The rebound in the Chinese stocks helped its Asian peers recover some ground, as investors resorted to bargain-hunting after the previous day’s rout but markets remained cautious as China’s deadly coronavirus claimed more lives outside the mainland as well.
Further, Beijing’s containment efforts combined with the policy support also reassured the markets, as the Chinese yuan reversed losses and looked to stabilize just under 7.00 vs. the US dollar. The improved risk sentiment was also reflected by a sharp uptick in the US equity futures and Treasury yields, which kept the greenback broadly underpinned near Monday’s high.
Meanwhile, the Aussie dollar emerged as the top performer across the G10 currencies, with AUD/USD having bounced to 0.6725 on Reserve Bank of Australia’s expected rates on hold decision. What lifted the Aussie was the fact that the RBA did not show a sense of urgency about bringing rates lower while it sounded relatively upbeat on the state of the domestic economy. The Kiwi benefited from the Aussie rally and flirted with daily highs near 0.6470.
The yen, on the other hand, saw a fresh round of selling that drove the USD/JPY pair closer towards the 109 handle amid risk-recovery. GBP/USD looked to stabilize above 1.3000 after almost 200-pips drop seen a day before after the UK PM Johnson laid out a hard-line approach to Brexit negotiations with the EU and re-ignited Hard Brexit fears. Meanwhile, the EUR/USD pair held steady above 1.1050.
On the commodities market, gold prices came under pressure below $1580 while oil prices jumped 1% amid a risk-on market profile.
Main Topics in Asia
Moody’s: Coronavirus outbreak will curb China's consumption
China's total number of confirmed coronavirus cases hits 20,438 as of end-Feb 3
China's Foreign Ministry: Hope US provides aid it has promised coronavirus outbreak soon
China Press urges investors not to panic over market slide on coronavirus outbreak
Hong Kong reports its first China coronavirus death, risk sentiment remains tepid
RBA leaves interest rate unchanged at 0.75%
RBA: Bushfires, coronavirus will temporarily weigh on growth
China’s Pres. Xi: The coronavirus is a “major test” for China - Xinhua
Key Focus Ahead
Markets look to a relatively quiet EUR calendar this Tuesday, in absence of any first-tier macro releases. Therefore, the UK Construction PMI data and Eurozone Producer Price Index (PPI) will be closely watched at 0930 GMT and 1000 GMT respectively for fresh trading incentives.
Meanwhile, the broader market sentiment and USD dynamics will continue to play a key role across the financial markets amid China’s coronavirus outbreak and its likely implications.
Moving on, the NA docket sees a slew of US economic data lined up for release. However, the US Factory Orders due at 1500 GMT will grab more market attention. Also, of note remains New Zealand’s (NZ) GDT Price Index and American Petroleum Institute’s (API) weekly Crude Oil Stock data ahead of the key NZ Employment data, dropping in at 2145 GMT.
EUR/USD holds below 100-day MA, focus on T-yields
EUR/USD is on the defensive below the 100-day average. With oil regaining poise, treasury yields are looking to resume the post-US ISM PMI rise. The uptick in US yields will likely keep the pair under pressure.
GBP/USD regains footing above 1.3000 with eyes on UK PMI
GBP/USD holds onto recovery gains above 1.3000 while heading into the London open on Tuesday. The pair recently benefited from the market’s risk reset as well as an absence of any negative catalysts concerning the UK.
WTI Probes 1-Year Low at $50.00 – Time for a Dead Cat Bounce?
Until authorities can provably contain the spread of coronavirus, oil traders may look at any near-term rally as a “dead cat bounce” and look to re-enter short positions on any bounce toward the $53.00-54.00 area.
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 holds near 1.1100, looks to post small weekly gains](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/money-9377516_XtraSmall.jpg)
EUR/USD holds near 1.1100, looks to post small weekly gains
EUR/USD trades near 1.1100 in the American session on Friday. Although the risk-averse market atmosphere caps the pair's upside, dovish comments from Fed officials and the disappointing US jobs report help it hold its ground.
![GBP/USD retreats to 1.3150 area after post-NFP spike](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-1178148633_XtraSmall.jpg)
GBP/USD retreats to 1.3150 area after post-NFP spike
GBP/USD turns south and declines to 1.3150 area after spiking to 1.3240 in the early American session. The negative shift seen in risk mood following the US labor market data for August helps the US Dollar stay resilient against its peers and weighs on the pair.
![Gold pulls away from near record highs, holds above $2,500](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/Gold_Bar_XAU_Precious_Metal_XtraSmall.jpg)
Gold pulls away from near record highs, holds above $2,500
Gold came within a touching distance of a new all-time high near $2,530 as US Treasury bond yields turned south on disappointing US jobs data. The US Dollar's resilience amid a souring risk mood, however, caused XAU/USD to erase its daily gains.
![Crypto today: Bitcoin, Ethereum, XRP tests key support, TRON network non-stablecoin activity hits new highs](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/bitcoins-37949586_XtraSmall.jpg)
Crypto today: Bitcoin, Ethereum, XRP tests key support, TRON network non-stablecoin activity hits new highs
Bitcoin, Ethereum, and XRP hover around key support levels after registering a steep correction earlier this week. TRON network’s stablecoin activity hit new highs following the release of SunPump.
![Nonfarm Payrolls expected to show modest hiring rebound in August after July’s tepid report](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/Employment/NFP/us-job-hunter-8793311_XtraSmall.jpg)
Nonfarm Payrolls expected to show modest hiring rebound in August after July’s tepid report
The Nonfarm Payrolls report is forecast to show that the US economy added 160,000 jobs in August, after creating 114,000 in July. The Unemployment Rate is likely to dip to 4.2% in the same period from July’s 4.3% reading.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.