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Forex News Timeline

Wednesday, February 19, 2020

The outlook on Cable looks mixed but it could still attempt to test the 1.3160 region in the short-term, suggested FX Strategists at UOB Group. Key Qu

The outlook on Cable looks mixed but it could still attempt to test the 1.3160 region in the short-term, suggested FX Strategists at UOB Group. Key Quotes 24-hour view: “We highlighted yesterday that there “is room for GBP to test the 1.2980 support first before a rebound can be expected”. Our view was not wrong as GBP dipped to 1.2971 before rebounding to touch 1.3049 during London hours (before easing off quickly). The rapid but short-lived swings have resulted in a mixed outlook. From here, GBP could trade in a choppy manner and within a relatively broad range of 1.2970/1.3060.” Next 1-3 weeks: “After popping to a high of 1.3069 last Thursday (13 Feb), GBP has not been able to make much headway on the upside. The price action was not exactly surprising as we highlighted last Friday (14 Feb, spot at 1.3045) that ‘despite the strong advance, we do not view the current GBP strength as part of an uptrend’. For now, we continue to hold the view that the ‘short-term strength could extend to 1.3160’ but after the price action over the past couple of days, the prospect for further GBP strength has diminished. On the downside, a breach of 1.2950 would indicate that the current mild upward pressure has eased.”

While presenting the German DIHK Chambers of Industry and Commerce latest business sentiment survey among more than 26,000 firms, the German body cite

While presenting the German DIHK Chambers of Industry and Commerce latest business sentiment survey among more than 26,000 firms, the German body cites that it sees 2020 GDP growth at 0.7% amid sluggish conditions. Key quotes: Export growth will be stagnant this year in the wake of trade conflicts and Brexit More companies still expect business to be worse rather than better this year although investment sentiment is slightly better than it was from the October survey.

The latest data published by the Joint Organizations Data Initiative (JODI) showed on Wednesday, Saudi Arabia, the Organization of Petroleum Exporting

The latest data published by the Joint Organizations Data Initiative (JODI) showed on Wednesday, Saudi Arabia, the Organization of Petroleum Exporting Countries’ (OPEC) No.1 oil producer, reported a 10.75% drop in its exports YoY in 2019, as cited by Kingdom’s news outlet Mubasher. Key details (via oilprice.com) “The total Saudi oil exports, including crude oil and petroleum products, averaged 8.339 million barrels per day (bpd) in 2019, down from an average 9.344 million bpd in total oil exports in 2018. Saudi Arabia’s crude oil exports in December remained unchanged month on month at 7.37 million bpd. Throughout 2019, Saudi crude oil exports did not exceed 7.4 million bpd in any month.” Oil prices trade firmer Ahead of the European open, both crude benchmarks are seen paring their earlier gains, as China’s coronavirus induced uncertainty in the market continues to weigh on investors’ mind. WTI, still, holds above $52.50 while Brent manages to sustain above $58 mark.

The AUD/USD pair traded with a mild positive bias through the Asian session, with bulls still awaiting a sustained move beyond the 0.6700 round-figure

AUD/USD gains some positive traction on Wednesday amid improving risk sentiment.A pickup in the US bond yields underpinned the already stronger USD and capped gains.The AUD/USD pair traded with a mild positive bias through the Asian session, with bulls still awaiting a sustained move beyond the 0.6700 round-figure mark. The pair managed to regain some positive traction on Wednesday and recovered further from over one-week lows, set in the previous session amid mounting concerns over deepening economic fallout from the coronavirus outbreak. The upside seems limited However, a recovery in the global risk sentiment, supported by a slowdown in new cases, extended some support to perceived riskier currencies, including the Australian dollar, and attracted some buying interest around the major. On the other hand, the US dollar stood tall near multi-month tops and remained well supported by Tuesday's stronger-than-expected Empire State Manufacturing Index, which surpassed consensus estimates and rose sharply to 12.9 in February. Meanwhile, a positive mood around equity markets led to a modest uptick in the US Treasury bond yields and further underpinned the already stronger greenback, which eventually turned out to be the only factor capping additional gainst. Hence, it will be prudent to wait for some strong follow-through buying before traders start positioning for any further near-term appreciating move. Moving ahead, Wednesday's release of housing market data and Producer Price Index from the US, along with speeches by influential FOMC members will be looked upon for a fresh impetus. Technical levels to watch  

Open interest in Gold futures markets went up by nearly 28.4K contracts on Tuesday, reaching the third consecutive build according to flash data from

Open interest in Gold futures markets went up by nearly 28.4K contracts on Tuesday, reaching the third consecutive build according to flash data from CME Group. In the same line, volume rose by nearly 188.7K contracts, reaching the largest single day build so far this year. Gold now looks to YTD highs The ounce troy of the precious metal regained the key $1,600 mark on Tuesday amidst rising open interest and volume, opening the door at the same time for a potential visit to the 2020 peaks at $1,611.34 recorded earlier in January.

FX Strategists at UOB Group remain bearish on EUR/USD and hinted at a potential move to 1.0770 and possibly below. Key Quotes 24-hour view: “After tra

FX Strategists at UOB Group remain bearish on EUR/USD and hinted at a potential move to 1.0770 and possibly below. Key Quotes 24-hour view: “After trading sideways for a couple of days, EUR lurched lower and dropped to 1.0784 before ending the day on a weak note at 1.0791 (- 0.40%). The sudden pick up in momentum suggests EUR has room to weaken further to 1.0770. For today, the prospect for a break of the next support at 1.0740 is not high. Resistance is at 1.0820 followed by 1.0840.” Next 1-3 weeks: “We highlighted on Monday (17 Feb, spot at 1.0840) that ‘the combination of waning momentum and oversold conditions suggest that a bottom may not be far away’. We added, ‘while a dip below 1.0810 would not be surprising, the next support at 1.0770 could be out of reach’. Instead of ‘dipping below 1.0810’, EUR plummeted below this level and dropped to a low of 1.0784 before ending the day on a weak note at 1.0791 (-0.40%). The sudden and rapid pick up in momentum suggests the weak phase that started earlier this month is not ready to stabilize just yet. Only a move above 1.0860 (‘strong resistance’ level previously at 1.0890) would indicate that the current weakness in EUR has run its course. Otherwise, a break of 1.0770 would open up the way for further decline towards 1.0740 (next support is at 1.0700).”

Ray Attrill, Head of FX strategy at National Australia Bank (NAB), said in his latest client note that the US dollar could benefit from both risk-on a

Ray Attrill, Head of FX strategy at National Australia Bank (NAB), said in his latest client note that the US dollar could benefit from both risk-on and risk-off market conditions. Key Quotes: “The dollar seems to be benefiting from risk-on conditions where its yield attractions in an ultra-low FX volatility environment still stand out and its equity market continues to perform better than elsewhere. The dollar is also able to benefit from risk-off conditions via traditional safe haven support for US Treasuries. The diverging economic data performance recently between the euro and dollar as a key reason as well by noting that this has aggravated euro weakness while supporting the greenback at the same time.”

In light of preliminary prints for JPY futures markets from CME Group, open interest and volume rose by nearly 5.5K contracts and almost 75K contracts

In light of preliminary prints for JPY futures markets from CME Group, open interest and volume rose by nearly 5.5K contracts and almost 75K contracts, respectively, on Tuesday, reversing Friday’s pullback. USD/JPY does not rule out extra gains Tuesday’s lack of direction in the price action around USD/JPY was on the back of rising open interest and volume, leaving the outlook somewhat uncertain. That said, risk trends, with the main focus on the COVID-19, are expected to keep ruling the sentiment in the Japanese safe haven while the pair keeps targeting the area above the key 110.00 barrier.

FX option expiries for Feb 19 NY cut at 10:00 Eastern Time, via DTCC, can be found below. - EUR/USD: EUR amounts 1.0785 1.2bn - GBP/USD: GBP amounts 1

FX option expiries for Feb 19 NY cut at 10:00 Eastern Time, via DTCC, can be found below. - EUR/USD: EUR amounts 1.0785 1.2bn - GBP/USD: GBP amounts 1.3080 201m - USD/JPY: USD amounts          109.85 491m 110.00 1.1bn - AUD/USD: AUD amounts 0.6700 2.4bn  0.6740 522m 0.6750 890m - USD/CAD: USD amounts        1.3290 1.1bn

UOB Group’s Economist Barnabas Gan gives his views on the recently announced Budget 2020 in Singapore. Key Quotes “The Singapore Budget 2020 is being

UOB Group’s Economist Barnabas Gan gives his views on the recently announced Budget 2020 in Singapore. Key Quotes “The Singapore Budget 2020 is being announced in a time of unprecedented global threat from multilateralism, and amid on-going geopolitical tensions, the COVID-19 outbreak and global economic uncertainties.” “Owing to the uncertainties, Budget 2020 has introduced two special packages: the Stabilisation and Support Package (S$4.0bn) and a Care and Support Package (S$1.6bn). Collectively, the above-mentioned packages will set aside S$5.6 billion (or 1.1% of GDP) to support businesses and households with the COVID-19 outbreak.” “The Stabilisation and Support Package is targeted to help workers remain employed and aid companies with cash flow, while the Care and Support Package is to support households and alleviate concerns over cost of living.” “Beyond near-term uncertainties, the budget recognises four key areas to prepare Singapore and Singaporeans for mid-to-long term challenges and opportunities. These include (1) growing Singapore’s economy and creating opportunities, (2) caring and nurturing Singaporeans at every stage of life, (3) building a liveable and sustainable Singapore in the face of climate change while securing Singapore’s sovereignty as an independent nation, and (4) working together to mobilise all Singaporeans to build a nation and a home.” “For fiscal year 2020, revenue is expected to come in at S$76.0 billion, or an increase of S$1.3 billion over the revised 2019 estimates… Overall budget balance remains expansionary at an estimate of S$10.9 billion deficit, or 2.1% of GDP. This compares to a revised overall budget deficit of S$1.7 billion in FY2019.”

