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Asia Roundup: Japanese yen rallies as investors stampede to safe-haven assets, greenback at 3-week low as pandemic fears lift Fed rate-cut bets, Asian shares plunge - Friday, February 28th, 2020

Market Roundup

  • Gold set for third monthly gain
     
  • Oil on track for biggest weekly drop in over 4 years
     

Economic Data Ahead

  • (0355 ET/0855 GMT) Germany Unemployment Rate s.a. (Feb)   
     
  • (0355 ET/0855 GMT) Germany Unemployment Change (Feb)
     
  • (0500 ET/1000 GMT) Italy Consumer Price Index (YoY) (Feb) PREL     
            
  • (0500 ET/1000 GMT) Italy Consumer Price Index (EU Norm) (MoM) (Feb) PREL 
     
  • (0500 ET/1000 GMT) Italy Consumer Price Index (MoM) (Feb) PREL 
           
  • (0500 ET/1000 GMT) Italy Consumer Price Index (EU Norm) (YoY) (Feb) PREL 
     

Key Events Ahead

  • No Significant Events Scheduled

FX Beat

DXY: The dollar index slumped to a 3-week low as worsening global threat from the virus prompted investors to rapidly step up bets the U.S. Federal Reserve would cut interest rates as soon as next month to support economic growth. The greenback against a basket of currencies traded down at 98.39, having touched a low of 98.33 earlier, its lowest since Feb. 6.

EUR/USD: The euro steadied after rising by 1 percent to a 3-week in the previous session, as the greenback declined amid growing dovish Federal Reserve expectations. The European currency traded flat at 1.1000, having touched a high of 1.1006 on Thursday, its highest since Feb. 6. Investors’ attention will remain on a series of data from the Eurozone economies ahead of the U.S. personal consumption expenditure, personal income and spending, wholesale inventories, Chicago Purchasing Managers index, and Michigan consumer sentiment index. Immediate resistance is located at 1.1014, a break above targets 1.1025. On the downside, support is seen at 1.0964, a break below could drag it below 1.0942.

USD/JPY: The dollar plunged to a 3-1/2 week low as the global spread of the coronavirus stoked expectations for a U.S. rate cut. Money markets are now all but certain the U.S. Federal Reserve will lower its benchmark lending rate next month. The major was trading 0.6 percent down at 108.88, having hit a low of 108.79 earlier, its lowest since Feb. 4. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. personal consumption expenditure, personal income and spending, wholesale inventories, Chicago Purchasing Managers index, and Michigan consumer sentiment index. Immediate resistance is located at 109.78, a break above targets 110.13. On the downside, support is seen at 108.66, a break below could take it near at 108.31.

GBP/USD: Sterling eased, extending losses for the third straight session as Britain confirmed a hardline stance on trade talks with the EU and disappointment grew that the new finance minister may not increase spending as much as expected. On Thursday, Britain said it wanted binding obligations on access to the European Union’s financial market The major traded down at 1.2883, having hit a low of 1.2860 on Thursday, it’s lowest since Feb. 20. Investors’ attention will remain on the trade negotiations, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2915, a break above could take it near 1.2934 (5-DMA). On the downside, support is seen at 1.2860, a break below targets 1.2841. Against the euro, the pound was trading 0.1 percent down at 85.43 pence, having hit a low of 85.44 earlier, it’s lowest since Jan.20.

AUD/USD: The Australian dollar slumped to a fresh 11-year low as deepening worries about coronavirus sent global financial markets into a tailspin. Hopes the coronavirus outbreak could be contained in China have vanished this week as infections spread around the globe. The Aussie trades 0.7 percent down at 0.6522, having hit a low of 0.6516 earlier, it’s lowest since March 2009. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.6570 (23.6% retracement of 0.6750 and 0.6516), a break above could take it near 0.6604 (38.2% retracement). On the downside, support is seen at 0.6512, a break below targets 0.6484.

NZD/USD: The New Zealand dollar plunged by over 1 percent to a 5-month trough amid fears the coronavirus would become a pandemic and trigger a global recession. The Kiwi trades 1.1 percent down at 0.6240, having touched a low of 0.6232 earlier, its lowest level since Oct. 1. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6330 (38.2% retracement of 0.6487 and 0.6232), a break above could take it near 0.6360 (50% retracement). On the downside, support is seen at 0.6218, a break below could drag it below 0.6192.

Equities Recap

Asian shares plunged amid worsening global threat from the coronavirus, as new infections reported around the world surpassed those in China.

MSCI's broadest index of Asia-Pacific shares outside Japan slumped 4.3 percent.

Tokyo's Nikkei plunged 3.7 percent to 21,142.96 points, Australia's S&P/ASX 200 index slumped 3.3 percent to 6,441.20 points and South Korea's KOSPI declined 3.3 percent to 1,987.01 points.

Shanghai composite index fell 3.7 percent to 2,880.96 points, while CSI 300 index traded 3.5 percent down at 3,940.02 points. Hong Kong’s Hang Seng traded 2.9 percent lower at 26,001.28 points.

Commodities Recap

Crude oil prices plunged to multi-month lows and were on track for about a 12 percent weekly fall, the biggest in more than four years, as the spread of the coronavirus outside China raised fears of slowing global demand. International benchmark Brent crude was trading 2.2 percent lower at $50.26 per barrel by 0529 GMT, having hit a low of $50.21 earlier, its lowest since 26 Dec. 2018. U.S. West Texas Intermediate was trading 1.5 percent down at $45.60 a barrel, after falling as low as $45.58 earlier, its lowest since Jan. 2019.

Gold prices eased on profit taking, however, mounting concerns over the rapid spread of the coronavirus and its impact on global economy limited downside. Spot gold was trading .3 percent down at $1,639.74 per ounce by 0535 GMT, having touched a high of $1689.38 on Monday, its highest since January 2013. U.S. gold futures were up 0.1 percent at $1,643.50.

Treasuries Recap

The U.S. yields plunged with the benchmark 10-year notes yield hitting a record low of 1.241 percent. It last stood at 1.247 percent.

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