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Fundamental Forex Analysis

China coronavirus death tops SARS, upbeat CPI rescues the Aussie

The Chinese factories and offices returned to work on Monday, as the country continued to battle the coronavirus epidemic, with the death toll surpassed the 900 figure as well as that of SARS’. The market mood was largely somber, barring a brief lift following a big beat on the Chinese CPI data. The Asian equities traded with mild losses while the traditional safe-haven gold drew bids and traded around $1575 region.

Across the G10 fx board, the Australian dollar staged a solid comeback from a new decade low near 0.6660, having benefited from positive Chinese inflation figures. The AUD/USD pair jumped above 0.6700, dragging the Kiwi higher above the 0.64 handle. The anti-risk yen traded on the back foot, as USD/JPY tracked the strength in the Treasury yields and S&P 500 futures. The increased Bank of Japan (BOJ) bond-buying and shrinking Japan’s Current Account surplus likely weighed on the local currency.

Meanwhile, the USD/CAD pair fell below the 1.3300 level amid a tepid recovery seen in oil prices and weaker US dollar across its main competitors, as the buck corrected the US NFP data-backed gains. The EUR/USD pair attempted a bounce above 1.0950 but the further downside still remained in play.  The UK-US post-Brexit trade deal optimism drove the cable back on the 1.29 handle.

Main Topics in Asia

Iran supports unanimous OPEC output cut plan

Brexit officials fear talks could break down as early as this April – Telegraph

NZIER Policy Shadow Board recommends no RBNZ rate change this week

Coronavirus cases in Hubei and Wuhan has continued climbing – Global Times

Coronavirus update: Total cases in China rises to 40,171, death toll 908

Chinese CPI YoY (Jan): 5.4% vs 4.9% expected and 4.5% prior, (fastest rise since Oct 2011)

China’s AgricultureMin reports first H5N6 bird flu in Sichuan poultry farm

BOJ increases purchases of 10-25-year JGBs to JPY 120bn

China’s central bank injects 900 billion into market

Indonesia Q4 current account deficit widens to 2.84%

UK’s Raab: Confident of trade deal with the US in wave one

Key Focus Ahead       

We have a quiet start to a busy week ahead, in terms of the economic data releases, as Monday’s EUR calendar sees the only Eurozone Feb Sentix Investor Confidence gauge of note. The data will drop in at 0900 GMT. The Chinese credit growth data could draw some attention, in the wake of growing coronavirus risks.  

The NA session offers the speech by the Fed official Bowman at 1315 GMT alongside the release of the Canadian Housing Starts data. Meanwhile, the Canadian Building Permits data will drop in at 1430 GMT.

The coronavirus-related updates will continue to keep the investors on the edge, as post-Brexit trade talks will also remain in the focus.

EUR/USD prints longest daily losing run since November

EUR/USD has registered its longest daily losing streak since November. The single currency is likely to remain under pressure with the virus scare continuing to dominate the market sentiment. Focus on Eurozone’s Sentix Investor Confidence (Feb) due at 09:00 GMT. 

GBP/USD struggles around 10-week low amid hard Brexit fears

GBP/USD seesaws around 1.2900 while heading into the London open on Monday. While broad US dollar strength has been weighing on the pair off-late, expectations of a hard Brexit recently disappointed the Cable traders.

Gold Price Analysis: Retreats to 200-HMA, bearish candle on weekly chart

Gold has surrendered gains seen in early Asia and could revisit the Feb. 5 low of $1,548 during the week ahead. The safe-haven metal may continue to lose ground, as early signs of bearish reversal have emerged on the weekly chart. 

 

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