CME Group’s advanced readings for GBP futures markets showed investors added around 1.2K contracts to their open interest positions on Wednesday, resu

CME Group’s advanced readings for GBP futures markets showed investors added around 1.2K contracts to their open interest positions on Wednesday, resuming the uptrend after Friday’s drop. In the same line, volume reversed the previous pullback and increased by around 52.2K contracts. GBP/USD looks capped by 1.3060, the 55-day SMACable’s inconclusive session on Tuesday was amidst rising open interest and volume and following another failed attempt to break above the 1.3060/65 band, where is located the 55-day SMA. That said, the continuation of the leg lower could extend to, initially, monthly lows in the 1.2870 region (February 10th).

Enrico Tanuwidjaja, Economist at UOB Group, reviewed the impact of the Chinese COVID-19 on the latest trade balance figures in Indonesia. Key Quotes “

Enrico Tanuwidjaja, Economist at UOB Group, reviewed the impact of the Chinese COVID-19 on the latest trade balance figures in Indonesia. Key Quotes “Indonesia trade balance posted a large deficit of USD864.2mn in January 2020, as exports to Indonesia key trading partner – China dropped amidst impact from the novel coronavirus (COVID19) outbreak, which more than offset the decline in imports.” “Despite the impact of slower exports growth hitting some of the Indonesia’s key commodity exports and a high likelihood that it will take some time for Indonesia to diversify, we are hopeful that COVID-19 would soon be contained (within 6 months or earlier) and as such are still projecting a steadier expansion in H2 2020.”

Risk-recovery emerged as the main underlying theme in Asia this Wednesday, reflective of a rebound in the Asian stocks, Wall Street futures and Treasu

Risk-recovery emerged as the main underlying theme in Asia this Wednesday, reflective of a rebound in the Asian stocks, Wall Street futures and Treasury yields. A slowdown in the number of new coronavirus cases in China’s Hubei province, the epicenter, and China’s containment efforts help subside the fears over the economic fallout of the virus outbreak. The safe-haven yen was the weakest across the fx board, as USD/JPY topped the 110 level for the first time in five days. The Aussie also staged a comeback and battled the 0.67 handle while NZD/USD cheered the upbeat comments from the Reserve Bank of New Zealand (RBNZ), Governor Orr, amid improved risk tones. Meanwhile, USD/CAD kept its overnight range trade intact around mid-1.32s just as the cable held onto the 1.30 barrier. EUR/USD, however, attempted an anemic bounce above 1.0800 from multi-year lows amid broad US dollar retreat. Despite the upside attempts, the bearish bias remains in place for the shared currency. On commodity markets, gold prices on Comex consolidated near a six-week high of $1608.15 while oil prices (on NYMEX) jumped nearly 1% ahead of the US weekly crude supply report. Main Topics in Asia RBNZ: Both the economy and monetary policy are in a good position British prime minister again displays a cosiness with Beijing – SCMP China's Hubei province, epicentre of coronavirus outbreak, reports 1,693 new cases on Feb 18 vs 1,807 on Feb 17 WHO urges calm as China virus death toll reaches 2,000 – AFP China’s NHC reports 1,749 new confirmed cases of coronavirus, 136 new deaths - Xinhua Moody's says credit conditions in Asia will turn negative in 2020 S. Korea confirms 15 new coronavirus cases, Hong Kong reports 2nd death Singapore’s FinMin Heng: SGD exchange rate has sufficient band to move as appropriate S&P: Coronavirus will deliver a short-term blow to China’s Q1 economic growth Sources: Japan govt to maintain view that economy is recovering despite virus risks - Reuters China dumps US Treasuries for the sixth straight month in December US Pres. Trump casts doubts over India trade deal ahead of visitKey Focus Ahead        The main highlight in Wednesday’s EUR macro calendar is likely to be the UK Consumer Price Index (CPI) for January, due at 0930 GMT, with both the annualized headline and core figures seen accelerating while on a monthly basis, the CPI is likely to report deflation. Also, in focus will remain the Eurozone Current Account and Construction Output data due later in the European trading. The Brexit-related headlines will be also eyed for fresh trading incentives. The NA session offers a slew of US macro releases, including the Building Permits, Housing Starts, Producer Price Index (PPI), all of which will drop in at 1330 GMT. At the same time, the Canadian CPI data will be released. Apart from the data and coronavirus-related updates, the speeches by the US Federal Reserve (Fed) officials Mester, Kaplan and Kashkari will remain in focus ahead of the key FOMC January meeting’s minutes, slated for release at 1900 GMT. Later in the American afternoon, the American Petroleum Institute’s (API) weekly Crude Stocks data will be published at 2130 GMT, soon followed by New Zealand’s PPI data release. EUR/USD: Investors add bets to position for weakness in the Euro EUR/USD is looking south and investors are adding bets to position for deeper losses in the common currency. The spot printed its worst daily close in nearly three years on Tuesday. Broader market sentiment and Eurozone data are likely to guide EUR/USD pair.  GBP/USD awaits UK Consumer Price Index for fresh moves GBP/USD clings to 1.3000 ahead of the London open on Wednesday. The cable has been in a 10-pip choppy range between 1.2995 and 1.3005 since the start of the Asian session. The reason to blame could be traced from the upcoming UK Consumer Price Index (CPI) data. UK inflation preview: How CPI may finally break the pound's prowess UK inflation figures for January are set to show a rebound to 1.6%. GBP/USD has shown resilience to weak wage figures and worrying Brexit headlines. Downbeat CPI figures may be a breaking point for the pound. January FOMC Minutes Preview: The economic comparisons accumulate Unanimous vote for stable policy at January 28-29 meeting. Powell testimony in Congress lauds economy, labor market. Dollar stronger on economic comparison European Union.  

Open interest in EUR futures markets shrunk for the second session in a row on Tuesday, this time by just 928 contracts according to flash data from C

Open interest in EUR futures markets shrunk for the second session in a row on Tuesday, this time by just 928 contracts according to flash data from CME Group. On the other side, volume posted the largest single day build so far this year, up by around 153.5K contracts. EUR/USD: Downside momentum losing traction?EUR/USD closed below the key support at 1.08 the figure on Tuesday, levels last seen in April 2017. While the large build in volume opens the door for extra pullbacks in the near-term, shrinking open interest also hints at the likeliness that the downside momentum could be running out of steam.

Following their fiercest drop in three weeks, Asian equities bounce back amid clues of further liquidity infusion from China as well as cautious optim

Shares traders in Asia-Pacific stay cautiously optimistic.Coronavirus figures flash mixed signals while diplomats from Beijing show readiness to confront the epidemic.Chinese headlines will keep the driver’s seat amid a lack of major data/events.Following their fiercest drop in three weeks, Asian equities bounce back amid clues of further liquidity infusion from China as well as cautious optimism considering Beijing’s upbeat outlook. Despite Moody’s flashing warning to China and Asia, on the back of coronavirus fears, Chinese President Xi Jinping says that the dragon nation will be able to meet this year’s growth target. The Reuters’ news follows comments from China’s Commerce Ministry that showed readiness to announce further measures to keep foreign investments. Also supporting the expectations of further stimulus from China come from the People’s Bank of China’s (PBOC) cut to the medium-term lending rate on Monday. Concerning the coronavirus numbers, data from Hubei and mainland China suggests a steady decline in the infections. However, the death rate has been strong and the cases of the Princess cruise ship in Japan stand tall. While portraying the same, MSCI’s index of Asia-Pacific shares outside Japan register 0.44% gains whereas Japan’s NIKKEI rises 0.94% to 23,415 during the pre-European session on Wednesday. Markets in China and Hong Kong join those of Indonesia and India to register sub-1.0% gains whereas South Korea’s KOSPI loses 0.10% to 2,206 by the press time despite the government’s plan to unveil comprehensive economic measures. The US 10-year treasury yields recover to 1.566% whereas S&P 500 Future buck the Wall Street’s losses. Considering the lack of major data/events on the economic calendar, updates from China will be the key driver for the Asian equities.

Economist at UOB Group Barnabas Gan assessed the outlook on Thailand’s economic growth for the current year. Key Quotes “Thailand’s economy expanded 1

Economist at UOB Group Barnabas Gan assessed the outlook on Thailand’s economic growth for the current year. Key Quotes “Thailand’s economy expanded 1.6% y/y in 4Q19, marking its slowest growth pace since 3Q14. On a quarter-on-quarter seasonally adjusted basis, the economy expanded merely 0.2% in 4Q19. Accounting for the latest growth print, Thailand clocked 2.4% growth for the whole of 2019.” “We are downgrading our full-year growth further to 2.0% for 2020, accounting for the negative impact from the COVID-19 outbreak. This is down from our previous estimate of 2.8% which we highlighted was still subjected to downside risks of between 0.5% and 1.0% depending on the severity of the COVID-19 outbreak.” “With the Bank of Thailand cutting its benchmark rate by 25bps to an unprecedented low of 1.0% in its February 2020 MPC meeting, we think that policy space is limited at this juncture. We also view that Thailand’s elevated household debt levels and inflation pressures could be exacerbated if rates are cut further in 2020. As such, we do not expect the Bank of Thailand to reduce rates further in 2020. Instead, we expect economic stimulus to come from fiscal space (ie budget disbursements, relaxed rules to facilitate capital outflows etc) to mitigate the impact arising from the COVID-19 outbreak.”

