Forex news from the European morning session - 24 February 2020
Headlines:
- Oil now down by 4% on the day on risk aversion
- Italian equities down by nearly 5%, set for worst day since June 2016
- The market is now pricing in two Fed rate cuts this year
- Mnuchin: No material impact from virus on US-China trade deal for now
- Germany February Ifo business climate index 96.1 vs 95.3 expected
- China issues warning against travel to the US
- Gold continues to soar as safety flows dominate
- China decides to postpone annual NPC meeting
- South Korea reports 70 new coronavirus cases, brings total to 833
- US Treasury 10-year yields fall to lowest since 2016
- Wuhan pulls back earlier statement on easing lockdown
- South Korea president Moon calls for 'extraordinary' steps to bolster economy
Markets:
- JPY leads, GBP and CAD lag on the day
- European equities sharply lower; E-minis down 2.3%
- US 10-year yields down 7.7 bps to 1.394%
- Gold up 2.3% to $1,680.81
- WTI down 4.0% to $51.25
- Bitcoin up 1.4% to $9,812
The market is in a sour mood to kick start the new week amid a spike higher in coronavirus cases in South Korea and Italy over the weekend.
Equities in Asia were routed and the bloodbath continued into European trading, with Italian stocks bearing the brunt of the beating - set for its biggest loss since June 2016.
Bond yields also cracked lower with 10-year Treasury yields falling below 1.40% while 30-year yields continued to chase fresh record lows during the session.
The risk-off tone benefited gold as the commodity rose by $42 at the highs to $1,689 earlier in the session, before settling near $1,681 currently.
In the currencies space, the dollar kept firmer across the board with the aussie and kiwi staying pressured but not really making fresh lows since Asia Pacific trading.
The pound was taken lower in early morning trade with cable easing from 1.2930 to 1.2890 with EUR/GBP also seeing a bounce towards 0.8400.
Meanwhile, the yen is continuing to struggle with a bit of identity crisis with USD/JPY keeping around 111.50-60 initially before retracing back lower towards 111.20.
It is all about the risk-off mood in the market as we see investors come to terms with what the coronavirus outbreak could possibly do to the world economy. Is this time for more realisation or will greed start to set in once again like the episodes we have seen before?
