Forex news from the European morning session - 7 February 2020
Headlines:
- Russia's Novak: No sign of China demand for Russian oil and gas falling
- Singapore raises alert level for new coronavirus to be on par with SARS epidemic
- Japanese lawmakers call for BOJ to consider digital currency to counter China
- ECB's Villeroy: French Q4 GDP contraction is a temporary hiccup
- Germany December industrial production -3.5% vs -0.2% m/m expected
- Is Japan's "whale" the main reason for yen calm amid coronavirus fears?
- Russia's Novak: We will give our decision next week
Markets:
- JPY leads, AUD lags on the day
- European equities lower; E-minis down 0.5%
- US 10-year yields down by 3 bps to 1.61%
- Gold flat at $1,566.43
- WTI down 0.7% to $50.60
- Bitcoin up 0.2% to $9,757
Coronavirus fears are starting to rear its ugly head in the market again, with news about the 41 cases on the cruise ship in Japan tempering the risk mood early today before a further softening as Singapore raised its alert level to 'Orange' - similar to that of SARS.
Risk sentiment was more tepid to start the European morning with Treasury yields a little lower and stocks were also more cautious. USD/JPY lingered around 109.85-00 with US 10-year yields sitting about 3 bps lower at around 1.61%.
That quickly turned into more heavy risk flows after the Singapore headlines, with USD/JPY touching a low of 109.67 as risk currencies also got battered with AUD/USD easing from 0.6710 to lows of 0.6672. NZD/USD also fell from 0.6440 to lows around 0.6414.
US 10-year yields eased lower by around 5 bps to 1.589% but has since recovered some ground, keeping USD/JPY back at around 109.80-85 currently.
As the risk mood softened, the dollar stayed more firm and pushed gains against the euro as well. EUR/USD dropped to fresh four-month lows near 1.0950 from 1.0975-80.
Looking ahead, we still have US non-farm payrolls to go through but I reckon that will be overshadowed but changes in the risk mood today i.e. risk aversion extends on profit-taking ahead of the weekend or Wall Street brushing aside virus fears.