Here is what you need to know on Wednesday, February 19: Coronavirus: The respiratory disease has already taken the lives of over 2,000 people includi

Here is what you need to know on Wednesday, February 19:Coronavirus: The respiratory disease has already taken the lives of over 2,000 people including a second victim in Hong Kong and infected over 75,000. However, contrary to Tuesday, markets are calmer as Beijing has announced more measures to help the economy. This includes bailing out airlines, waiving social security payments, and more.Markets: The safe-haven yen is retreating with USD/JPY topping 110 while Gold's rally halted around $1,600. The dollar is only marginally lower against other currencies. Robert Kaplan, President of the Dallas branch of the Federal Reserve, has reaffirmed the bank's wait-and-see mode. His speech came ahead of the release of the FOMC Meeting Minutes from the January decision, in which the Fed left rates unchanged and made only subtle changes to the outlook. The minutes may reveal more on the Fed's thinking on the coronavirus, inflation, growth, and more. See January FOMC Minutes Preview: The economic comparisons accumulateEUR/USD has been trading around 1.08 after dropping sharply on Tuesday and filling the "Macron Gap." The ZEW Economic Sentiment figure was the latest worrying eurozone release to push the pair deeper into levels last seen in April 2017.GBP/USD has been able to recover from disappointing wage figures and the stark differences between the UK and the EU ahead of official post-Brexit talks. Sterling faces another test on Wednesday – Consumer Price Index figures for January.  See UK inflation preview: How CPI may finally break the pound's prowessAUD/USD is edging higher to around 0.67 amid the better market mood. Australia's Wage Price Index rose by 0.5% in the fourth quarter, within expectations. Thursday's jobs report is awaited. Canada publishes its inflation figures for January with both headline and Core CPI statistics set to edge higher. The Canadian dollar has been recovering alongside oil prices. Cryptocurrencies have consolidated their gains made on Tuesday with Bitcoin holding above $10,000 and Ethereum trading around $280.  

Coronavirus fears continue underpinning gold prices. While China has announced measures to help the economy, fears of growing economic damage, XAU/USD

Coronavirus fears continue underpinning gold prices. While China has announced measures to help the economy, fears of growing economic damage, XAU/USD is holding onto gains above $1,600. What are the next levels to watch? The Technical Confluences Indicator is showing that significant resistance awaits at $1,612, which is the convergence of the multi-year high, the Pivot Point one-day Resistance 1, the PP one-week R3, and the Bollinger Band 1h-Upper.  Further above, the upside target is $1,620, which is where the Pivot Point one-day Resistance 2 hits the price. Looking down, substantial support is at $1,599, which is the confluence of the Fibonacci 23.6% one-day, the previous 4h-low, the Simple Moving Average 5-4h, the PP one-week R2, and more. Further down, a considerable cushion awaits gold prices at $1,594, which is a juncture including the Fibonacci 61.8% one-day, the PP one-week R1, the SMA 5-1h, and the Fibonacci 23.6% one-month.  Here is how it looks on the tool: Confluence Detector The Confluence Detector finds exciting opportunities using Technical Confluences. The TC is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies. This tool assigns a certain amount of “weight” to each indicator, and this “weight” can influence adjacents price levels. These weightings mean that one price level without any indicator or moving average but under the influence of two “strongly weighted” levels accumulate more resistance than their neighbors. In these cases, the tool signals resistance in apparently empty areas. Learn more about Technical Confluence

The greenback, when measured by the US Dollar Index (DXY), is struggling for direction near 99.50 following the Asian trading session on Wednesday. US

DXY trades in the vicinity of recent YTD highs just below 99.50.Coronavirus fears spurred the demand for the dollar on Tuesday.FOMC minutes, Producer Prices, housing data, Fedspeak all due later.The greenback, when measured by the US Dollar Index (DXY), is struggling for direction near 99.50 following the Asian trading session on Wednesday. US Dollar Index looks to Fed, data The monthly rally in the index appears far from abated on Wednesday after it clinched fresh YTD highs near 99.50 on Tuesday and is now at shouting distance from 2019 peaks at 99.67 recorded on October 1st. Renewed jitters around the Chinese coronavirus (COVID-19) encouraged investors to return to the safe haven universe in detriment of recent bets favouring riskier assets, all morphing into extra wings for the buck and dragging US yields lower. Later in the NA session, the focus of attention will be on the publication of the FOMC minutes. Seconded in relevance will come Housing Starts and Building Permits along with Producer Prices for the month of January. Additionally, Atlanta Fed R.Bostic (2021 voter, centrist) will speak on the Economic Outlook in Atlanta, Cleveland Fed L.Mester (voter, hawkish) will speak at a Forum of Executive Women, Minneapolis Fed N.Kashkari (voter, dovish) speaks in Minnesota, Dallas Fed R.Kaplan (voter, hawkish) speaks in Dallas and Richmond Fed T.Barkin (2021 voter, centrist) will discuss the Monetary Policy Framework. What to look for around USD The index has extended the march north to new 2020 highs near 99.50 on Tuesday, keeping the bid bias unaltered for the time being. Investors are expected to keep looking to the performance of US fundamentals and the broader risk appetite trends for direction as well as any fresh developments from the COVID-19. In the meantime, the outlook on the dollar remains constructive and bolstered by the current “appropriate” monetary stance from the Fed vs. the broad-based dovish view from its G10 peers, the “good shape” of the domestic economy, the buck’s safe haven appeal and its status of “global reserve currency”. US Dollar Index relevant levels At the moment, the index is gaining 0.01% at 99.45 and a breakout of 99.47 (2020 high Feb.18) would aim for 99.67 (2019 high Oct.1) and finally 100.00 (psychological barrier). On the flip side, immediate contention emerges at 98.75 (23.6% Fibo retracement of the 2020 rally) seconded by 98.54 (monthly high Nov.29 2019) and then 98.40 (21-day SMA).

EUR/GBP seesaws around the previous day’s close while taking rounds to 0.8305 ahead of the European session on Wednesday.

EUR/GBP struggles for direction near a 10-week low.Oversold RSI favors a pullback but short-term falling resistance line challenges buyers.EUR/GBP seesaws around the previous day’s close while taking rounds to 0.8305 ahead of the European session on Wednesday. The pair dropped to the lowest in a year on Tuesday but bounced back amid oversold RSI conditions. Even so, a descending trend line from January 01 restricts the pair’s near-term pullback. Hence, the pair’s recovery to January-end lows near 0.8387 can’t be expected unless it stays strong above 0.8353 resistance-line. If at all buyers manage to dominate beyond 0.8387, February 05 low near 0.8430 and the monthly top surrounding 0.8540 will gain market’s attention Until then, sellers will keep targeting December 2019 low near 0.8275 while also aiming for July 2016 low near 0.8250 during further declines. If prices stay weak below 0.8250, April 2016 top close to 0.8120 could return to the charts. EUR/GBP four-hour chart Trend: Bearish  

Days ahead of a scheduled visit to India, US President Trump raised doubts over a potential trade deal with the South Asian super power, Bloomberg rep

Days ahead of a scheduled visit to India, US President Trump raised doubts over a potential trade deal with the South Asian super power, Bloomberg reports. While speaking to Reuters late Tuesday, Trump said:” Well, we can have a trade deal with India, but I’m really saving the big deal for later on.” Trump said that he still wants to do “a very big trade deal with India,” but added “I don’t know if it will be done before the election. We’re not treated very well by India, but I happen to like Prime Minister Modi a lot.” Trump is scheduled to visit India on February 24th and 25th. USD/INR slips from monthly top near 71.80 despite challenges at India

GBP/USD clings to 1.3000 while heading into the London open on Wednesday. The Cable has been in a 10-pip choppy range between 1.2995 and 1.3005.

GBP/USD registers fewer moves as traders await the key data.The British government said no to visas for low-skilled workers, the EU-UK tussle over Brexit issues continues.The UK CPI becomes the other criteria for expecting BOE’s rate cut.GBP/USD clings to 1.3000 while heading into the London open on Wednesday. The Cable has been in a 10-pip choppy range between 1.2995 and 1.3005 since the start of the Asian session. The reason to blame could be traced from the upcoming UK Consumer Price Index (CPI) data. With the multi-year low British Unemployment rate closing doors for the BOE’s rate cut, traders are all eyes on the UK CPI data for January considering the central bank’s upward revision to price pressures. In regards to this, the BOE’s line "should indicators of domestic prices remain relatively weak" becomes the key. Markets anticipate a slight recovery in headline CPI (YoY) figure to 1.6% from 1.3%, lagging behind BOE’s 1.8% forecast. Other than that, UK politics and Brexit will also be important to watch. While the newly appointed Chancellor’s readiness to present budget on March 11 shows the high-performance bar for the Tories, their “NO” sign to low-skilled workers applying for the British Visa is largely criticized. Elsewhere, the EU Brexit negotiator Michel Barnier again acted as the tough teacher and poured cold water on the UK’s call for Canada-style trade deal. On the other hand, the market’s risk tone seems to improve between the receding cases of coronavirus infections and the surging death toll. To portray this, the US 10-year treasury bonds rise one basis point (bp) to 1.566% whereas stocks in Asia and S&P 500 Futures are also registering mild gains by the press time. In addition to the UK CPI, US housing market numbers and the Producer Price Index will also be important to watch for. Technical Analysis While the recent Doji favors the pair’s pullback, 61.8% Fibonacci retracement of its November-December 2019 upside, at 1.3055, could lure the short-term buyers. However, the pairs’ declines below 100-day SMA, at 1.2945 now, can challenge the monthly bottom near 1.2870.  

