USD lower against JPY following news of the virus in China


The USD is lower this morning against the JPY, but relatively unchanged against the GBP and EUR, as traders are concerned about the Coronavirus spreading in China. Asian stocks sold off after the World Health Organization confirmed a fourth person had died, and with more than normal travel around the Chinese New Year expected, there are concerns that the disease may spread. Dow Futures are pointing to a lower opening of the US equity markets later this morning of around 125 points. Traders are looking at this viral outbreak and remembering the SARS outbreak in 2003, which had investors getting out of Asian assets. Health news from Asia will be on trader’s minds as US markets reopen after the three-day holiday. 


The EUR/USD has traded in a narrow range overnight as traders await the European Central Bank meeting on Thursday. There is an expectation that the central bank will review its strategy and possibly change inflation targets. President Trump and President Macron met during the Davos economic summit and have agreed to not place tariffs on each other’s country, which has calmed some tensions regarding US-EU trade. Aiding the EUR this morning is the expected German ZEW economic sentiment which is expected to move to 15.0 after a previous reading of 10.7. 


The GBP/USD is higher this morning after UK wage figures beat expectations, coming in at 3.2%. This was the same as last month and better than the 3.1% expected. GBP unemployment remained at 3.8%. Traders are still awaiting some news on Brexit as the January 31 deadline is now only 10 days away.


The Bank of Japan has left interest rates unchanged as expected at -0.1%. The central bank did raise growth forecasts for 2020 from 0.7% to 0.9%. The markets did not react much to these expected moves, having already reacted to the virus news out of China. As traders move out of risk over the next few days, expect the USD/JPY to continue to move lower.


USD/CAD moved off its overnight highs as oil prices headed to their higher prices in over a week as two large production fields in Libya were shut down reducing oil flows. As oil prices go, so goes the Canadian Dollar and if there is a reduction in supply the loonie could move higher.


Asian stock moved lower overnight as concern grows over the outbreak of the Coronavirus in China. This virus is similar to pneumonia and can be passed person-to-person. With the Lunar New Year approaching, there is an expected large number of people traveling which could spread the virus. Cases have already been reported in Thailand, Japan, and South Korea

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