The USD is stronger this morning as concerns regarding the Coronavirus seem to be easing a bit. The market is responding to the ISM Manufacturing number that was released yesterday at 50.9, better than the previous 47.2 number and much better than the expected 48.5. Traders will now focus on Factory Orders due out later this morning. Factory Orders are forecast at 1.1% after a previous -0.7% number. US Equity markets rebounded yesterday after Friday's sell-off, gaining almost 150 points. Dow Futures are higher this morning and the US equity markets are expected to open around 300 points higher.
EUR/USD has traded lower overnight as better than expected US economic numbers are putting pressure on the single currency. With Euro economic numbers still in the contraction area below 50, the release of US ISM above 50 (50.9) showed expansion in the US economy and traders were buying USD against the EUR. Adding to the Euro’s woes was the release of data from Spain, showing a substantial increase in unemployment.
GBP/USD is trading slightly higher this morning after UK Construction PMI beat expectations and came in at 48.4. The market had expected a number of only 47.1, so this number had some traders returning to buying GBP, lifting the pound off six-week lows. Post Brexit negotiations continue, and both sides are far apart at this point. The EU Chief Negotiator, Michel Bernier said to have “easy market access”, the UK would need to agree to EU rules, while UK PM Boris Johnson has rejected accepting any rules for the EU. It looks like these negotiations will continue for quite some time. They still have until Dec. 31 to come to an agreement.
USD/JPY is also higher this morning as the currency has approached overnight highs and the North American markets begin trading this morning. The USD move against the JPY in the last 24 hours was the biggest move since mid-January. Traders seem to be willing to take on some risk, therefore moving out of safe-haven JPY trades.
USD/CAD has moved off their overnight highs as oil prices moved a bit higher in overnight trading. Brent crude is up 21 cents, while West Texas crude moved 32 cents higher. Positive oil prices could prop up the Canadian currency in the short run. Strong US economic releases will continue to weigh on the loonie.
Confirmed cases from the Coronavirus continue to rise as the Chinese government has now confirmed 20,438 cases in China. The death toll has risen to 425. The Chinese government is attempting to ease fears regarding the Chinese economy as an article published in the Securities Times stated that the virus is “an event that usually only causes a short-term interruption to the markets”. Equity markets in Asia were all higher overnight and European markets are positive this morning as well.