The bid tone around the anti-risk Japanese yen weakened, allowing USD/JPY to rise to 110.11, as the futures on the S&P 500 ticked higher hinting at ri

Uptick in the US equity index is boding well for USD/JPY. The pair needs to break above 110.29 to revive the broader uptrend. The bid tone around the anti-risk Japanese yen weakened, allowing USD/JPY to rise to 110.11, as the futures on the S&P 500 ticked higher hinting at risk reset in the financial markets.  The US equities fell on Tuesday after Apple Inc said its revenue will be hit due to coronavirus. As a result, USD/JPY had dropped to a low of 109.66.  Bulls need further gains While the recovery from 109.66 to 110.11 is encouraging, the pair is still trading within the range of last week’s Doji candle, meaning the market is still indecisive and the immediate outlook is neutral.  A break above 110.29 (January high) is needed to confirm breakout or continuation of the rally from the August 2019 low of 104.45.  Alternatively, a move below last week’s low of 109.56 would mean the period of indecision has ended in victory for the bears and could yield a deeper drop toward support at 108.30.  Weekly chartTrend: Neutral Technical levels  

USD/CHF takes the bids to 0.9835 amid the pre-European session on Wednesday. In doing so, the pair crosses 38.2% Fibonacci retracement of its broad ru

USD/CHF registers three-week winning streak, breaks above 38.2% Fibonacci retracement for the first time in a year.61.8% Fibonacci retracement, September 2018 low act as the key supports.USD/CHF takes the bids to 0.9835 amid the pre-European session on Wednesday. In doing so, the pair crosses 38.2% Fibonacci retracement of its broad run-up between February 2018 and April 2019. Also supporting the pair’s upside is a first in nine weeks bullish MACD signal. Based on that, buyers are again targeting a 200-week SMA level of 0.9850 whereas a descending trend line from April 2019, at 0.9940 can question the bulls afterward. In a case where the USD/CHF prices stay strong beyond 0.9940, chances of witnessing the 1.0000 mark on the chart can’t be ruled out. Alternatively, 0.9770/65 and 50% Fibonacci retracement level around 0.9710 can entertain sellers during the pullback ahead of pleasing them with the yearly bottom of 0.9612. However, 61.8% Fibonacci retracement and September 2018 trough near 0.9585 and 0.9540 respectively could challenge the bears during the further declines. USD/CHF weekly chart Trend: Bullish  

According to the US Treasury Department report released Tuesday, China’s total shrank $54.4 billion on the year to $1.07 trillion. China sold around $

According to the US Treasury Department report released Tuesday, China’s total shrank $54.4 billion on the year to $1.07 trillion. China sold around $19.3bn of US Treasuries in December. Its holdings dropped in December for a sixth straight month to the smallest amount since early 2017. Meanwhile, foreign inflows into US Treasuries in 2019 hit largest in 7 years Global yields and money flows into the US dollar in focus

EUR/USD is looking south and investors are adding bets to position for deeper losses in the common currency. Bearish daily close The pair closed below

EUR/USD printed its worst daily close in nearly three years on Tuesday. Risk reversals drop to lowest since October on put demand. Broader market sentiment and German data are likely to guide EUR/USD pair. EUR/USD is looking south and investors are adding bets to position for deeper losses in the common currency.  Bearish daily close The pair closed below 1.08 on Tuesday, confirming its weakest daily close since April 2017.  The daily and weekly candlestick arrangement shows the path of least resistance is to the downside.  Risk reversals hit lowest since October Risk reversals on EUR/USD, a gauge of calls to puts on the common currency, plunged to their lowest levels since October on Tuesday, indicating investors are adding bets to position for further weakness in the euro.  One-month risk reversals fell to -0.55, the lowest level since Oct. 28. The negative number indicates the demand for put options (bearish bets) is higher than that for calls.  The common currency could suffer a deeper drop as anticipated by investors if the coronavirus-led risk aversion worsens, strengthening the haven demand for the US Treasuries.  At press time, the futures on the S&P 500 are reporting a 0.35 percent drop. As a result, EUR/JPY is flashing green near 118.80 and helping EUR/USD stay sidelined just below 1.08.  Apart from the broader market sentiment, the pair could take cues from the German Producer Price Index and Gfk Consumer Confidence Survey scheduled for release at 07:00 GMT.  Technical levels  

Citing two sources familiar with the Japanese government thinking, Reuters reports that the Cabinet Office will likely maintain its view that the econ

Citing two sources familiar with the Japanese government thinking, Reuters reports that the Cabinet Office will likely maintain its view that the economy is recovering despite rising coronavirus risks, in a monthly report due on Thursday. In its monthly report for February to be released on Thursday, the government will make slight tweaks to language describing the economy as “recovering moderately despite continued weakness in exports,” the sources said. Additional Quotes: The assessment will also reflect the expected boost from the government’s $122 billion (93.84 billion pounds) fiscal package compiled in December to head off heightening overseas risks. The government will warn that risks to the economy were heightening due to the coronavirus outbreak. Meanwhile, USD/JPY sits above the 110 level, having found a fresh boost from the risk recovery seen across the financial markets in Wednesday’s Asian trading.

USD/INR declines to 71.52 as the Indian markets open for trading on Wednesday. The pair’s latest surge to 71.83 repeated the habit of being short-lived.

USD/INR respected broad risk reset while stepping back from a three-week high.US President Trump signals deal with India, savings rate at home drops to a 15-year low.China’s coronavirus cases show a mixed reaction, rating giants keep flashing red signals.An absence of data at home will keep external catalysts in focus.USD/INR declines to 71.52 as the Indian markets open for trading on Wednesday. The pair’s latest surge to 71.83 repeated the habit of being short-lived amid risk reset in Asia. However, broad challenges to the Indian economy remain standby. With the World Health Organization’s (WHO) urge to keep calm over China’s coronavirus death toll, which crossed 2,000 mark as of February 20, joined optimism spread by Chinese President Xi Jinping. The diplomat ruled out Moody’s downbeat growth forecast while expecting the GDP growth to meet the mark in 2020 despite coronavirus threats. Also on the positive side could be US President Donald Trump’s comments saying, “We will have a really big trade deal with India, maybe after November US election.” Even so, Moody’s raises doubts on the Asian credit conditions while also downgrading Indian growth forecasts to 5.4% versus 6.6% prior. Furthermore, data from the Central Statistical Organisation shows that the Indian gross savings slump 30.1%, the lowest since 2003/04. While portraying the market sentiment, the US 10-year treasury yields stay mildly positive to 1.566% with the risk recovery in Asia. It’s worth mentioning that risk reversals suggest the options market is most bullish on the USD/INR pair in over four months.  Given the absence of major data/events at home, traders will keep eyes on the headlines from China as well as the US statistics for near-term direction. Technical Analysis A gradual higher high formation poses a serious challenge to 72.00 round-figure. Though 72.2 and January month high near 72.60 stay as a tough nut to crack for the buyers. On the downside, a five-week-old rising trend line near 71.25 acts as the key support.  

The AUD/USD pair is mildly bid, but struggling to cut through the psychological resistance of 0.67 with investors likely waiting on the sidelines ahea

AUD/USD's upside has stalled around the zero figure of 0.67. Aussie jobs report due Thursday is expected to show an uptick in the jobless rate. A big beat on expectations is needed to strenthen the bid tone around the Aussie dollar. The AUD/USD pair is mildly bid, but struggling to cut through the psychological resistance of 0.67 with investors likely waiting on the sidelines ahead of the all important Aussie jobs report, scheduled for release on Thursday.  The data is expected to show the jobless rate ticked higher to 5.2% in January from December’s 5.1% reading and the economy added 10K jobs versus 28.9K previously. It's worth noting that the coronavirus outbreak became a cause for concern at the end of January. The January jobs data, therefore, would largely represent the pre-virus period and could be dismissed by markets as being an outdated one.  So, it would take a big beat on expectations to lift the AUD, However, if the data prints below estimates, markets may begin pricing higher odds of an RBA rate cut in the first half of 2020, sending the AUD lower.  Currently, the overnight index swap (OIS) market is pricing a March rate cut at 8% and 25 basis point cut is not fully priced in until October, according to Reuters News.  At press time, AUD/USD is changing hands at 0.6695, having hit a high and low of 0.6701 and 0.6683 earlier today.  The pair may challenge session lows if the S&P 500 futures turn red on coronavirus fears. At press time, the index futures are reporting a 0.30% gain.  Technical levels  

S&P global ratings is out with its assessment of the impact of the coronavirus outbreak on the Chinese economy. Key Quotes: Coronavirus will deliver a

S&P global ratings is out with its assessment of the impact of the coronavirus outbreak on the Chinese economy. Key Quotes: Coronavirus will deliver a short-term blow to economic growth in the first quarter in China. Assuming coronavirus is contained in march, expect China’s GDP growth rate to recover firmly in Q3, before rebounding in 2021. Expect small and medium-sized restaurant firms to come under stress in china from coronavirus, as store closures pile on liquidity pressure. Believe the long-term outlook for hardware and software remains positive in China. Structured finance sector is expected to see a short-term impact from coronavirus. Coronavirus has highlighted vulnerabilities that exist across China's tourism sector. Earlier today, S&P said that it sees “material knock to growth” for Australia from coronavirus and therefore the RBA will be forced to cut rate further.

In an interview with Bloomberg TV on Wednesday, Singapore’s Finance Minister Heng said that the Singapore dollar (SGD) exchange rate has sufficient ba

In an interview with Bloomberg TV on Wednesday, Singapore’s Finance Minister Heng said that the Singapore dollar (SGD) exchange rate has sufficient band to move as appropriate. China has taken decisive measures to deal with the virus outbreak, he added. On Tuesday, Heng announced a 5.6 billion Singapore dollars ($4.02 billion) budget in the coming year to help businesses and households tide through the ongoing coronavirus outbreak. He also announced a delay in the planned a raise in the goods and services tax. FX Implications The Singapore dollar saw a fresh buying wave on the above comments, knocking-off USD/SGD to a fresh daily low of 1.3912, where it now wavers. The pair faces rejection near 1.3930 region for the fourth straight session on Wednesday, as the US dollar retreat from multi-month peaks across its main peers.

