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Forex Today: Coronavirus anxiety rattles Asia; BOE base rate decision, US GDP eyed

Dhwani Mehta FXStreet

Safe-havens benefited the most at the expense of the higher-yielding assets in Thursday’s Asian trading, as the risk-off sentiment remained at full steam amid growing anxiety over China’s rapidly spreading coronavirus and its economic impact.

China’s National Health Commission (NHC) said that the coronavirus deaths in the country climbed to 170 while the number of infected patients rose to 7,711. Meanwhile, the US, Japan, Singapore, New Zealand and Taiwan evacuated their nationals from Wuhan and quarantined them back home.

Investors also weighed in the US Federal Reserve’s (Fed) concerns over the US economic outlook, in the face of the mounting risks overseas. The Asian stocks traded with sizeable losses, led by the 5% sell-off in Taiwan stocks, as traders returned from the Lunar New Year holiday break.

Amid souring risk appetite, yields on benchmark 10-year US Treasuries hit a new three-month low of 1.5600% while S&P 500 futures dropped 0.60% towards the session close. Oil prices fell nearly 1%, as worries over the economic fallout from the virus played out on the oil demand growth outlook.

Gold prices advanced to $1580 amid dovish Fed and risk-off action in the global equities. The anti-risk Japanese yen recovered further ground, with USD/JPY back on the offers below the 109 level. Meanwhile, the Swiss franc traded firmer and dragged USD/CHF lower towards 0.9700. The higher-yielding Aussie renewed three-month low at 0.6731 while the Kiwi hit a two-month low just ahead of the 0.6500 level. The Chinese yuan reached six-week low vs. the greenback near 6.9370. USD/CAD battled 1.3200 amid broad-based US dollar weakness and falling oil prices.

Both EUR/USD and cable traded modestly flat, keeping its recent trading range ahead of the German macro releases and the key Bank of England (BOE) base rate decision due later on Thursday.

Main Topics in Asia

WH Adviser Navarro: US will keep tariffs on China even if coronavirus starts hurting growth – CNBC

WH Adviser Kudlow: Further restrictions to US-China airlines are under discussion

Boris Johnson will tell the EU he is prepared to accept post-Brexit border checks – The Telegraph

China’s GDP growth may drop to 5% or even lower in Q1 - Government Economist

BOK Official: Premature to decide on rate cuts to counter virus impact, USD/KRW at seven-week high

Japan’s Suga: 13 unwell who returned to Japan on the 2nd flight from Wuhan

Taiwan Deputy FinMin: Not currently considering stabilization for stock market

HKMA: Will continue to closely monitor any possible impact of the spread of the novel coronavirus

US Pres. Trump forms a 12-member Coronavirus Task Force, Asia risk-off in full swing

Key Focus Ahead

The immediate focus remains on the scheduled speech by the Bank of Japan (BOJ) Deputy Governor Amamiya at 0700 GMT, which will be followed by the Swiss KOF Leading Indicator and German Unemployment data at 0800 GMT and 0855 GMT respectively. Also, of note remains a series from Eurozone confidence gauges and Unemployment data, all of which will drop in at 1000 GMT.

Next of relevance and the likely main event risk for today remains the BOE monetary policy decision accompanied by the minutes of the meeting. The BOE expected to stand pat on the base rate but the voting composition will be closely eyed for fresh cues on the central bank’s next policy move. Governor Mark Carney’s presser will also draw attention for his take on the economic outlook, especially after the EU parliament paved the way for a smooth exit on Friday.

The NA docket also remains eventful, with the German Preliminary Inflation report and US Q4 Preliminary Gross Domestic Product (GDP) likely to hog the limelight at 1300 GMT and 1330 GMT. Later in the NY session, the speech by the Bank of Canada (BOC) official Beaudry will drop in at 2015 GMT.

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GBP/USD: Modestly flat above 1.3000 ahead of BOE

GBP/USD remains almost unchanged on a daily basis above 1.3000 while heading into the London open on Thursday. Even if the latest risk-off is weighing on the pair, traders are cautious ahead of the key BOE base rate decision.

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GMT	Event	Consensus	Previous
Friday, Jan 24
24h	CNY Chinese New Year
24h	IDR Chinese New Year
Saturday, Jan 25
24h	AUD Australia Day
24h	INR Republic Day
Sunday, Jan 26
24h	AUD Australia Day (Observed)
Thursday, Jan 30
07:00	JPY BoJ's Amamiya speech
08:00	CHF KOF Leading Indicator	97.0	96.4
08:55	EUR Unemployment Rate s.a.	5%	5%
08:55	EUR Unemployment Change	5K	8K
10:00	EUR Unemployment Rate	7.5%	7.5%
10:00	EUR Business Climate	-0.19	-0.25
10:00	EUR Economic Sentiment Indicator	101.8	101.5
10:00	EUR Industrial Confidence	-8.7	-9.3
10:00	EUR Consumer Confidence	-8.1	-8.1
10:00	EUR Services Sentiment	11.2	11.4
12:00	GBP BoE Interest Rate Decision	0.75%	0.75%
12:00	GBP BoE Asset Purchase Facility	£435B	£435B
12:00	GBP Monetary Policy Summary
12:00	GBP Bank of England Quarterly Inflation Report
12:00	GBP BoE MPC Vote Unchanged	6	7
12:00	GBP BoE MPC Vote Cut	3	2
12:00	GBP BoE MPC Vote Hike	0	0
12:00	GBP Bank of England Minutes
12:30	GBP BoE's Governor Carney speech
13:00	EUR Consumer Price Index (YoY)	1.7%	1.5%
13:00	EUR Consumer Price Index (MoM)	-0.6%	0.5%
13:00	EUR Harmonized Index of Consumer Prices (YoY)	1.7%	1.5%
13:00	EUR Harmonized Index of Consumer Prices (MoM)	-0.8%	0.6%
13:30	USD Initial Jobless Claims	215K	211K
13:30	USD Initial Jobless Claims 4-week average		213.25K

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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