Forex news from the European morning session - 13 February 2020
Headlines:
- Japan confirms first death from the new coronavirus
- UK finance minister Sajid Javid is said to have resigned
- Singapore sees biggest jump in new coronavirus cases to date, up by 8 to 58 cases
- European Commission keeps Eurozone growth forecast at 1.2% for 2020, 2021
- Russia says that has not made decision on additional OPEC+ output cuts yet
- IEA sees fall in Q1 oil demand, the first quarterly drop in more than a decade
- China reports 15,152 new coronavirus cases for 12 February, death toll rises by 254
- Chinese equities snap seven-day rally as virus concerns creep back in
- China's Hubei province extends work suspension until 20 February
Markets:
- GBP leads, NZD lags on the day
- European equities lower; E-minis down 0.7%
- US 10-year yields down 4 bps to 1.593%
- Gold up 0.6% to $1,574.70
- WTI down 0.6% to $50.85
- Bitcoin down 1.8% to $10,199
Things began with a heavy focus on risk as coronavirus headlines stirred the pot, after China reported a huge jump in reported cases - owing to a reclassification in Hubei cases.
Risk trades were softer as a result of the risk-off mood in the market, and that only intensified during the session as stocks fell while bonds were strongly bid amid safety flows.
USD/JPY inched lower from 109.85 to 109.62 as the yen stayed bid with Treasury yields falling quite a bit across the curve. At the lows, 10-year yields were down by more than 6 bps to 1.566% earlier in the session.
Meanwhile, the aussie and kiwi are modestly softer as both currencies retrace some of their earlier gains from this week but nothing too substantial for now.
As we moved towards European midday, the UK cabinet reshuffle took a twist as Sajid Javid announced his resignation. The pound was already trading mildly higher against the dollar, around 1.2985 before the news took it lower to 1.2965 initially.
But as the details surfaced, it was No. 10 who forced Javid's hand as they wanted him to fire his advisers - just a month before the budget announcement in March.
Thereafter, the pound gained strongly and broke 1.3000 as the market sees the move as being one that Johnson is preparing to unleash a host of fiscal measures next month.
In essence, this also reduces the need for the BOE to act so soon if there will be fiscal help to bolster the UK economy in the short-term.