NZD/USD consolidates losses to 0.6395, up 0.15%, during early Wednesday. The pair recently took a U-turn from a horizontal line stretched from Novembe

NZD/USD bounces off a multi-week-old support line but stays below 61.8% Fibonacci retracement.A descending trend line from late-January adds to the resistance.November 2019 low can return to the chart during further declines.NZD/USD consolidates losses to 0.6395, up 0.15%, during early Wednesday. The pair recently took a U-turn from a horizontal line stretched from November 19. Though, the quote still remains below 61.8% Fibonacci retracement of its October-December 2019 upside. In addition to the immediate key Fibonacci resistance near 0.6415, a downward sloping trend line since January 24, 2020, around 0.6435, also questions the pair’s latest recovery. Furthermore, a confluence of 50% Fibonacci retracement and 100-day SMA, close to 0.8480/85, becomes the tough nut to crack for buyers. Alternatively, the pair’s daily closing below 0.6377 will open the door for the extended declines to November 2019 low surrounding 0.6315. Also up on the sellers’ radar post-0.6315 will be October 16, 2019 bottom and October 2019’s monthly low, respectively around 0.6240 and 0.6200. NZD/USD daily chart Trend: Pullback expected  

Analysts at Citigroup discuss the key five reasons for the euro’s recent decline to multi-year lows sub-1.0800 levels. Key Quotes: "Reasons for EUR's

Analysts at Citigroup discuss the key five reasons for the euro’s recent decline to multi-year lows sub-1.0800 levels. Key Quotes: "Reasons for EUR's decline - (1) EU less US (hard) data momentum is turning negative; (2) Downward revisions to Chinese and global growth in the face of the COVID-19 outbreak to impact the euro zone more given supply chain linkages between Europe and China - a supply chain recovery remains problematic in the near term even if Coronavirus sentiment makes an immediate turn; (3) Foreign (Japanese and European) investor buying of US bonds FX unhedged; (4) A poor technical picture; (5) Rising political risks in Germany and Italy.  Bottom Line - Drivers 1, 2, 3 & 4 are interlinked and would likely recede if the Coronavirus outlook improves.”

Foreign inflows into US Treasuries in 2019 hit their largest level in seven years, data from the US Treasury Department showed on Tuesday. Overall for

Foreign inflows into US Treasuries in 2019 hit their largest level in seven years, data from the US Treasury Department showed on Tuesday.  Overall foreign inflows rose to $6.696 trillion in December, up about $425 billion from a year earlier.  Japanese and Eurozone investors sought higher-yielding US government debt in a world of negative interest rates and their combined purchses accounted for half of foreign buying of Treasuries last year.  Japanese investors bought $115 billion worth of US Treasuries, while Eurozone investors snapped up more than $100 billion worth of Treasuries. With coronavirus outbreak and increased fears of Chinese and global growth slowdown, the high-yielding treasuries, especially at the long end of the curve (10-year), could continue to attract haven flows.  As a result, the 10-year yield could fall below the two-year yield, inverting the curve.
 

Ratings agency Standard & Poor's (S&P) thinks the Reserve Bank of India (RBA) will be forced to cut interest rates, as coronavirus outbreak will deliv

Ratings agency Standard & Poor's (S&P) thinks the Reserve Bank of India (RBA) will be forced to cut interest rates, as coronavirus outbreak will deliver a material knock to Australia's growth.  Key points Gross Domestic Product (GDP) could be as low as 1.7% – down significantly from the previous forecast of 2.2%.  Tourism and education sectors are likely to take hit due to virus outbreak. Many Chinese students may not be able to start the new academic year.  Commodity prices could feel the pull of gravity.  On the bright side, weaker AUD would act as cushion.  The RBA kept interest rates unchanged at a record low of 0.75% earlier this month and said it may refrain from cutting rates for some time, disppointing traders expecting a dovish stance in the wake of the virus outbreak.  However, the minutes released Tuesday flagged concerns about the coronavirus outbreak and noted there was a case a for further cuts lower rates could speed progress toward bank's inflation and employment goals. 

Amid a slowdown in the number of new cases reported in China’s Hubei province, the epicenter of the coronavirus outbreak, unfortunately, across the bo

Amid a slowdown in the number of new cases reported in China’s Hubei province, the epicenter of the coronavirus outbreak, unfortunately, across the boarders its not the same situation. South Korea reported 15 new cases of the coronavirus this Wednesday, bringing the total number of people infected in the country to 46. Meanwhile, a Princess Margaret Hospital spokeswoman told Reuters that Hong Kong recorded its second death caused by the new coronavirus. The 70-year-old man, who had underlying illnesses, was one of the 62 confirmed cases in the Chinese-ruled city, Reuters added. As on Wednesday, China’s National Health Commission (NHC) reported 1,749 new confirmed cases of coronavirus and 136 new deaths, as cited by Xinhua news agency.

USD/CAD is struggling to gather upside traction despite a bullish continuation setup on the 4-hour chart. The pair broke out of a falling wedge patter

USD/CAD is on the offer despite the falling wedge breakout on the 4H chart. Tuesday's high of 1.3278 needs to breached to confirm a bullish revival.USD/CAD is struggling to gather upside traction despite a bullish continuation setup on the 4-hour chart.  The pair broke out of a falling wedge pattern on Monday, signaling a continuation of the recent rally from the December low of 1.2951.  The post-breakout upside, however, stalled at 1.3278 on Tuesday, allowing sellers to push the spot back to levels near 1.3250 where it is currently trading.  Tuesday’s high of 1.3278 is now the level to beat for the bulls. A break higher would expose the recent high of 1.3329.  Alternatively, if sellers manage to establish a secure foothold below 1.3225 (Feb. 17 low), additional losses toward 1.3185 could be seen. That level marks the 38.2% Fibonacci retracement of the rally from 1.2951 to 1.3329.  4-hour chartTrend: Bearish below 1.3225 Technical levels  

The UBS analysts stay bullish on gold’s outlook and recommend ‘buy the dips’ strategy amid looming macro uncertainty. Key Quotes: “Investors look to b

The UBS analysts stay bullish on gold’s outlook and recommend ‘buy the dips’ strategy amid looming macro uncertainty. Key Quotes: “Investors look to buy dips in gold. A bias to be long. No rush to build substantial positions, many are looking to opportunistically add to positions. Helping to keep dips shallow and the market well supported. ETFs have been steadily adding to holdings. Market remains quite sensitive to fluctuations in risk sentiment. Yet given lingering macro uncertainty, gold's appeal as a hedge and diversifier is also in focus, allowing prices to stay resilient despite a strong dollar and equities hovering at all-time highs.”

USD/JPY takes the bids to 110.00 during early Wednesday. The risk barometer recently benefited from the uptick in Asian stocks.

USD/JPY rises to the highest levels in four days.Risk reset, downbeat data from Japan seem to have contributed to the pair’s run-up.Coronavirus continues to weigh on the market’s trade sentiment.US data, Chinese headlines will offer near-term direction.USD/JPY takes the bids to 110.00 during early Wednesday. The risk barometer recently benefited from the uptick in Asian stocks. Also contributing to the pair’s run-up could be mixed data from Japan as well as risk reset based on catalysts from China. Stocks in China, Hong Kong, Indonesia and Japan are marking mild gains ranging between 0.20% and 0.60% following the latest consolidation in risk-tone. Also portraying the risk reset is the US 10-year treasury yields that rise one basis point to 1.563% by the press time. The underlying reason for the pair's rise can be traced from the early-day release of Japan’s Machinery Orders and Merchandise Trade Balance. However, the major influence seems to be from the upbeat comments of China’s President Xi Jinping and the World Health Organization’s (WHO) urge to remain calm. In doing so, challenging statements from Moody’s seem to have been ignored. Coronavirus numbers are flashing mixed signals off-late. While infections have been receding, the death toll is on a rise crossing 2,000 in mainland China. Although headlines from China are likely to be the key drivers, the US housing market numbers and the Producer Price Index data will also be important to watch. Technical Analysis Unless breaking a 21-day SMA level of 109.50, USD/JPY prices are less likely to avoid challenging the yearly top surrounding 110.30.  

The options market is most bullish on the USD/INR pair in over four months. The one-month 25 delta risk reversals jumped to 0.60 on Tuesday – the high

Premium or demand for call options has hit the highest level since October. Investors are addition bets to position for dollar strength. The options market is most bullish on the USD/INR pair in over four months.  The one-month 25 delta risk reversals jumped to 0.60 on Tuesday – the highest level since Oct. 8, 2019 – indicating investors are adding bets to position for strength in the US dollar.  A positive reading indicates higher demand for call options (bullish bets) compared to put options (bearish bets).  USD/INR closed Tuesday with 0.35% gains at 71.5690. Since September, the pair has been restricted to a narrowing price range between 70.30 and 72.40. The increased demand for call options, as highlighted by risk reversals, suggests the investors are expecting USD/INR to break higher from its multi-month range.  INR1MRR
 

USD/IDR stays modestly changed to 13,675 amid the initial trading hours on Wednesday. The quote recently broke the three-week-old rising trend line bu

USD/IDR struggles to extend the latest declines.Further declines can challenge monthly bottom whereas 13,705 holds the key to the month’s top.USD/IDR stays modestly changed to 13,675 amid the initial trading hours on Wednesday. The quote recently broke the three-week-old rising trend line but stays above 21-day SMA. However, bullish MACD pushes buyers to look for entry if prices take a U-turn beyond the support-turned-resistance line of 13,685. In doing so, 13,705 could be their target ahead of challenging the monthly high near 13,760. Meanwhile, pair’s further declines below 21-day SMA level of 13,665 could aim for the month’s low near 13,620 whereas 13,600 and 13,560 can please the bears afterward. USD/IDR daily chart Trend: Pullback expected  

Moody's says with coronavirus aside, structural changes add to Asia's credit challenges. Key notes Moody's says credit conditions in Asia will turn ne

Moody's says with coronavirus aside, structural changes add to Asia's credit challenges. Key notes Moody's says credit conditions in Asia will turn negative in 2020, in tandem with a slowdown in growth momentum, continued trade policy uncertainty. Moody's says slowdown in Asian growth will constrain policy choices and limit the region's ability to respond to negative shocks. Moody's says at the sovereign level, weaker growth prospects will hinder revenue generation and shock absorption capacity in Asia. Market implications The coronavirus is still a threat, yet there is a more positive outlook in financial and commodity markets recently – More on that here: Coronavirus peaking? How will it impact the global economies and FX? 

According to the latest report published by China’s National Health Commission (NHC) on Wednesday, 1,749 new confirmed cases of novel coronavirus infe

According to the latest report published by China’s National Health Commission (NHC) on Wednesday, 1,749 new confirmed cases of novel coronavirus infection and 136 deaths were reported on Tuesday from 31 provincial-level regions and the Xinjiang Production and Construction Corps, per Xinhua. The Commission, further, noted, “Among the deaths, 132 were in Hubei Province and one in Heilongjiang, Shandong, Guangdong and Guizhou, respectively.”

