Forex news for North American trade on January 23, 2020:
- ECB leaves key rates unchanged in January meeting
- Lagarde opening statement: Incoming data are in-line with baseline scenario
- Lagarde Q&A: ECB view on risk balance was unanimous
- World Health Organization does not declare international virus alarm
- Expert says coronavirus could be "at least" ten times worse than SARS
- Suspected case of coronavirus in Texas -
- EIA weekly oil inventories -405K vs +800K expected
- KC Fed manufacturing index -4 vs -7 prior
- Eurozone January advance consumer confidence -8.1 vs -7.8 expected
- Statement: ECB launches review of its monetary policy strategy
- US initial jobless claim 211K vs 214K estimate
Markets:
- Gold up $4 to $1563
- WTI crude oil down $1.10 to $55.64
- S&P 500 up 4 points to 3325
- US 10-year yields down 4 bps to 1.73%
- JPY leads, EUR lags
The market was positioned for the chance of something hawkish from Lagarde and appeared to get it early on when she said inflation was showing signs of picking up. But the second half of that sentence include the caveat that inflation was rising only in line with their forecast. Worries about European growth and manufacturing increased with coronavirus worries and the euro sagged to a low of 1.1036 before a late-day 20-pip bounce.
The stock market turned in part due to the WHO opting not to hit the alarm bells on coronavirus but the FX market was less enthusiastic and yen crosses struggled.
Commodity currencies were a mixed bag. AUD/USD gave back all the Aussie employment gains but CAD finished strong as oil rebounded from the lows on the inventory report. Note that Canadian retail sales are due on Friday.
Cable gave back some of Wednesday's gains but found support at 1.3100 and ticked a quarter-cent higher.
