Market Roundup
- Gold jumps over 2 percent
- Oil prices skid on demand concerns
- Virus spreads beyond China
Economic Data Ahead
- (0400 ET/0900 GMT) Germany IFO - Business Climate (Feb)
- (0400 ET/0900 GMT) Germany IFO - Current Assessment (Feb)
- (0400 ET/0900 GMT) Germany IFO - Expectations (Feb)
Key Events Ahead
- No Significant Events Scheduled
FX Beat
DXY: The dollar index steadied after tumbling from a 3-year peak last week on data that showed American business activity stalled in February, signalling a contraction for the first time since 2016. The manufacturing sector also recorded its lowest reading since August. The greenback against a basket of currencies traded 0.3 percent up at 99.58, having touched a high of 99.91 on Thursday, its highest since April 21, 2017.
EUR/USD: The euro declined from a 1-1/2 week peak hit in the previous session as the rapid spread of the coronavirus beyond China drove fears of a pandemic. Italy has halted the carnival of Venice, shut schools, and sealed off affected towns across north, but is struggling to find out how and where the virus spread began. The European currency traded 0.3 percent down at 1.0821, having touched a low of 1.0777 on Thursday, its lowest since May 2017. Investors’ attention will remain on German IFO data, ahead of the U.S. Chicago Fed National Activity Index and Dallas Fed Manufacturing Business Index. Immediate resistance is located at 1.0865, a break above targets 1.0925. On the downside, support is seen at 1.0800, a break below could drag it below 1.0783.
USD/JPY: The dollar plunged, extending losses from the prior session as the spread of the coronavirus outside China darkened the outlook for world growth with infections and deaths rising in South Korea, Italy and the Middle East. The major was trading down at 111.21, having hit a high of 112.22 on Thursday, its highest since April 25 2019. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. Chicago Fed National Activity Index and Dallas Fed Manufacturing Business Index. Immediate resistance is located at 112.07, a break above targets 112.23. On the downside, support is seen at 110.95, a break below could take it near at 110.40 (10-DMA).
GBP/USD: Sterling eased after rising to more than 0.5 percent in the previous session on UK purchasing managers indexes that showed British factories posted the fastest rise in output for 10 months. The major traded 0.1 percent down at 1.2940, having hit a low of 1.2848 on Thursday, it’s lowest since Nov. 27. Investors’ attention will remain on the trade negotiations, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2966 (10-DMA), a break above could take it near 1.2998 (21-DMA). On the downside, support is seen at 1.2907, a break below targets 1.2848. Against the euro, the pound was trading 0.1 percent down at 83.61 pence, having hit a low of 84.15 on Thursday, it’s lowest since Feb.12.
AUD/USD: The Australian dollar slumped near an 11-year low after Italy, South Korea and Iran all posted sharp rises in infections over the weekend. South Korea now has more than 600 cases, Italy more than 150 and Iran 43 cases. The Aussie trades 0.3 percent down at 0.6601, having hit a low of 0.6584 earlier, it’s lowest since March 2009. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.6585, a break below targets 0.6568. On the upside, resistance is located at 0.6623 (23.6% retracement of 0.6750 and 0.6584), a break above could take it near 0.6647 (38.2% retracement).
NZD/USD: The New Zealand dollar slumped, hovering towards a 4-month low recorded last week as concerns about the impact of the new virus grew, with the number of infections jumping in South Korea, Italy and Iran. The Kiwi trades 0.5 percent down at 0.6315, having touched a low of 0.6306 on Friday, its lowest level since Oct. 17. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6347 (23.6% retracement of 0.6487 and 0.6306), a break above could take it near 0.6374 (38.2% retracement). On the downside, support is seen at 0.6282, a break below could drag it below 0.6255.
Equities Recap
Asian shares declined as concerns about the spread of the virus beyond China grew with sharp rises in infections in South Korea and Italy and Iran.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 1.6 percent.
Australia's S&P/ASX 200 index eased 2.3 percent to 6,978.30 points and South Korea's KOSPI slumped 3.5 percent to 2,086.07 points.
Shanghai composite index fell 0.2 percent to 3,033.35 points, while CSI 300 index traded 0.3 percent down at 4,138.48 points.
Hong Kong’s Hang Seng traded 1.6 percent lower at 26,876.75 points. Taiwan shares shed 1.3 percent to 11,534.87 points
Commodities Recap
Crude oil prices plunged nearly 3 percent towards a 1-week low as the rapid spread of the coronavirus in several countries outside China left investors fretting about a hit to demand. International benchmark Brent crude was trading 2.3 percent lower at $57.03 per barrel by 0507 GMT, having hit a high of $59.98 on Thursday, its highest since Jan. 29. U.S. West Texas Intermediate was trading 2.3 percent down at $52.09 a barrel, after rising as high as $54.45 on Thursday, its highest since Jan. 24.
Gold prices surged more than 2 percent to their highest since February 2013 as a spike in coronavirus cases in several countries outside China heightened worries about a hit to global economic growth. Spot gold was up 1.2 percent at $1,662.52 per ounce by 0510 GMT, having touched a high of $1681.31 earlier, its highest since Feb. 2013. U.S. gold futures rose 1 percent to 1,664.60.
Treasuries Recap
On Friday, U.S. Treasury yields were down as mounting concerns about the economic impact of the coronavirus epidemic drove investors into safe-haven assets. The benchmark 10-year yield was down 6.9 basis points in morning trade at 1.4561 percent.
