Forex Today: Long-term extremes for EUR/USD, USD/JPY, AUD/USD, Gold amid coronavirus fears, USD rally

Yohay Elam FXStreet

Here is what you need to know on Thursday, February 20:

Coronavirus: Fears are dominating markets once again after the number of cases in South Korea doubled and two people on the Diamond Princess cruise ship died. China has changed its counting methodology once again, causing confusion. On the economic front, Beijing has provided more liquidity and cut requirements for the household loans but some see it as insufficient.

USD/JPY has been consolidating its gains well above 111 after soaring on Wednesday. A combination of data-related dollar strength, receding coronavirus fears, the triggering of stops, and a late reaction to dismal Japanese growth figures are behind the meteoric rise. The downbeat market mood is helping the yen stabilize.

Gold prices have topped $1,612 amid coronavirus fears and other reasons. It is the highest since 2013. The precious metal has been extending its gains that began in 2019 and topped the peak seen around the Iran crisis early in 2020.

See Gold Price Analysis: Pulls back amid overbought RSI, multiple upside barriers ahead

AUD/USD has hit new 11-year lows at 0.6630 after Australia reported a disappointing increase in the unemployment rate to 5.3% in January. It is hovering around the lows last seen in 2009.

EUR/USD is also near the 34-month lows of 1.0782 after having almost fully closed the "Macron Gap" from 2017. The European Central Bank's minutes from the January decision may shed more light on the bank's next moves. Germany's weakness may prompt more stimulus. Details of the ECB's strategic review are also eyed.

See ECB Minutes Preview: Coronavirus, inflation, and strategic review comments set to move EUR/USD.

GBP/USD also dropped sharply to around 1.29 despite higher than expected inflation figures. The pound has come under pressure after EU ambassadors failed to agree on a position toward the UK in post-Brexit talks. UK retail sales are forecast to show an increase in January after two months of substantial falls.

The Federal Reserve's meeting minutes have confirmed the bank's stance that it intends to leave rates unchanged. The minutes also provided several technical details about the Fed's plan to taper down the buying of short-term bonds.

See FOMC minutes mix economic optimism and caution

The Philly Fed Manufacturing Index is of interest on Thursday. On Wednesday, Housing Starts, Building Permits, and the Producer Price Index are all beat expectations.

Cryptocurrencies suffered a sell-off late on Wednesday. Bitcoin is trading around $9,500, Ethereum at around $260, and XRP below $0.30.

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 holds above multi-month lows and 0.6900 ahead of Fed's Warsh

AUD/USD struggles to capitalize on the previous day's modest bounce from its lowest level since early July and trades above 0.6900 during the Asian session on Friday. Thursday's disappointing Australian jobs data tempered RBA rate-hike bets, capping the Aussie. The US Dollar (USD), meanwhile, is regaining positive traction as this week's hot US CPI and PPI reports keep Fed rate hike bets firmly on the table. This further keeps a lid on the pair ahead of Fed Chair Kevin Warsh speech.

USD/JPY climbs above 158.00 as USD edges higher ahead of Warsh's speech

USD/JPY attracts some buyers during the Asian session on Friday, building on the overnight bounce from the vicinity of 157.50, or a one-week low, amid the emergence of some US Dollar buying. This week's hot US CPI and PPI reports lifted Fed rate-hike bets, which, along with stable US bond yields and geopolitical uncertainties, help revive USD demand. Traders, however, remain on high alert amid speculation that authorities will step in to prop up the Japanese Yen, which could cap the currency pair ahead of Fed Chair Kevin Warsh's speech.

Gold weakens to $4,150 amid reviving USD demand as traders await Warsh's speech

Gold drifts lower during the Asian session on Friday, reversing part of the previous day's move up amid reviving US Dollar demand. US inflation data released this week reaffirmed bets for at least one Fed rate hike this year, while US bond yields stabilize after Thursday's steep decline. This, along with geopolitical risks, underpins the safe-haven USD, which, in turn, is seen weighing on bullion ahead of Fed Chair Kevin Warsh's speech.

Ethereum reclaims $2,400 as PPI hits 6.3% and yields fall

Ethereum (ETH) is back above $2,400 on Thursday, rebounding from a brief decline toward $2,340, which was sparked by an upside surprise in the US wholesale inflation report. The Producer Price Index (PPI) increased 1.3% monthly and 6.3% annually in September, far above expectations of 0.5% and 5.3%, respectively.

The Iran war will eventually end. Tariffs won't. Here's the problem

Two cost shocks are in the September Consumer Price Index (CPI), and they have different half-lives. Energy is up 20.4% on the year and accounts for about 1.3 points of the 3.7% headline, and that shock reverses when Oil does: Brent was back at its pre-war price on July 1 and above $100 again by the end of the month, after the ceasefire collapsed on July 8.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.