Forex news from the European morning session - 28 February 2020
Headlines:
- OPEC reportedly discussing additional output cut of up to 1 mil bpd now
- German government says that no stimulus package is currently planned
- ECB's Weidmann: No need for immediate monetary action due to coronavirus
- ECB's Vasiliauskas: Doesn't see anything ECB can do next month to respond to coronavirus
- The market now expects the Fed to cut rates next month
- Germany February unemployment change -10.0k vs 4.5k expected
- Japan's Hokkaido declares state of emergency amid virus outbreak
- Saxony February CPI +2.0% vs +1.8% y/y prior
- France Q4 final GDP -0.1% vs -0.1% q/q prelim
- France February preliminary CPI +1.4% vs +1.5% y/y expected
- BOE's Carney: Coronavirus could mean economic growth downgrade for the UK
Markets:
- JPY leads, NZD lags on the day
- European equities lower; E-minis down 0.9%
- US 10-year yields down 5.6 bps to 1.204%
- Gold down 1.2% to $1,625.36
- WTI down 2.9% to $45.75
- Bitcoin down 2.0% to $8,575
As we approach the weekend, the market continues to be overwhelmed by coronavirus fears as risk continues to get hammered in trading today.
It is getting harder to keep up with new cases popping up in many countries as we see Nigeria, Wales, Mexico, New Zealand and Lithuania among others naming their first case.
Meanwhile, Japan is starting to feel the heat as the race to keep the Tokyo Olympics alive is well and truly on at this point. It feels like it only is a matter of time before the country goes into lockdown in order to try and keep the hope alive.
European stocks are being battered across the board, though there is some mild profit-taking activity in a bit of a choppy session. However, equities are deep in the red with bond yields also sinking further during the European morning.
US 10-year yields made fresh record lows of 1.153% with 2-year yields now also falling below 1.00% to 0.976% currently.
As such, the yen is the biggest beneficiary as USD/JPY sinks to 108.50 from 109.00 at the start of the session. Meanwhile, USD/CHF fell from 0.9670 to 0.9610 - the lowest level since 2018 - before recovering some ground towards 0.9650 now.
The euro also continued its march higher before being pegged back a little as EUR/USD moved from 1.1000 to 1.1053 before slipping back closer to the figure level.
Meanwhile, the aussie and kiwi continue to see little reprieve as the beatdown continues as both currencies are down by ~1% against the dollar today.
It is all about the risk mood as we approach the weekend and though there will be some hints of profit-taking amid the sharp moves we are seeing this week, risk is still likely to finish the week on the defensive side ahead of China PMI data and more coronavirus developments still to come over the next two days.
