Forex news for Asia-Pacific trading on January 27, 2020:
- US embassy in Baghdad hit with a rocket
- Trump expected to announce travel ban this week (but not to where you think)
- Italy's Democrats defeat Salvini's league in key regional vote
- Kobe Bryant dies in a helicopter crash at 41
- China confirms 2744 cases of coronavirus
- China says 30,453 people are under medical observation and at risk of coronavirus
- China coronavirus death toll rises to at least 80 from 56
- China's national health minister warns virus appears to be infectious during incubation and is getting stronger
- Australia confirms fifth case of coronavirus. Thailand warns on tourism curbs
- Mongolia closes its border with China
- Saudi Energy Minister: We're closely monitoring developments in global oil and coronavirus
- US confirms fifth case of coronavirus
- Gold up $8 to $1580
- WTI crude down $1.28 to $52.91
- US 10-yer yields down 4.5 bps to 1.64%
- China A50 stock futures fall 4.9%
- Nikkei down 1.9%
- Iron ore futures down 6%
China extended its lunar new year holiday through Sunday in a bid to contain the coronavirus but the number of new cases are expected to continue to climb and spread.
The market reaction a sharp risk-off tone at the open that was a burst of trading but it was surprisingly quiet afterwards. Risk trades started to recover, like to the 61.8% level in gold, but then risk-off picked up again before leveling out. With China and Australia out, liquidity was thinned.
USD/JPY gapped down to 108.75 from 109.25 at the open but has steadily battled back and is into the cap at 109.10. That probably reflects USD vying with the yen as a safe haven more than it does the risk trade.
A clearer pattern emerges in the commodity currencies, which are struggling to get off the lows against the dollar but have had decent bounces against the yen. Is this a sign that money is going to the US where bonds at least offer some kind of positive return?
The euro has held pace with the US dollar so far while cable has come under mild pressure.
The biggest directional trades continue to be on growth-sensitive commodities with oil down despite the Baghdad attack, an event that may have wounded Americans but isn't getting much attention. Industrial metals are also getting hit hard.
Good luck out there today.