Risk-off in the currencies space
With global equities tumbling and Treasury yields continuing to make fresh record lows, the yen is going back to basics and is leading the charge in trading today.
The fall in USD/JPY back below 110.00 was significant in helping the pair push back below the 100-day moving average to test key trendline support at 108.87 currently.
Meanwhile, the aussie and kiwi are the major laggards today amid the risk-off mood but also as rate cut odds for the RBNZ meeting next month rise dramatically.
The odds of a 25 bps rate cut for the 25 March meeting was just ~25% yesterday but that has now jumped up to ~47% currently, putting a drag on the kiwi.
The loonie is also weighed lower as USD/CAD eyes a key breakout towards 1.3500 next as oil prices continue to be crushed amid growing fears of a global virus pandemic.
Oil is down by a further 3.2% to $45.58 currently and looks set to test the 2016 low near the $42 level in a matter of time.
Looking ahead, it is all about risk ahead of the weekend but just be mindful of some mild profit-taking activity during the day amid the recent sharp moves this week.
That said, I would still expect risk to stay softer as the selloff rampages on in anticipation of China PMI data and more coronavirus developments over the next two days.