USD/CNH remains mildly positive around 7.0120 as China’s markets open for Wednesday’s trading. While coronavirus indicators and efforts to placate tra

USD/CNH fails to hold onto previous gains.The mixed direction of coronavirus numbers keeps traders on their toe.Upbeat comments from China’s Xi and WHO’s urge to not panic recently grabbed market attention.China does it all to stay positive, eyes on the US data, coronavirus headlines for fresh impulse.USD/CNH remains mildly positive around 7.0120 as China’s markets open for Wednesday’s trading. While coronavirus indicators and efforts to placate traders earlier portrayed risk reset, Beijing’s efforts to ignore the negative impacts of the deadly virus seems to keep the buyers happy off-late. Despite Moody’s downgrade to China’s economic forecast, from 5.8% previous expectations to 5.2%, China’s President Xi Jinping said, “China can meet its economic growth target in 2020 despite the impact of the coronavirus outbreak.” In addition to being optimistic, China is trying it all to placate traders. Be it extra tariffs on the US goods or heavy liquidity infusion, not to forget signals to take measures to boost foreign investment, diplomats in Beijing are doing their best to avoid widespread economic contagion of the deadly disease. Also trying to tame the fears were the World Health Organization (WHO) that praised China for taking drastic measures to contain the virus and urged calm as the death toll crossed 2,000 mark. Numbers from mainland China and the epicenter Hubei both confirm the increase in death contrasting a sustained weakness in the numbers of infected cases. While portraying the trade sentiment, the US 10-year treasury yields consolidate losses to 1.563% whereas stocks in China also turn modestly positive by the press time. Given the lack of catalysts on the economic calendar, traders will follow clues from China for near-term direction. Technical Analysis Considering the sustained break of a descending trend line from December 2019, at 7.0080 now, the monthly top surrounding 7.0230 is likely to return to the charts.  

Gold jumped 1.32% on Tuesday, confirming an upside break of the six-week-long narrowing price range or the pennant pattern on the daily chart. The bre

Gold's daily chart shows a pennant breakout, a bullish continuation pattern. The metal could challenge the January high of $1,611. Gold jumped 1.32% on Tuesday, confirming an upside break of the six-week-long narrowing price range or the pennant pattern on the daily chart.  The breakout indicates the rally from November lows near $1,445 has resumed. Tuesday's close also invalidated the bearish lower high of $1,593.90 established on Feb. 3.  Additionally, the 5- and 10-day averages are trending north, indicating a strong upward momentum and the relative strength index has breached the descending trendline in favor of the bulls.  All in all, the metal looks set to test the 2020 high of $1,611 reached on Jan. 8. The bullish case would be invalidated if prices find re-enter the pennant pattern with a drop below $1,580.  At press time, an ounce of gold is changing hands at $1,603.  Daily chartTrend: Bullish Technical levels  

AFP reports on the death toll from the new coronavirus outbreak that surged to 2,000 on Wednesday, noting that Chinese and international health offici

AFP reports on the death toll from the new coronavirus outbreak that surged to 2,000 on Wednesday, noting that Chinese and international health officials warned against excessive measures to contain the epidemic. Key notes "More than 74,000 people have now been infected by the virus in China, with hundreds more cases in some 25 countries. The situation remains serious at the epicentre, with the director of a hospital in the central city of Wuhan becoming the seventh medical worker to succumb to the COVID-19 illness. Chinese officials released a study showing most patients have mild cases of the infection, and World Health Organization officials said the mortality rate was relatively low. The outbreak is threatening to put a dent in the global economy, with China paralysed by vast quarantine measures and major firms such as iPhone maker Apple and mining giant BHP warning it could damage bottom lines. Several countries have banned travellers from China and major airlines have suspended flights -- something that Beijing's ambassador to the EU warned was fuelling panic and threatening attempts to resume business. Russia on Tuesday said no Chinese citizens would be allowed to enter its territory from February 20. The epidemic has triggered panic-buying in Singapore and Hong Kong. Authorities have placed about 56 million people in hard-hit central Hubei and its capital Wuhan under an unprecedented lockdown. The city was carrying out "very good public health practice" with door-to-door surveillance, said Michael Ryan, head of WHO's health emergencies programme. Market implications On a more positive outlook, see here: Coronavirus peaking? How will it impact the global economies and FX?

The People's Bank of China (PBOC) has set the Yuan reference rate 7.0012 at versus Tuesday's fix at 6.9826.

The People's Bank of China (PBOC) has set the Yuan reference rate 7.0012 at versus Tuesday's fix at 6.9826.

Considering the coronavirus, markets are paying particular attention to global yields. The Aussie trades as a proxy to the theme of the virus and it i

Coronavirus supporting positive US dollar flows.Foreign residents increased their holdings of long-term US securities in December.AUD and JPY to continue facing pressures in US dollar strength. Considering the coronavirus, markets are paying particular attention to global yields. The Aussie trades as a proxy to the theme of the virus and it is interesting to note that the currency continues to strength despite rate cut expectations. Looking to yields overnight, we had the Australian 3-year government bond yields falling from 0.72% to 0.70%, 10-year yields from 1.04% to 1.01%. But the markets are "pricing in just a 5% chance of easing at the next RBA meeting on 3 March, and a terminal rate of 0.46% (RBA cash rate currently at 0.75%)," according to analysts at Westpac. Analysts at ANZ argued, however, that the market has given up on the RBA cash rate ever returning to what might have been considered ‘normal’: "This is evident in the small difference between the RBA cash rate and the 10y overnight interest rate swap – a difference we refer to as the ‘policy expectations curve’. A flat policy expectations curve has important implications for the fixed income market. In particular, the absence of a term premium forces investors to search out spreads to generate return. We think this generally supportive backdrop for spreads will remain in place until the policy expectations curve materially steepens." The analysts argued that potential triggers for such steepening include much higher global interest rates, a much lower AUD or a sizeable fiscal easing. "We don’t see any of these emerging as triggers for a steeper curve anytime soon." As for US yields, the 2-year treasury yields extended yesterday’s decline, from 1.40% to 1.39% while the 10-year yields slid from 1.55% to 1.54%. This was despite a drop in US stocks owing to the news that Apple warning that disruption in China from the coronavirus will mean revenues falling short of forecasts. The tech giant said production and sales were affected, and that "worldwide iPhone supply would be temporarily constrained".  As the stock market slips away, yields tend to rise, although what we are seeing here is a risk-off theme as investors seek out safe havens in US bonds. If this is to continue, despite the narrowing of the spread between the US, Japan and Australian yields, the US dollar can continue to rise on the 99 handle regardless which should ultimately pressure the yen ad AUD, until, of course, markets begin to facto in Federal Reserve rate cuts. "Markets are pricing a 10% chance of easing at the next Fed decision on 18 March, and a terminal rate of 1.10% (vs Fed’s mid-rate at 1.63% currently, effective FFR at 1.58%)," analysts at Westpac explained.  Foreign residents increased their holdings of long-term US securities in December Meanwhile, the details of the US Treasury International Capital Report gave a glimpse of the investment activity of foreign investors, a significant buyer base of the US government bond market was released overnight. The sum total in December of all net foreign acquisitions of long-term securities, short-term US securities, and banking flows was a net TIC inflow of $78.2 billion. Of this, net foreign private inflows were $134.2 billion, and net foreign official outflows were $56.0 billion. Foreign residents increased their holdings of long-term US securities in December; net purchases were $60.7 billion. The next release, which will report on data for January 2020, is scheduled for March 16, 2020.   

GBP/USD remains a little changed below 1.3000 during early Wednesday. The cable posted a trend reversal Doji candlestick formation the previous day.

GBP/USD fails to register noticeable moves following a Tuesday’s Doji candlestick.Short-term moves are confined between 50 and 100-day SMA, 61.8% Fibonacci retracement offers immediate resistance.The monthly bottom can please sellers below 100-day SMA.GBP/USD remains a little changed below 1.3000 during early Wednesday. The cable posted a trend reversal Doji candlestick formation the previous day. Though, 50-day and 100-day SMA continue to restrict near-term moves. While the recent Doji favors the pair’s pullback, 61.8% Fibonacci retracement of its November-December 2019 upside, at 1.3055, could lure the buyers ahead of making them confront 50-day SMA level of 1.3067. In a case buyers manage to cross 1.3067, 50% Fibonacci retracement level of 1.3142 and 1.3200 could return to the charts. On the flip side, the pairs’ declines below 100-day SMA, at 1.2945 now, can challenge the monthly bottom near 1.2870. Should there be a further price weakness beneath 1.2870, 1.2820 and November 2019 low around 1.2770 could gain the bears’ attention. GBP/USD daily chart Trend: Sideways  

EUR/USD closed out Tuesday below 1.07 to print the weakest daily close since April 2017. More importantly, the single currency formed a bearish marubo

Euro has suffered its weakest daily close in 34 months. Tuesday's bearish marubozu candle suggests scope for further sell-off. EUR/USD closed out Tuesday below 1.07 to print the weakest daily close since April 2017.  More importantly, the single currency formed a bearish marubozu candle, implying a continuation of the downtrend. A red maruzobu, the one with a large body and little or no shadows, occurs when sellers control the price throughout the day, and is considered very bearish.  The back-to-back big red marubozu candles seen on the weekly chart are also painting a bearish picture.  Therefore, the path of least resistance for the EUR is to the downside. While the 14-day relative strength index (RSI) is reporting oversold conditions, the 14-week is still biased bearish with a below-50 print.  Also, the daily RSI can and does stay oversold for a prolonged period in a strong bearish market. The oversold signal would gain credence if and when signs of seller exhaustion emerge on the daily chart.  So, as of now, there is room for deeper sell-off in the common currency. On the downside, support is seen at 1.0710 (February 2016 low). On the higher side, 1.0879 (September 2019 low) is the level to beat for the bulls. A break higher is needed to neutralize the bearish setup.  At press time, EUR/USD is trading at 1.0798.  Daily chartTrend: Bearish Technical levels  

