Forex Today: Coronavirus boosts Gold, BOE coin-flip and US growth eagerly awaited

Yohay Elam FXStreet

Here is what you need to know on Thursday, January 30:

Coronavirus: Asian markets are spooked by the rapid spread of the respiratory disease, with over 7,000 infected and around 200 deaths. The safe-haven yen and gold are bid. The World Health Organization is projected to elevate its guidance. While the virus is not as deadly as SARS, contagion – human to human and to markets – is rapid.

Fed: The Federal Reserve left interest rates unchanged as expected and made only subtle changes to its statement. The bank stressed that it aims to hit the 2% inflation goal and committed to supporting the repo market through the second quarter. The US dollar edged lower in response to the modest dovish tilt.

US GDP: The world's largest economy publishes its first estimate for growth in the fourth quarter and it is forecast to remain around 2.1% annualized recorded in the third quarter. Downbeat Durable Goods Orders in December probably lower real estimates.

See US Fourth Quarter GDP Preview: The fourth quarter marks time

BOE: GBP/USD is clinging to 1.30 ahead of the all-important decision by the Bank of England. The odds of a rate cut and no change are roughly equal and high volatility is expected. Apart from the announcing rates now, the bank is set to hint about future moves, and that is set to rock sterling as well.

See BOE Preview: Carney to cause carnage with a hawkish cut? Four scenarios for GBP/USD

Brexit: The EU Parliament approved the UK's exit out of the bloc, a formality ahead of Friday's official move. Britain enters a transition period that expires at year-end.

Eurozone: German states publish preliminary Consumer Price Index figures for January throughout the European morning. The figure feeds into Friday's all-European statistics.

Oil: The "black gold" has been extending its sell-off following a surprising build in US inventories and as the coronavirus scare lowers demand forecasts. WTI trades below $53, despite instability in the Middle East.

Cryptocurrencies: Digital currencies have been consolidating recent gains, with Bitcoin hovering around $9,300.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

GBP/USD advances to three-month peak beyond 1.3600

GBP/USD extends its daily rally and trades at its highest level since mid-May above 1.3600. The US Treasury Department decision to double the sice of liquidity support buyback operations for longer-dated nominal coupon securitiez weighs heavily on the US Dollar and helps the pair push higher. Earlier in the day, the data from the UK showed that annual Consumer Price Index (CPI) inflation picked up to 2.9% in July, meeting estimates, while core CPI rose by 2.6% YoY in July versus 2.5% expected.

EUR/USD surges to 11-week high above 1.1650 after US Treasury announcement

EUR/USD gathers bullish momentum and trades at its highest level since early June above 1.1650 on Wednesday. The US Dollar stays under heavy bearish pressure after the US Treasury announced that it will increase the size of liquidity support buyback operations for longer-dated nominal coupon securities. Later in the day, investors will scrutinize FOMC Minutes for fresh clues on policy outlook.

Gold climbs above $4,500 as US Dollar, yields fall

Gold price rises to around $4,520 during the early Asian session on Thursday. The precious metal surges to the highest since early June amid the weakening US Dollar after the US Treasury Department stepped in to provide relief to bond markets.

Australia unemployment rate expected to hold at 4.4% in July

Australia will release the July monthly employment report on Thursday at 01:30 GMT. Ahead of the announcement, analysts anticipate a modest 15K increase in job creation, while the Unemployment Rate is expected to remain steady at 4.4%.

$20 billion offered, $2 billion taken: Why Treasury doubled its buyback cap

The US Treasury moved off its own calendar on Wednesday, and that is the part worth sitting with. At 12:32 GMT, the department said it would at least double the size of liquidity support buyback operations in the 10-year to 20-year and 20-year to 30-year sectors, lifting the maximum from $2 billion per operation to at least $4 billion, effective September 9 and running to November 4.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.