The market mood remained fragile in Friday’s Asian trading, as a sense of caution prevailed amid concerns over the rapid spread of the China coronavirus outbreak globally, despite the Chinese authorities extending their containment efforts. Media reports hit the wires, citing fresh coronavirus cases reported in China, South Korea, Australia and the US. The World Health Organization (WHO), however, refrained from declaring it as a global emergency on Thursday.
The Asian equities traded mixed amid the virus concerns and slowing volumes, as the financial markets in China, Taiwan, South Korea and Indonesia were closed for the Lunar New Year holiday. The S&P 500 futures posted small gains while the US Treasury yields returned to the green zone, which somewhat buoyed the sentiment around the US dollar.
Meanwhile, most fx majors traded in tight trading ranges, with the USD/JPY pair stuck in range around the 109.50 level, divided between upbeat Japanese CPI, cautious sentiment and positive Wall Street futures. The Aussie’s rebound was capped near 0.6850 while the Kiwi hit a new four-day high near 0.6625, in the wake of above-forecasts New Zealand’s inflation data. USD/CAD traded listless around 1.3125, with the upside capped by the rebound in oil prices. Meanwhile, gold prices remained under pressure below $1560 levels.
Among the European currencies, EUR/USD remained on the defensive around 1.1050 after downbeat remarks from the European Central Bank (ECB) Chief Lagarde during the post-monetary policy meeting press conference. The cable held steady above the 1.31 level heading into the key events risks in the European session.
Main Topics in Asia
US Pres. Trump: White House Middle East peace plan is a great plan
Japanese CPI Dec: 0.8% YoY vs 0.4% expected
BoJ Minutes: Most members agreed it is appropriate to continue easing consistently
UK to strike first post-Brexit trade deal with Japan, dubbed as EU++ - The Sun
Total number of confirmed coronavirus cases in China at 830 as of Jan 23 - State media
105 new cases of Wuhan coronavirus confirmed in Hubei - Global Times
RBNZ Q4 Sectoral Factor Model Inflation Index rises by 1.8% YoY, Kiwi hits four-day highs
Incoming BOE Governor Bailey: UK badly prepared for market crash
Coronavirus spreads globally, China continues containment efforts
US Official: US Pres. Trump to sign USMCA trade deal Wednesday at White House
Turkish FinMin Albayrak: Lira “looks competitive” at 5.7-5.9 against US dollar – Nikkei
S&P warns coronavirus threatens to dent China’s new growth driver – Bloomberg
Key Focus Ahead
Fresh trading momentum could gather pace in the session ahead after a quiet Asian affair, as markets brace for the key preliminary Markit Manufacturing PMI readings from the across the Euro area as well from the UK. The bloc’s PMIs will start trickling from 0815 GMT and could emerge a key driver for the euro in the coming days.
Meanwhile, the UK activity numbers (due at 0930 GMT) will be closely watched heading into next week’s Bank of England’s (BOE) policy decision. Also, of note remains the speech by the ECB President Lagarde scheduled at 1030 GMT. Lagarde is due to participate in a panel discussion titled "Global Economic Outlook" at the 2020 World Economic Forum, in Davos.
The NA session is also an eventful one, with the Canadian Retail Sales data to kick-off the calendar at 1330 GMT. In the American mid-morning, Markit’s Preliminary Manufacturing and Services PMI reports for the US are lined up for release at 1445 GMT. Markets will also look forward to the Baker Hughes US Oil Rig Count data, dropping in at 1800 GMT.
Besides, China coronavirus spread-related developments are likely to remain the main market driver in the day ahead.
EUR/USD: Fiber has lost its upward trajectory, eyes PMIs and Lagarde speech
EUR/USD is on the defensive, having dived out of key ascending trendline. ECB President Lagarde on Thursday said risks to the outlook remain on the downside. German and Eurozone PMIs will likely guide the price action on Friday.
GBP/USD: Mildly bid above 1.3100 ahead of the key PMIs
GBP/USD gradually recovers Thursday’s losses as it takes the bids around 1.3125 ahead of the London open. The pair might have benefited from the EU-UK trade positive headlines but market players are waiting for the UK January preliminary PMIs for fresh impulse.
Eurozone PMIs preview: Upbeat expectations seem justified, opening the door for EUR/USD gains
Markit's preliminary PMIs for January are set to show a modest improvement. EUR/USD is expected to react strongly to any outcome.
Key economic events in the week ahead - ANZ
The FX Strategists at Australia and New Zealand Banking Group (ANZ) provide brief insights into the key event risks due on the cards next week.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0850 despite weak US employment data
EUR/USD loses its traction and declines toward 1.0850 after testing 1.0900 earlier in the session. Because Nonfarm Payrolls data for October missed the market expectation by a wide margin due to hurricanes and strikes, the US Dollar manages to hold its ground.
GBP/USD climbs above 1.2950, looks to end week little changed
GBP/USD benefits from the improving risk mood and trades in positive territory above 1.2950 in the American session on Friday as markets ignore the weak labor market data from the US. The pair remains on track to end the week flat.
Gold clings to small gains near $2,750 after US data
Gold clings to marginal recovery gains and trades slightly above $2,750. The 10-year US Treasury bond yield struggles to push higher after the dismal October jobs report and weaker-than-expected PMI data from the US, helping XAU/USD keep it footing.
Bitcoin Weekly Forecast: Run toward fresh all-time high hinges on US presidential election results
Bitcoin could experience a price pullback in the next few days ahead of the US presidential election, analysts say, an event that will be key to determining whether and how the crypto class will be regulated in the years to come.
Bank of Japan holds rates steady amid signs of modest GDP growth
Monthly industrial production results have been mixed but generally indicate a modest recovery in third-quarter GDP. Clear guidance from the Bank of Japan remains elusive, with each upcoming meeting being pivotal.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.