EUR/JPY is currently trading at 118.67 between a range of 118.55 and 118.68, as bulls step away from the bearish rend which recently broke below a cri

EUR/JPY downside remains compelling in the 118 handle. Coronavirus failing to support the yen, although euro is weaker as data fails to impress.EUR/JPY is currently trading at 118.67 between a range of 118.55 and 118.68, as bulls step away from the bearish rend which recently broke below a critical support structure. EUR/USD has been relentless on the downside and there have been no bids and a wobble overnight indexes in Europan and the US gave a lift to the yen, pressuring the cross further.  EUR/USD has lost ground due to a grim economic outlook and unsupportive data with mounting speculation around the negative impact of the coronavirus. The German ZEW index for February offered a first glimpse of the impact on coronavirus on European surveys. "Both the Expectations Index and the Current Situation Index dropped sharply (by around 20 points and 6 points, respectively). It should come as no surprise that the declines were acute in the Automobile and Electronics sectors, but most other sectors were relatively flat in the month. The Expectations Index, despite its near 20-point decline, still lies above move of its 2018-2019 range," analysts at TD Securities explained. The result will likely continue to weigh in euro crosses. Yen unable to find traction despite coronavirus risks As for the yen it was still failing to rally on the coronavirus story at the start of this week and remains pressured vs the greenback around the 110 handle. We would likely need to witness a decisive turn for the worse in the virus newsflow, but that doesn't;t seem to be panning out for the yen bulls. More on that here: Coronavirus peaking? How will it impact the global economies and FX?EUR/JPY levels  

AUD/JPY trades modestly positive while trading around 73.55 after Australia’s fourth quarter (Q4) Wage Price Index during early Wednesday.

AUD/JPY recently responded to the Aussie/Japan statistics.China’s coronavirus cases follow the footsteps of Hubei with a decline in infections, a rise in the death toll.Headlines from China will be the key driver.AUD/JPY trades modestly positive while trading around 73.55 after Australia’s fourth quarter (Q4) Wage Price Index during early Wednesday. The Aussie Wage Price Index for Q4 matched forecasts of 2.2% YoY and 0.5% QoQ growth and failed to offer any clear direction concerning Thursday’s Australian employment data. Earlier during the day, Australia’s Skilled Vacancies for January rose from 0.6% prior to 0.7% whereas the Westpac Leading Index also grew to 0.05% versus revised down prior of 0.01%. On the other than, Japan’s December month machinery orders registered larger than expected 9% drop to -12.5% mark on MoM basis while Merchandise Trade Balance flashed ¥-1312.6 B compared to ¥-1694.9 B consensus. Coronavirus cases have recently started showing mixed signals as the numbers for infections continue to decline but the death toll increased. The latest figures from China Health Commission suggest coronavirus cases increase by 1,749 as of end February 18 but the death toll grew 136 from 98 the previous day. The same pattern of a rise in death numbers and a sustained pullback in infection cases was also observed while noticing numbers from the epicenter Hubei. The update states that there are 1,693 new cases on February 18 versus 1,807 of February 17. The report also mentions 132 new deaths compared to 93 noted the previous day. Even so, China’s President Xi Jinping was spotted ignoring Moody’s downbeat growth forecasts despite coronavirus fears. Investors will now keep eyes on updates from China for fresh impulse. It should also be noted that Beijing has started turning trade-positive towards the US off-late and hence any more development on that will also be followed closely. Furthermore, Thursday’s Aussie employment data will be the key after the RBA’s bearish minutes. Technical Analysis 61.8% Fibonacci retracement of its October-December 2019 upside near 73.55, followed by a 200-day SMA level of 74.25, limits the pair’s short-term upside. Alternatively, February 07 low near 73.00 seems to be on the intra-day sellers’ radar.  

AUD/USD has barely moved in response to the Aussie wage growth data for the fourth quarter released by the Australian Bureau of Statistics 00:00 UTC.

Aussie wage growth for the fourth quarter matched estimates. The data for the pre-virus period failed to move the needle on the Australian currency. The Aussie labor market report, due this Thursday, could yield big moves in the Aussie pairs.AUD/USD has barely moved in response to the Aussie wage growth data for the fourth quarter released by the Australian Bureau of Statistics 00:00 UTC.  The data showed wages growth sticking at 0.5% quarter-on-quarter and 2.2% year-on-year as expected, leaving the AUD/USD unaffected around 0.6692, the level where it was trading before the data was released.  The lackluster market reaction is not surprising, given the fourth quarter wage growth largely reflects the pre-coronavirus period and look outdated.  The focus now is on the labor market data scheduled for release on Friday. the economy is forecasted to have added 10k jobs in January and the jobless rate is expected to have risen slightly to 5.2% from 5.1% previously. The Aussie could face selling pressure while heading into Thursday's labor market report, courtesy of virus-led risk-off tone in the equity markets and the dovish RBA minutes released Tuesday.  The US stocks dropped on Tuesday with the Dow Jones Industrial Average losing over 0.5%. Meanwhile, the minutes flagged concerns about the COVID-19 coronavirus outbreak and noted there was a case for further cuts as lower rates could “speed progress towards the bank's inflation and employment goals.  It's worth noting that the markets are currently pricing a quarter-point rate cut by October. Technical levels  

Australia Wage Price Index (YoY) in line with expectations (2.2%) in 4Q

Australia Wage Price Index (QoQ) in line with expectations (0.5%) in 4Q

WTI rises to $52.40 during Wednesday’s Asian session. Even so, the black gold stays below 21-day SMA while a bearish candlestick formation keeps the s

WTI holds onto recovery gains, stays below 21-day EMA.A bearish candlestick formation continues highlighting downside risks.Mid-January lows could lure buyers during the successful rise.WTI rises to $52.40 during Wednesday’s Asian session. Even so, the black gold stays below 21-day SMA while a bearish candlestick formation keeps the sellers hopeful. That said, $51.00 can act as immediate support during the pullback whereas the monthly bottom surrounding $49.40 could gain market attention afterward. If at all oil prices slip below $49.40, late-October 2017 low near $49.00 might return to the chart. Meanwhile, the oil benchmark’s ability to cross the 21-day EMA level of $52.91 defies the bearish candlestick formation. In doing so, January 29 high of $54.37 and January 15 low nearing $57.40 can flash on the bull’s radar. WTI daily chart Trend: Bearish  

Japan Adjusted Merchandise Trade Balance below expectations (¥-64.2B) in January: Actual (¥-224.1B)

Japan Merchandise Trade Balance Total came in at ¥-1312.6B, above expectations (¥-1694.9B) in January

Japan Machinery Orders (YoY) below expectations (-1.3%) in December: Actual (-3.5%)

Japan Machinery Orders (MoM) below expectations (-9%) in December: Actual (-12.5%)

Japan Imports (YoY) registered at -3.6%, below expectations (-1.3%) in January

Japan Exports (YoY) above forecasts (-6.9%) in January: Actual (-2.6%)

Gold prices step back from monthly high to $1,601.30 during the Asian session on Wednesday. The bullion earlier surged as headlines concerning China f

Gold pulls back from the seven-week top as traders await fresh clues from China.The latest numbers from Hubei, China’s Xi and trade-positive news check the bullion buyers.Coronavirus updates, US data will be in the spotlight.Gold prices step back from monthly high to $1,601.30 during the Asian session on Wednesday. The bullion earlier surged as headlines concerning China fuelled risk-off while a lack of major negative seems to trigger the latest pullback. Coronavirus infections recede, death toll increases… While Caixin raised doubts over the receding coronavirus numbers on Tuesday, the latest figures from Hubei, the epicenter of the deadly virus, suggest a mixed picture. As per the release, there are 1,693 new cases on February 18 versus 1,807 of February 17. The report also mentions 132 new deaths compared to 93 noted the previous day. Read: Coronavirus peaking? How will it impact the global economies and FX? China’s Xi remains optimistic… Following Moody’s downgrade of China’s growth forecasts, Chinese President Xi Jinping was cited by Reuters to keep the economic optimism. “China can meet its economic growth target in 2020 despite the impact of the coronavirus outbreak, state television quoted President Xi Jinping as saying on Tuesday,” said the reported. In addition to the Chinese President’s optimism, the earlier announced tariff cut on the 696 US goods by Beijing also plays in favor of the risk reset. That said, the market’s risk tone remains sluggish with the US 10-year treasury yields recovering to 1.564% from sub-1.56% whereas S&P 500 Futures also following the suit with 0.13% gains to 3,375. Given the current pullback in trade sentiment, investors will keep eyes on any headlines from China for further direction whereas the US economic calendar could entertain momentum traders afterward. Technical Analysis Unless declining back below the early-month top near $1,594, prices can continue to challenge the yearly high surrounding $1,612.  

AUD/NZD has made a significant move to the upside and price action is showing little sign of exhaustion until it breaks below the 17th Feb highs at 1.

