Forex Today: Aussie cheers risk-on as China coronavirus fears ebb, eyes on Fed interest rate decision


The risk rebound theme extended well into Asia this Wednesday, as investors placed their concerns about China coronavirus's potential economic impact on the back burner and cheered the upbeat US and Australian fundamentals. The Asian stocks tracked the Wall Street bounce overnight, driven by upbeat Apple Inc earnings.

Markets re-assess the economic impact of the coronavirus, with 130+ death toll in China and about 6,000 confirmed cases. Hong Kong markets returned from the Lunar New Year holiday and slumped 2.5% on the China virus anxiety.

However, the risk-on trades were unaffected, as S&P 500 futures rose 0.30% and Treasury yields jumped nearly 1% across the curve. Meanwhile, both crude benchmarks rebounded sharply, underpinned by a surprise draw in the API Crude Stocks. Consequently, the safe-havens, namely, the yen, Swiss franc and gold were pressured. Gold held the lower ground around $1565 on expectations of less dovish Federal Reserve’s (Fed) monetary policy decision.

Across the G10 fx space, the AUD/USD pair benefited from upbeat Australian CPI data that eased expectations of an imminent Feb RBA rate cut. The spot hit a fresh daily high at 0.6777. The Kiwi emerged as the weakest this session and dropped back below 0.6550, as markets digested the comments from the Reserve Bank of New Zealand (RBNZ) Assistant Governor Hawksby on the exchange rate value. Meanwhile, both EUR/USD and cable traded on the backfoot amid broad-based US dollar comeback.

Main Topics in Asia

RBNZ’s Hawksby: Lower NZD is helping to insulate the New Zealand economy

New Zealand PM Ardern: Roads, rail, schools and hospitals to be built

NZ FinMin Robertson: Economy in good shape, net debt will remain low

Hubei confirms 840 new cases of coronavirus and 25 more deaths reported - CCTV

McConnell says GOP doesn’t have votes to block impeachment witnesses - WSJ

Australian Consumer Confidence: Consolidation - ANZ

Aussie CPI Q4 Trimmed Mean 0.4% ( vs 0.4% expected and prior 0.4%)

Probability of an RBA rate cut in February continues to decline

US Official: White House did not ask for a suspension of US-China flights

Banks in China cut interest rate for small companies in Hubei province

China coronavirus could hit Beijing’s ability to meet US trade war deal import demands – SCMP

Key Focus Ahead       

The Fed interest rate decision is expected to stand out at 1900 GMT later today and could likely set the tone for the markets in the coming months. In light of upbeat US macro data, China coronavirus outbreak and implications of the US-China phase one trade deal, the Fed Chair Powell’s economic outlook for the first half of this year will be closely watched.

Ahead of the Fed event, the US Good Trade Balance, Pending Homes Sales and EIA Crude Oil Stocks Change data will remain in focus, in absence of relevant economic data from the European calendar.

Meanwhile, the China coronavirus outbreak-related updates and EU-UK post-Brexit trade talks will grab some attention for any impact on the market sentiment.

EUR/USD: Buyers struggle for follow-through, focus on Fed

EUR/USD buyers are struggling to find follow-through, having successfully defended the psychological support at 1.10 on Tuesday with a bullish hammer candle. The Fed may validate the renewed expectations for a 2020 rate cut. 

GBP/USD: Modestly flat above 1.3020, Huawei talks in the spotlight

GBP/USD sellers catch a breath after four consecutive days of declines. The UK’s favor for the Chinese tech giant negatively affects its friendship with the US. Brexit headlines keep calm while BOE readies for the decision.

Gold: Bulls looking for a discount in $1560s

Gold top in the making with a weekly shooting star and weekly divergence. H&S in the making, or follow through below 1530 and 1440 support levels. Bulls will be looking for a discount is momentum holds the support line. 

Federal interest rate preview: Stable policy and an uncertain future

Steady rate policy expected at first meeting of 2020. US economy and Fed forecasts foresee little change. Economic impact of trade and China virus may be a topic for Chairman Powell.

GMT
Event
Vol.
Actual
Consensus
Previous
Friday, Jan 24
24h
 
 
24h
 
 
Saturday, Jan 25
24h
 
 
24h
 
 
Sunday, Jan 26
24h
 
 
Wednesday, Jan 29
07:00
 
-0.6%
-2.1%
07:00
 
0.3%
0.5%
07:00
 
9.6
9.6
07:00
 
0.3%
0.1%
07:00
 
1.5%
1.4%
09:00
 
3.6%
3.5%
09:00
 
 
5.6%
09:00
 
5.5%
5.6%
09:00
 
 
12.5
11:30
 
 
10.1%
12:00
 
 
-1.2%
13:30
 
 
-0.1%
13:30
 
$-68.75B
$-62.99B Revised from $-63.19B
15:00
 
 
7.4%
15:00
 
0.5%
1.2%
15:30
 
0.460M
-0.405M
19:00
 
1.75%
1.75%
19:30
 
 
21:45
 
 
$-753M
21:45
 
 
$5.23B
21:45
 
 
$-4.82B
21:45
 
 
$5.98B
23:50
 
 
¥263.8B
23:50
 
 
¥175.1B
Thursday, Jan 30
00:30
 
-5.4%
1.3%

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD falls below 1.1850 as US consumer sentiment beats

EUR/USD is trading under1.1850, off the previous levels as US consumer sentiment beat estimates with 78.9 points. The Fed refrained from adding more stimulus, supporting the dollar earlier in the week. Investors are eyeing fiscal stimulus talks.

EUR/USD News

GBP/USD falls as the EU reportedly objects Johnson's bill

GBP/USD is trading around 1.2950, off the highs. According to reports, the EU remains opposed to UK PM Johnson's controversial bill, which violates the Brexit accord. 

GBP/USD News

XAU/USD struggles to move back above 100-hour SMA

Gold regained some positive traction on the last trading day of the week and recovered a part of the previous day's losses to over one-week lows. The commodity held on to its intraday gains and traded above the $1950 level through the mid-European session.

Gold News

Ethereum hits Bitcoin's bid to lead the market

Bitcoin risks dominance after the strong rise of Ethereum. Technical indicators show some significant discrepancies keeping the stress on the board. Sentiment levels are improving and bordering on optimism.

Read more

WTI: Clings to 50-DMA above $41, focus on Friday’s close

WTI (futures on Nymex) consolidates the three-winning streak above $41 mark on Friday, as the bulls await a fresh catalyst for the next push higher.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures