Market Roundup
- Gold gains as WHO declares coronavirus pandemic
- Oil slumps as U.S. bans travel from Europe over pandemic
Economic Data Ahead
- (0500 ET/1000 GMT) EZ Industrial Production w.d.a. (YoY) (Jan)
- (0500 ET/1000 GMT) EZ Industrial Production s.a. (MoM) (Jan)
Key Events Ahead
- (0745 ET/1245 GMT) ECB Interest Rate Decision
- (0745 ET/1245 GMT) ECB Deposit Rate Decision
FX Beat
DXY: The dollar index eased after U.S. President Donald Trump rattled markets with a month-long ban on European travel to the United States. The greenback against a basket of currencies traded 0.4 percent down at 96.25, having touched a low of 94.65 on Monday, its lowest since September 27, 2018.
EUR/USD: The euro rebounded from a near 1-week low as the European Central Bank is all but certain to unveil new stimulus measures today, pushing policy closer to its limits to help the euro zone economy cope with the shock of the coronavirus epidemic. The pair initially tumbled after Trump announced a ban on travellers from 26 European countries entering the United States for a month. The European currency traded 0.2 percent up at 1.1293, having touched a high of 1.1495 on Monday, its highest since January 2019. Investors’ attention will remain on Eurozone industrial production and ECB interest rate decision, ahead of the U.S. unemployment benefit claims and producer price index. Immediate resistance is located at 1.1354, a break above targets 1.1400. On the downside, support is seen at 1.1197 (10-DMA), a break below could drag it below 1.1133.
USD/JPY: The dollar declined, extending previous session losses after the World Health Organization described the new coronavirus as a pandemic. On Wednesday, Trump suspended all travel from Europe to the United States for 30 days starting on Friday in order to fight the coronavirus. The restrictions are applied to all of Europe, excluding the United Kingdom. The major was trading 0.8 percent down at 103.70, having hit a low of 101.18 on Monday, its lowest since October 2016. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. unemployment benefit claims and producer price index. Immediate resistance is located at 105.75 (61.8% retracement of 108.57 and 101.18), a break above targets 106.44 (10-DMA). On the downside, support is seen at 102.92, a break below could take it near at 102.37.
GBP/USD: Sterling plunged to a 1-week low after the Bank of England cut interest rates by 50 basis points to 0.25 percent, in its first emergency since the global financial crisis more than a decade ago. On Wednesday, the major surged after the British government unveiled a 30 billion pound ($39 billion) economic stimulus plan, but closed lower as the interest rate cuts were larger than expected. The major traded 0.05 percent lower at 1.2811, having hit a high of 1.3200 on Monday, it’s highest since Jan. 31. Investors’ attention will remain on the trade negotiations and geopolitical developments ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2897 (10-DMA), a break above could take it near 1.2933 (21-DMA). On the downside, support is seen at 1.2770, a break below targets 1.2740. Against the euro, the pound was trading 0.4 percent down at 88.22 pence, having hit a low of 88.47 on Wednesday, it’s lowest since Oct. 11.
AUD/USD: The Australian dollar declined, extending losses for the fourth straight session, as risk sentiment weakened after U.S. President Donald Trump said the United States will suspend all travel from Europe as he unveiled measures to contain the coronavirus epidemic. The Aussie trades 0.6 percent down at 0.6445, having hit a low of 0.6314 on Monday, 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 0.6507, a break above could take it near 0.6535. On the downside, support is seen at 0.6433, a break below targets 0.6405.
Equities Recap
Asian shares slumped as a surprise U.S. ban on travel from Europe added to investor fears over the impact of coronavirus.
Tokyo's Nikkei declined 4.4 percent to 18,559.63 points, Australia's S&P/ASX 200 index fell 7.4 percent to 5,304.60 points and South Korea's KOSPI slumped 3.9 percent to 1,834.33 points.
Shanghai composite index eased 1.5 percent to 2,923.49 points, while CSI 300 index traded 1.9 percent down at 3,950.91 points.
Hong Kong’s Hang Seng traded 3.8 percent lower at 24,269.00 points. Taiwan shares shed 4.3 percent to 10,422.32 points.
Commodities Recap
Crude oil prices slumped after the United States banned travel from Europe following a World Health Organization declaration that the coronavirus outbreak is now a pandemic. International benchmark Brent crude was trading 5.0 percent lower at $33.29 per barrel by 0608 GMT, having hit a low of $31.26 on Monday, its lowest since Feb. 2016. U.S. West Texas Intermediate was trading 4.6 percent down at $31.57 a barrel, after falling as low as $27.40 on Monday, its lowest since Feb. 2016.
Gold prices nudged up as concerns about the economic impact from the coronavirus increased after world health officials declared it a pandemic and many countries took measures to combat the spread by restricting public gatherings. Spot gold rose 0.1 percent to $1,638.79 per ounce by 0612 GMT, having touched a high of $1703.28 on Monday, its highest since December 2012. U.S. gold futures were up 0.1 percent at $1,644.30.
Treasuries Recap
On Wednesday, he yield on the 10-year Treasury note, which moves inversely with prices, rose six basis points to 0.82 percent in volatile trading. The yield on the 30-year Treasury bond was also higher at around 1.33 percent.
