ForexLive Americas FX news wrap: Risk trades hammered again on virus fears

Author: Adam Button | Category: News

Forex news for North American trade on February 25, 2020:


  • Gold down $25 to $1633
  • US 10-year yields down 4 bps to 1.33%
  • WTI crude oil down $1.65 to $49.79
  • S&P 500 down 98 points to 3128
  • GBP leads, NZD lags
It didn't start out like a bad day. Risk trades were doing better in the early going and US stocks opened higher but a combination of new Swiss/German cases, an alarming CDC press conference, Kudlow hinting at no help from the Fed and general fears about the virus quickly took a toll that ultimately hammered stock markets.

The FX market still isn't sure how to react. The yen continued to hold a bid as USD/JPY fell below 110.00 and completely erased last week's squeeze higher. Yen crosses also fell 0.3-0.8% across the board.

The euro continues to alternately trade on domestic fundamentals and carry trade unwinds. The outbreak in Europe caused some euro-centric selling but the other line of thinking is that it's only a matter of time until it goes global so the trade is safety and all those euros that went elsewhere looking for yield are now happy to be at home on the sidelines.

Cable is another example of a market that's confused about how to react. There are speculative shorts unwinding and the UK has far more financial flexibility to respond to a pandemic so there's a case to buy the pound but it's not exactly a safe-haven.

The commodity currencies held up relatively well and that was a surprise given the drop in oil prices and base metals. It's a reflection of the very uncertain backdrop and some technical support levels nearby.

Forex news for North American trade on February 25, 2020:
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