Several media reports in Asia suggested that China’s coronavirus spread internationally, with the death toll rising. Japan, Macau, Taiwan and Singapore suspended travel to Wuhan, the epicenter. The rising concerns over the spread of the novel virus rattled financial markets, as investors sought flight to safety. Therefore, the demand for the risk assets such as the regional equities, Wall Street futures and Treasury yields was almost killed.
The Asian equities were a sea of red, led by the sharp decline in the Chinese stocks while oil prices tumbled to seven-week lows amid concerns that the virus outbreak might wallop the global economic upturn. The traditional safe-havens in gold and the yen drew bids, as gold prices firmed up near $1560 while USD/JPY dropped to an eight-day low near mid-109s.
The strongest across the fx board was the Aussie dollar that benefited from a downtick in the Australian jobless rate and bigger-than-expected jobs growth figures. AUD/USD rallied hard to test the 0.6880 figure. The Kiwi also followed suit and briefly regained the 0.66 handle. Meanwhile, the Canadian dollar emerged the main laggard and drove USD/CAD to four-week highs above 1.3150, as oil-price weakness and broad-based US dollar rebound weighed.
Among the European currencies, GBP/USD fell for the first time in four days and headed towards 1.3100 despite Brexit optimism while EUR/USD traded in a tight range ahead of the key European Central Bank (ECB) monetary policy decision.
Main Topics in Asia
China confirms 571 total cases of new coronavirus – China State TV
Australia Jobs Data: Unemployment Rate: 5.1% vs 5.2% expected (AUD bullish)
Australian bond yields rise as Aussie jobless rate slips to 5.1%
RBA rate cut probability falls to 30%
Macau reports second case of novel coronavirus - Cable TV
PBOC injects CNY 240.5 bn via one-year TMLF
Macau has cancelled all Lunar New Year festivities - TVB
Fitch: China's manufacturing investment growth to recover on US-China partial trade deal
NZ FinMin Robertson: More government spending to be announced to support economy
Shanghai Composite drops below 200-HMA, Asian stocks bleed
PBOC Adviser Ma: China's central bank to lower funding costs, prevent debt and inflation risks
USD/INR bounces back towards 71.25 despite RBI rate cut pause bets
Key Focus Ahead
The main highlight in Thursday’s macro calendar remains the ECB Interest Rate Decision due to be announced at 1245 GMT. Markets expect the ECB to stand pat on its monetary policy but could start the strategy review. Ahead of the ECB, the Bank Indonesia’s Rate Decision will be closely watched (around 0730 GMT) after the rupiah posted strong gains starting out 2020.
In the NA session, the US weekly Jobless Claims will be released at 1330 GMT alongside the ECB Press Conference that will be addressed by President Lagarde. Lagarde’s take on the bloc’s and Germany’s economic situation will grab the eyeballs and could have a significant impact on the EUR markets. At 1500 GMT, the Eurozone Consumer Confidence for January will drop in, soon followed by the Energy Information Administration (EIA) Crude Oil Stocks Change data at 1600 GMT.
Apart from the ECB decision and the second-tier macro news, the China virus-related headlines will continue to influence the market sentiment in the day ahead.
EUR/USD: Sidelined in a narrow range ahead of ECB
EUR/USD is lacking a clear directional bias ahead of the all-important European Central Bank (ECB) rate decision. The spot has been largely restricted to a narrow range of 1.1120-1.1070 since Jan. 17. ECB is expected to keep rates unchanged and announce the start of the strategy review.
GBP/USD snaps three-day winning streak despite UK PM Johnson’s Brexit victory
GBP/USD holds the lower ground near 1.3125 ahead of the London open on Thursday. The pair snaps the three-day winning streak, ignoring the UK PM Johnson’s ability to end the years of Brexit deadlock by winning support for his Brexit Withdrawal Agreement Bill (WAB).
ECB Preview: Glass half green or a Lagarde drag on EUR/USD? Three scenarios
The ECB is set to leave rates unchanged in its first meeting of 2020. President Lagarde may find hope at the potential of fiscal stimulus and improving inflation. A focus on downside risks – which remain significant – may send the euro down.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD failed just ahead of the 200-day SMA
Finally, AUD/USD managed to break above the 0.6500 barrier on Wednesday, extending the weekly recovery, although its advance faltered just ahead of the 0.6530 region, where the key 200-day SMA sits.
EUR/USD met some decent resistance above 1.0700
EUR/USD remained unable to gather extra upside traction and surpass the 1.0700 hurdle in a convincing fashion on Wednesday, instead giving away part of the weekly gains against the backdrop of a decent bounce in the Dollar.
Gold keeps consolidating ahead of US first-tier figures
Gold finds it difficult to stage a rebound midweek following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% after US data, not allowing the pair to turn north.
Bitcoin price could be primed for correction as bearish activity grows near $66K area
Bitcoin (BTC) price managed to maintain a northbound trajectory after the April 20 halving, despite bold assertions by analysts that the event would be a “sell the news” situation. However, after four days of strength, the tables could be turning as a dark cloud now hovers above BTC price.
Bank of Japan's predicament: The BOJ is trapped
In this special edition of TradeGATEHub Live Trading, we're joined by guest speaker Tavi @TaviCosta, who shares his insights on the Bank of Japan's current predicament, stating, 'The BOJ is Trapped.'