Forex Today: Coronavirus consumes markets, Gold eyeing $1,700, German data awaited

Yohay Elam FXStreet

Here is what you need to know on Monday, February 24:

Coronavirus: The respiratory disease continues spreading and is taking its toll. Chinese President Xi Jinping has sounded the alarm over the outbreak at the Communist Party's gathering. His words contrast the upbeat mood of last week. Areas in northern Italy's industrial heartland have been put under lockdown due to a significant cluster of cases. The Venice Carnaval has been canceled. In South Korea, the number of cases related to a religious sect in the south of the country is growing.

Risk-off: S&P futures, most Asian stocks, commodity currencies, and oil are down on Monday. AUD/USD temporarily hit a new decade low, below last week's trough. While the Japanese yen is mostly unchanged, Gold prices have extended their gains, hitting a high of $1,680. Against the euro and the pound, the US dollar is recovering a significant chunk of its losses on Friday.

US data: While most of last week's American figures beat expectations, Markit's preliminary Services Purchasing Managers' Index shocked by dropped below 50, allowing an opportunity to take profits on dollar gains.

EUR/USD is trading closer to 1.08 ahead of the German IFO Business Climate figures for February. A slide from January's 95.9 is likely. Regional elections in Hamburg have dealt a blow to Chancellor Angela Merkel's CDU Party.

Brexit: Experts warn that if the UK reneges on pledges related to Northern Ireland, it could risk trade agreements with the US and the EU.

Saudi Arabia denied it is contemplating breaking away from Russia amid disagreements regarding oil production in the wake of the coronavirus crisis.

Cryptocurrencies are sliding on Monday yet remain in familiar ranges, with Bitcoin trading around $9,700.

More All the reasons why US stocks are defying gravity and why they may have more room to run

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.

AUD/USD shows resilience below 38.2% Fibo. near mid-0.7100s

The AUD/USD pair touches a one-and-a-half-week low, around the 0.7140 region during the Asian session on Monday, though it lacks follow-through. Spot prices currently trade just above mid-0.7100s, down nearly 0.25% for the day.

USD/JPY: Japanese Yen edges lower vs USD amid Middle East jitters as Fed, BoJ meetings loom

The USD/JPY pair attracts some buyers at the start of a new week and climbs closer to the 154.00 mark during the Asian session, reversing a part of Friday's losses. Spot prices, however, remain confined in a range held over the past week or so and within striking distance of a nearly seven-month low, touched last Tuesday, as traders await this week's key central bank events.

Gold: Sell-off meets support near $4,250… for now

Gold accelerates its downward trend on Monday, coming close to the $4,250 mark per troy ounce, or multi-week lows, on the back of the intense rebound in the US Dollar and US Treasury yields across the curve. The precious metal’s retracement comes on the back of steady speculation of an interest rate increase by the Fed and reignited inflation worries in response to the rally of crude oil prices.

Crypto Today: Bitcoin, Ethereum, XRP recover ahead of US Senate vote on CLARITY Act

Bitcoin edges higher, trading near $77,884 as of Monday, in tandem with broader gains across the cryptocurrency market. Ethereum and Ripple follow Bitcoin’s neutral-to-bullish trajectory, holding key support levels at $2,521 and $1.38, respectively.

Will the Fed deliver the hawkishness markets are pricing in?

Fed hike bets increase after PPI and CPI reports. Updated dot plot to be crucial for the dollar’s reaction. Warsh’s independence faces test amid Trump’s pressure for lower rates. For the Dollar to extend gains, Fed needs to satisfy current hawkish bets.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.