Forex news from the European morning session - 28 January 2020
Headlines:
- WHO chief has met with China president Xi on coronavirus outbreak - spokesman
- PBOC confirms that Chinese markets to only resume trading on 3 February
- The market now sees a Fed rate cut in September this year
- Risk gets a reality check as coronavirus concerns escalate
- Hong Kong suspends personal travel permits from China amid coronavirus concerns
- Japan confirms coronavirus case of person who has not been to Wuhan/China
- China said to urge its citizens to delay foreign travel over virus fears
Markets:
- JPY leads, GBP lags on the day
- European equities tepid; E-minis up 0.2%
- US 10-year yields down 1.7 bps to 1.59%
- Gold down 0.1% to $1,579.75
- WTI down 0.6% to $52.81
- Bitcoin up 0.8% to $9,017
Markets continue to be gripped by coronavirus fears as the more steady risk mood quickly turned on its head after Hong Kong took more stringent precautions in dealing with persons travelling from China to try and curb the virus from spreading.
Risk was holding up decently with gains in European equities and US futures, while bonds were keeping near flat levels to start the session.
But that all quickly flipped over with bonds yields dragged lower to the point where the US 3-month-to-10-year yields spread almost (depending on your chart, it might have) inverted.
That saw USD/JPY get dragged from 109.05 to session lows of 108.76 before recovering a little. Meanwhile, equities sold off and the likes of the aussie and kiwi were also pushed down with AUD/JPY threatening support at around 73.35 as the offshore yuan also fell.
The pound continues to stay pressured since the early morning as traders continue to deliberate the near 50-50 odds of a BOE rate cut on Thursday. Cable eased from 1.3045 to 1.3004 and is keeping just above the lows currently.
Looking ahead, it's still all about the battle of risk as markets will have to deal with coronavirus fears and key tech earnings in Wall Street this week - Apple set to kick start things after the closing bell later today.