ForexLive European FX news wrap: Pound firms on jobs data; virus concerns grip markets
Forex news from the European morning session - 21 January 2020
- Trump: Our relationship with China has never been better
- US president Trump: The US is in the midst of an economic boom
- WHO expects further spread of new coronavirus in China and possibly other countries
- Germany January ZEW survey current situation -9.5 vs -13.5 expected
- UK November average weekly earnings +3.2% vs +3.1% 3m/y expected
- BOJ's Kuroda: Too soon to adjust monetary policy framework at the moment
- BOJ's Kuroda: Japanese economy is expanding moderately as a trend
- GBP leads, CAD lags on the day
- European equities lower; E-minis down 0.4%
- US 10-year yields down 1.9 bps to 1.802%
- Gold down 0.3% to $1,556.32
- WTI down 1.3% to $57.80
- Bitcoin down 0.4% to $8,636
The European morning saw modest news flow but little to impact the trading landscape as markets stay gripped by heightened fears on the coronavirus outbreak in China.
The risk mood stayed more on the defensive as equities lose ground, with US futures also lower by ~0.4%, as bonds kept a little more firm on the session. As a result, the yen stayed firm while the aussie was notably softer during the early stages of the morning.
USD/JPY kept a tight range around 109.90-05 throughout the session while AUD/USD eased to a low of 0.6844 - testing its 100-day moving average - before recouping some losses to around 0.6866 currently.
The pound was decent mover as well with a slightly better-than-expected UK jobs report helping to see cable rise above its key hourly moving averages close to 1.3030. That helped to spur additional gains in the quid, as price climbs up to 1.3060 now.
That said, any significant move higher is likely to need the backing of UK PMI data on Friday - especially if buyers intend to chase a move back above the 1.3100 handle.
The euro is also mildly higher after the German ZEW survey showed a decent improvement in economic sentiment for both current conditions and outlook. EUR/USD is keeping above the 1.1100 handle since then but remains in a relatively narrow trading range.
Gold was a bit of an outlier during the session as the commodity lost ground despite the softer risk mood but so far the downside is limited by the 200-hour moving average.
Looking ahead, it is still all about the risk mood as markets keep the focus on contagion fear of the China virus outbreak - especially ahead of the hectic travel period during the Chinese New Year holidays later this week.
All that said, expect the fear to be faded in due time. Also, virus outbreak or not, Wall Street has been keeping at all-time highs since last week and there is good reason for some money to be taken off the table as such.