AUD/NZD bulls take off and slice through key resistance like butter. Thee is the risk of a bull trap and lower targets could be revisited on failures to hold above 1.0460. AUD/NZD has made a significant move to the upside and price action is showing little sign of exhaustion until it breaks below the 17th Feb highs at 1.0466. This is a prior resistance that was sliced through like butter in the US session on Tuesday with the bird losing its footing. At the time of writing, AUD/NZD is trading at 1.0471 between a barrow range of 1.0465 and 1.0471. The bird was weighed overnight on the back of New Zealand's key export product, whole milk powder, falling by 2.6%. "Last night’s results are unsurprising given the continuing uncertainty regarding the Coronavirus outbreak, the previous GDT auction on 4 February also likely affected by such," analysts at Westpac explained, adding that "the steps that China has taken to contain the outbreak – such as limiting the movements of people – have kept many factories closed, which has meant less demand for their inputs, including milk powder. North Asian demand at last night’s auction was lower than usual, but only slightly so." The Reserve Bank of New Zealand is expected to remain on hold but we are yet to see the aftermath of the coronavirus's impact on the tourism industry which could be a highly damaging outcome for the economy. Tourism is a significant export for New Zealand and in recent years, Chinese visitors have made a key contribution to overall revenue. What is compelling is how far the Aussie has been able to correct, which perhaps signifies how much of the coronavirus was priced into the currency. The sentiment that markets will soon be able to move on from the threats of the virus could be playing a roll in the currency's comeback.Coronavirus peaking? How will it impact the global economies and FX?Markets leaning less dovish on the RBA Following the RBA minutes, where it was discussed a further reduction in interest rates because prospects are for only gradual progress towards the Bank’s inflation and unemployment goals, when looking to central bank expectations, markets are pricing just a 5% chance of easing at the next RBA meeting on 3 March, and a terminal rate of 0.46% (RBA cash rate currently at 0.75%). For the RBNZ, the market is pricing a 10% chance of easing at the next meeting on 25 March from the RBNZ, with a terminal rate of 0.82% (RBNZ OCR currently at 1.0%), according to analysts at Westpac.  AUD/NZD levels As per yesterday's analysis, there are still prospects for consolidation in a head and shoulders pattern but the support of 1.0460 needs to give out for the bears. We now have extended bearish divergence across the daily and four-hour times frames and if there is no follow-through above 1.0460, risks will be titles to the downside again.                     

Australia Westpac Leading Index (MoM) remains at 0.05% in January

GBP/JPY stays mostly inactive while flashing 142.85 as a quote during Wednesday’s Asian session. That said, the pair recently took a U-turn from 10-we

GBP/JPY struggles to extend the latest pullback.61.8% of Fibonacci retracement offers immediate support.Buyers will look for entry beyond the fresh monthly top.GBP/JPY stays mostly inactive while flashing 142.85 as a quote during Wednesday’s Asian session. That said, the pair recently took a U-turn from 10-week-old resistance-turned-support but remains below 50-day SMA. With this, the quote is likely to revisit 61.8% Fibonacci retracement of its November-December upside, at 142.63, before retesting the support line, currently at 142.20. During the pair’s further downside below 142.20, which is less likely considering the current momentum, 100-day SMA level of 141.00 and lows marked during December 2019 and January 2020, around 140.80 could please the bears. On the upside, pair’s rise past-50-day SMA level of 142.95 again pushes it to challenge the monthly top nearing 143.50. If GBP/JPY prices manage to clear 143.50 resistance, a 50% Fibonacci retracement level of 143.65 can add challenges to the buyers. GBP/JPY daily chart Trend: Sideways  

NZD/USD pulls back from seven-day low to 0.6390 amid the initial Asian session on Wednesday. Mostly upbeat comments from the Reserve Bank of New Zeala

NZD/USD snaps four-day losing streak.Risk aversion, downbeat New Zealand data dominated off-late.RBNZ’s Orr favored the status quo, said the economy is in a good position.Coronavirus numbers from Hubei signaled a mixed picture.NZD/USD pulls back from seven-day low to 0.6390 amid the initial Asian session on Wednesday. Mostly upbeat comments from the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr and receding coronavirus numbers from the epicenter Hubei could be cited as the immediate catalysts. However, the broad risk aversion remains following the latest doubts on the actual figure and length of the epidemic. RBNZ’s Orr: Good position The RBNZ Governor Adrian Orr recently crossed wires while speaking in front of the committee in parliament to answer questions related to the Bank's annual report. The New Zealand central banker praised the present state of the monetary policy and economy while also suggesting a satisfactory position of inflation. With this, the odds of the RBNZ’s immediate rate cut decline. “Market pricing for RBNZ implies a 10% chance of easing at the next meeting on 25 March, with a terminal rate of 0.82% (RBNZ OCR currently at 1.0%,” mentions Westpac. Read: RBNZ: Both the economy and monetary policy are in a good position Coronavirus update: Numbers from Hubei fail to follow the recent declines As per the latest figures from China’s Hubei, the epicenter of coronavirus, there are 1,693 new cases on February 18 versus 1,807 of February 17. The report also mentions 132 new deaths compared to 93 noted the previous day. Read: Coronavirus peaking? How will it impact the global economies and FX? Even so, the market’s risk-tone refrains to turn positive as the S&P 500 Futures stay mostly unchanged around 3,370. Earlier, downbeat figures of New Zealand’s GDT Price Index, -2.9% versus 0.0% expected, contradicted the upbeat US data and broad US dollar strength to drag the kiwi pair downwards. It should also be noted that doubts over the coronavirus numbers and fears of global institutions like the International Monetary Fund (IMF) and the World Trade Organization (WTO) defied China’s readiness to cut tariffs of 696 US goods. Moving on, a light economic calendar at home will keep the pair traders at the mercy of external factors with China, Australia and the US being the key drivers. Technical Analysis Any downside below the monthly bottom of 0.6377 can drag the quote to November 2019 low near 0.6315.  

China's Hubei province, epicentre of coronavirus outbreak, reports 1,693 new cases on Feb 18 vs 1,807 on Feb 17. More to come

China's Hubei province, epicentre of coronavirus outbreak, reports 1,693 new cases on Feb 18 vs 1,807 on Feb 17. More to come

While citing a phone call between the leaders of the UK and China, the South China Morning Post (SCMP) cited British Prime Minister’s favor to China,

While citing a phone call between the leaders of the UK and China, the South China Morning Post (SCMP) cited British Prime Minister’s favor to China, in contrast to the European Union, which can negatively affect its relations with the US. Key quotes UK Prime Minister Boris Johnson has told President Xi Jinping that Britain welcomed Chinese investment under Beijing’s Belt and Road Initiative, a geopolitical move that will probably further upset the Trump administration. Johnson’s pledge to stay close to China on international issues comes after his government refused to heed Washington’s request to impose a ban on Huawei Technologies, giving the Chinese tech giant a share in Britain’s next-generation 5G mobile networks. China’s President Xi Jinping, in return, reassured Britain that China’s economy was still in good shape, as he attempts to prevent a decline in business confidence amid the coronavirus outbreak. The Chinese leader also speaks with French President Emmanuel Macron and Croatian President Zoran Milanovic. FX implications Although global markets paid a little heed to the story, this could turn the British pound (GBP) negative catalyst if US President Donald Trump reacts to the development of UK-China relations.

AUD/JPY declines to 73.47 during the early Asian session on Wednesday. The pair recently slipped below 61.8% Fibonacci retracement of its October-Dece

AUD/JPY stays on the back foot after testing the lowest in seven days.50% Fibonacci retracement and 200-day SMA add to the upside barriers.The yearly bottom gains the bears’ attention.AUD/JPY declines to 73.47 during the early Asian session on Wednesday. The pair recently slipped below 61.8% Fibonacci retracement of its October-December 2019 upside while staying under 21-day SMA. That said, the pair is currently targeting February 07 low, near 73.00 despite bullish MACD signals. However, horizontal support comprising multiple levels since late-September 2019, around 72.50, will challenge the bears, if not then the return of October 2019 low of 71.74 can’t be ruled out. In a case of the pair’s bounce beyond the immediate resistances, namely 61.8% Fibonacci retracement level of 73.57 and 21-day SMA near 73.75, AUD/JPY prices could aim for 74.15 level comprising 50% Fibonacci retracement. Though, buyers will wait for entry until the quote manages to remain strong beyond the 200-day SMA level of 74.25. AUD/JPY daily chart Trend: Bearish  

The Reserve Bank of New Zealand's governor, Adrian Orr, has said that both the economy and monetary policy are in a good position. More to come...

The Reserve Bank of New Zealand's governor, Adrian Orr, has said that both the economy and monetary policy are in a good position. More to come...

USD/JPY trades mildly positive to 109.90 during the early Asian session, ahead of the Tokyo open, on Wednesday.

USD/JPY recovers following the upbeat US data, a trade-positive announcement from China.The coronavirus-led risk-off couldn’t choose clearly between the greenback and the Japanese yen.The second-tier data from Japan awaited with eyes on any developments from Beijing.USD/JPY trades mildly positive to 109.90 during the early Asian session, ahead of the Tokyo open, on Wednesday. The risk barometer recently failed to portray the market’s fears from China’s coronavirus amid broad US dollar strength, also backed by the upbeat US data. Traders will now keep eyes on Japan’s December month Machinery Orders and trade numbers for January for immediate direction. Though, it doesn’t dim the importance of any headlines from China. The struggle amid the risk-off… Despite being the only major currency to not lose against the greenback, the Japanese yen failed to properly portray the market’s risk aversion based on China’s coronavirus related headlines. While the coronavirus numbers from China and the epicenter Hubei are receding off-late, there is a doubt concerning unreported cases as well as the time period over which the epidemic will last. Also, Moody’s cut to China’s growth forecast, from 5.8% to 5.2%, added strength to the investors’ fears that the world’s second-largest economy will be hit hard due to the contagion. The same pessimism was earlier spread through Apple that signaled to miss the forecasts amid depleting demand from China. Portraying this, the US 10-year treasury yield and Wall Street took a back foot following the previous day’s rise. Even so, the US dollar continued to benefit as upbeat data and broad support to the current monetary policy favored the US currency. Another USD-positive could be traced from China’s readiness to cut tariffs on 696 US goods to facilitate mode imports and near the phase-one deal promises. Furthermore, China’s Commerce Ministry spokesperson recently showed readiness to take measures to boost foreign investment and the same could offer a pullback amid the broad risk-off. Trades will now concentrate on Japan’s Machinery Orders, expected -9.0% versus +18% prior, as well as Merchandise Trade Balance, forecast ¥-1694.9 B versus ¥-154.6 B. Following that, the US housing market data and Producer Price Index (PPI) could decorate the economic calendar. However, nothing will dim the impact of Chinese headlines. Technical Analysis Tuesday’s “hanging man” bearish candlestick formation suggests the pair’s another failure to stay strong beyond 110.00, which if failed could challenge the yearly top surrounding 110.30 and aim for May 2019 high close to 110.70.  
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