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Forex Today: Risk-off grips Asia on China virus scare; focus on UK jobs, German ZEW

Dhwani Mehta FXStreet

Forex today in Asia saw a strong risk-off wave this Thursday, as investors flocked to safe harbors, namely, the yen and gold amid rising concerns over the economic impact of a Chinese coronavirus outbreak, which led to four deaths in China and appeared to have spread into Australia.

The US dollar extended its broad-based correction after the anti-risk yen picked up bids against the greenback. USD/JPY dropped to lows of 109.90 before recovering some ground around the 110 handle. Bank of Japan’s (BOJ) status-quo and upgradation to its growth forecasts failed to impress the JPY bulls.

Another safe-haven, gold, hit a nine-day high near $1568, as risk-off remained at full steam. Asian stocks were a sea of red while S&P 500 futures and the US Treasury yields incurred heavy losses, reflective of the jittery market mood.

Across the fx space, the Chinese yuan slumped to weekly lows on China virus outbreak news while the Antipodeans also fell alongside amid reduced demand for higher-yielding currencies. The Aussie tested the 0.6850 support once again while NZD/USD battled the 0.6600 level. Meanwhile, the USD/CAD pair regained the 1.3050 barrier amid extension of the weakness in oil prices. Oil prices extended losses after the International Monetary Fund (IMF) cut global growth forecasts.

Among the European currencies, EUR/USD bulls struggled to extend the recovery above the 1.11 handle while GBP/USD held steady above 1.3000 ahead of the key UK labor market report.

Main Topics in Asia

US Agriculture Sec. Perdue: No need for more farm aid after China trade deal

Sources: Three rockets fall inside Baghdad's Green Zone, no casualties – Reuters

India's Gold imports may rebound from a three-year low - All India Gem & Jewellery Domestic Council.

Pompeo says more US action coming to support Venezuelan opposition leader - Reuters

Trump: Heading to Davos and additional hundreds of billions of dollars back to USA

Wuhan-Pneumonia pandemic control centre set up to prevent spread of virus

China shows highest levels of confidence among major economies for 2020 - PwC survey

China’s CommerceMin: China welcomes competitive US products to enter China's markets

Coronavirus spreading into Australia, a Brisbane man undergoes tests - Australian press

BOJ leaves monetary policy unchanged, as widely expected

BOJ Quarterly Outlook: Japan’s GDP forecasts revised up, CPI projections lowered

Key Focus Ahead

Markets stay focussed on the UK Employment and Wage growth data, due for release at 0930 GMT, which will be closely eyed ahead of Thursday’s Bank of England (BOE) monetary policy decision. Also, of relevance remains the German ZEW Survey for January that is usually considered as a lead indicator. The ZEW Survey for Eurozone is also up for grabs at the same time, 1000 GMT.

All eyes will also remain on US President Trump’s speech at the World Economic Forum (WEF) in Davos that commences at 1030GMT until 1100GMT. The speech is titled 'Beyond Geopolitics'.

Moving on, the NA docket is a relatively lighter one, with the only Canadian Manufacturing Sales data of note. However, New Zealand’s GDT Price Index could also garner some attention around 1500 GMT, as the risk sentiment will continue to remain the main market motor amid concerns over the new virus outbreak and US political woes.

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GBP/USD ignores Brexit news ahead of UK employment data

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GMT	Event	Consensus	Previous
Monday, Jan 20
24h	USD Martin L. King's Birthday
24h	EUR Eurogroup Meeting
Tuesday, Jan 21
24h	EUR EcoFin Meeting
06:00	JPY BoJ Press Conference
09:00	EUR ECB Bank Lending Survey
09:30	GBP Average Earnings Excluding Bonus (3Mo/Yr)	3.4%	3.5%
09:30	GBP Claimant Count Rate		3.5%
09:30	GBP ILO Unemployment Rate (3M)	3.8%	3.8%
09:30	GBP Average Earnings Including Bonus (3Mo/Yr)	3.1%	3.2%
09:30	GBP Claimant Count Change	24.5K	28.8K
10:00	EUR ZEW Survey - Economic Sentiment	15.0	10.7
10:00	EUR ZEW Survey - Current Situation	-13.8	-19.9
10:00	EUR ZEW Survey - Economic Sentiment	5.5	11.2
13:30	CAD Manufacturing Sales (MoM)	0.3%	-0.7%
13:55	USD Redbook Index (YoY)		5%
13:55	USD Redbook Index (MoM)		-0.2%
n/a	NZD GDT Price Index	-0.3%	2.8%
16:30	USD 3-Month Bill Auction		1.53%
16:30	USD 6-Month Bill Auction		1.53%
23:00	CHF World Economic Forum - Davos
23:30	AUD Westpac Consumer Confidence	-0.8%	-1.9%
Wednesday, Jan 22
09:30	GBP Public Sector Net Borrowing	£4.600B	£4.878B
11:00	GBP CBI Industrial Trends Survey - Orders (MoM)		-28
12:00	USD MBA Mortgage Applications		30.2%
13:30	USD Chicago Fed National Activity Index	-0.30	0.56
13:30	CAD Wholesale Sales (MoM)	-0.3%	-1.1%
13:30	CAD New Housing Price Index (YoY)		-0.1%
13:30	CAD New Housing Price Index (MoM)	0.1%	-0.1%

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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