Monetary Fund spokesman Gerry Rice said the Fund welcomed China's efforts to contain the spread of the virus and mitigate its economic impact, and stood ready to help Beijing as needed. "Over the medium to long term we remain confident that China’s economy is resilient," Rice told a regular news briefing.
Data to be released on Friday :
New Zealand manufacturing PMI, food price index, Japan tertiary industry activity, Germany GDP, wholesale price index, Swiss producer/import price, Italy trade balance, EU employment change, trade balance, GDP, and U.S. import prices, retail sales ex-autos, retail sales, industrial production, capacity utilization, manufacturing output, business inventories, University of Michigan sentiment.
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