Forex Today: Coronavirus devastates Chinese markets, Boris pressures the pound, US data eyed

Yohay Elam FXStreet

Here is what you need to know on Monday, February 3:

Coronavirus news: The number of official cases has topped 17,000, and the death toll is around 360. The first death outside China has been reported, and additional airlines have limited flights to the mainland. Testing kits have improved, and medicine used for HIV may help in curing the virus. The worst is probably still ahead.

Coronavirus market response: Chinese markets have reopened after the New Year's holiday with a sharp downfall, carrying down prices of metals. The People's Bank of China cut interest rates on reverse repos and took other measures to stabilize markets. US stock futures are pointing to recovery after a sharp selloff on Friday. The yuan is down 1%, while USD/JPY has stabilized around 108.50. Gold is trading around $1,580, off the highs. The US dollar is generally stable on Monday after a significant drop on Friday.

Oil prices are also on the back foot amid the outbreak, with a potential fall of 20% in Chinese petrol imports and Citi seeing a $15 drop in prices. OPEC and non-OPEC members are watching the situation closely.

Brexit: Prime Minister Boris Johnson is set to present his vision for future EU-UK relations after Britain officially left on Friday. He will reportedly propose "walking away" from talks if they fail to work according to plan. Johnson aims for a Canada-style trade agreement. GBP/USD is on the back foot.

Eurozone: Markit's final Purchasing Managers' Indexes for January are expected to confirm slower contraction in the old continent.

The US ISM Manufacturing PMI is forecast to recover in January from the low of 47.2 recorded in December. The industry is struggling while the services sector, which is growing at a rapid clip. The figure serves as the first hint toward the Non-Farm Payrolls on Friday.

See US Manufacturing PMI Preview: Trade takes back seat to the virus

Cryptocurrencies are consolidating their recent gains, with Ripple standing out by topping $0.25.

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.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD falls toward 1.1700 on broad USD recovery

EUR/USD turns south and declines toward 1.1700 on Wednesday. The US Dollar gathers recovery momentum and forces the pair to stay on the back foor, as traders look to USD short-covering ahead of US inflation report on Thursday. However, the downside could be capped by hawkish ECB expectations.

GBP/USD trades deep in red below 1.3350 after soft UK inflation data

GBP/USD stays under strong selling pressure midweek and trades below 1.3350. The UK annual headline and core CPI rose by 3.2% each, missing estimates of 3.5% and 3.4%, respectively, reaffirming dovish BoE expectations and smashing the Pound Sterling across the board ahead of Thurday's BoE policy announcements.

Gold clings to moderate daily gains above $4,300

Following Tuesday's volatile action, Gold regains its traction on Wednesday and trades in positive territory above $4,300. While the buildup in the USD recovery momentum caps XAU/USD's upside, the cautious market stance helps the pair hold its ground.