· The yuan steadied a little after slipping to its weakest level in a month in offshore trade on Tuesday, but sentiment remained fragile on lingering anxiety about the widening economic fallout from a new coronavirus in China.
The Japanese yen, considered a safe-haven, traded near a three-week high versus the dollar as investors nervously watched the death toll from the virus climb to more than 100.
Currency markets were relatively subdued on Tuesday as some investors retreated to the sidelines before a U.S. Federal Reserve meeting.
· “We still do not know the full scale of this outbreak, which is not only a public health problem but also an economic problem,” said Minori Uchida, head of global market research at MUFG Bank in Tokyo.
“There are worries about the impact on tourism and China’s broader economy, which affect global economic growth forecasts. The yuan is likely to be sold, and the yen is likely to rise.”
In the offshore market, the yuan was quoted at 6.9755 per dollar, pulling back slightly from its weakest since Dec. 30. China’s onshore markets are closed this week for Lunar New Year.
The yen held steady at 108.97 per dollar, close to its strongest level since Jan. 8.
· The dollar index against a basket of six major currencies was little changed at 97.923 following a 0.86% increase on Monday.
The U.S. dollar was little changed at $1.1023 per euro, close to its strongest since December.
The pound was little changed at $1.3058 on the dollar and at 84.43 pence per euro.
Dovish comments from BoE policymakers have fuelled some expectations for monetary easing, but improving economic data has cast doubt on this view.
· EUR/USD has erased December gains
EUR/USD has erased almost entire gains seen in December and is fast closing on the psychological support at 1.10.
A majority of German economic data released this month reinforced expectations of a stronger economic rebound in 2020.
So far, however, the nascent recovery in the German economy has failed to impress the bulls. As noted earlier, EUR/USD has erased December gains.
The single currency may continue to trade on the defense for the rest of the week as safe-haven US treasuries are drawing bids on Coronavirus fears. The bid tone around the US dollar would strengthen if the US Durable Goods, scheduled for release at 13:30 GMT on Tuesday, betters estimates.
Coronavirus update
· Chinese health authorities said Tuesday that the coronavirus outbreak has killed 106 people and infected 4,515.
The officials also said 60 people had been discharged.
The U.S. Department of State on Monday raised its travel advisory for China from Level 2 to Level 3 asking Americans to “reconsider travel to China due to the novel coronavirus.” They added that some areas have “added risk.”
The new strain of coronavirus spreading across China claimed its first victim in Beijing, officials said on Tuesday, as the death toll climbed to 106, the United States warned citizens against trips to the country and financial markets recoiled again at the potential impact on the world’s second-biggest economy.
· Germany has declared its first confirmed case of the coronavirus that broke out in China, raising concerns about the spreading of the flu-like virus after the death toll in China climbed to 106.
· The World Health Organization’s director-general said on Tuesday he is confident in China’s ability to control and contain the spread of a new coronavirus, according to state news agency Xinhua.
At a meeting with authorities in Beijing, Tedros Adhanom Ghebreyesus said he approved of the Chinese government’s measures to curb the outbreak so far, Xinhua reported.
· Japanese Economy Minister Yasutoshi Nishimura warned on Tuesday that corporate profits and factory production might take a hit from the coronavirus outbreak in China that has rattled global markets and chilled confidence.
· The Philippines announced Tuesday it will temporarily suspend issuing visas upon arrival (VUA) for Chinese nationals amid concerns of a coronavirus outbreak.
· President Donald Trump’s impeachment trial may not result in his removal from office, but it could help determine whether his Republicans retain control of the Senate in the November congressional elections.
For the handful of senators who face tough re-election battles this year, their vote to acquit or convict Trump, or even to call witnesses in the trial, could loom large when voters consider whether to give them another six-year term, analysts said.
The Cook Political Report, Inside Elections and Sabato’s Crystal Ball, three nonpartisan election services, estimate that between five and seven incumbent Senate Republicans are at risk of losing their seats, as do two incumbent Democrats.
· Oil futures fell for a sixth session on Tuesday as the spread of a new virus in China and several countries raised concerns about a hit to economic growth and oil demand.
Brent crude was down 37 cents, or 0.6%, to $58.95 at around 0348 GMT, after touching a three-month low on Monday at $58.50, as the virus outbreak triggered a global sell-off in riskier assets.
U.S. West Texas Intermediate was down 29 cents, or 0.6%, at $52.85, after slipping to its lowest since early October in the previous session at $52.13.
· The United States warned against travel to China and other countries put out advisories as the death toll from the spreading coronavirus outbreak rose to more than 100 people and left millions of Chinese stranded during the biggest holiday of the year.
Oil investors are concerned travel advisories, other restrictions and any sizable impact on growth in the world’s second-biggest economy and elsewhere will dampen demand for crude and its products, amid plentiful supply.
· WTI: Oversold RSI can stop bears targeting 61.8% Fibonacci
WTI bears catch a breath as the quote flashes $53.00 during the initial trading session on Tuesday. The energy benchmark recently dropped to the lowest since October and is declining towards 61.8% Fibonacci retracement of its upside from December 2018 to April 2019.
Even so, overbought conditions of RSI can help repeat the bounces off $51.60 key Fibonacci level, if not then $50.00 could try disappointing the sellers.
In a case where the black gold continues to linger beneath $50.00, high marked on December 26, 2018, near $47.00 will be in the spotlight.
On the flip side, a 50% Fibonacci retracement level of $54.50 could please the short-term buyers during the pullback.
However, a confluence of 100 and 200-day SMA, as well as 38.2% Fibonacci retracement, will cap the rise around $57.25/35, if not then a fresh run-up towards $60.00 could be expected.
Reference: Reuters, CNBC, FX Street
Thai
Eng