· The euro was on the back foot on Monday, as concerns mounted about weakening economic growth in Europe at a time financial markets and policymakers fret about a new threat to the global economy from a fast spreading coronavirus in China.
The euro, which hit a 33-month low of $1.0817 on Friday, fetched $1.08385 EUR= in afternoon Asian trade on Monday, flat so far on the day but down 2.3% since the start of month - the worst performance among G10 currencies.
· “Coronavirus is increasingly looking like a long-term issue and thus, at least for currency markets, it will be playing second fiddle,” said Kyosuke Suzuki, manager of currencies at Societe Generale.
“In contrast, sentiment on the euro is becoming clearer, with weak economic fundamentals helping to push it down.”
Reaction in the currency market was muted as the safe-haven yen tends to be supported on bad news. It stood at 109.80 yen per dollar JPY=, little moved in a tight range for more than a week.
The dollar index =USD stood at 99.131, near Friday’s 4 1/2-month high of 99.241.
The onshore yuan CNY=CFXS was also up, trading 0.17% higher at 6.9760 per dollar by midday.
· EUR/USD: Speculators are their most net short since June 2019
The bearish sentiment around the EUR/USD pair is currently at its strongest in eight months.
Euro speculator positions have dropped by 10,000 in each of the last three weeks and totaled -85,669 in the week ended Feb. 11. That is the most bearish net positionsince June 2019.
While the path of least resistance is to the downside, deeper losses may be preceded by a bounce as the short-term technical studies are now reporting oversold conditions.
· Japan’s economy shrank at the fastest pace in almost six years in the December quarter as last year’s sales tax hike hit consumer and business spending, highlighting a fragile outlook made worse by growing coronavirus risks.
Japan’s gross domestic product (GDP) shrank an annualized 6.3% in the October-December period, government data showed on Monday, much faster than a median market forecast for a 3.7% drop and the first decline in five quarters.
· Bank of Japan Governor Haruhiko Kuroda said the central bank would consider additional rapid easing if the coronavirus outbreak significantly threatened Japan’s economy and price trends, the Sankei newspaper reported on Monday.
· China has approved the import of all poultry and poultry products from the United States, the Ministry of Agriculture and Rural Affairs said on its website on Monday.
Beijing had banned all trade in poultry products from the United States since 2015 due to outbreaks of avian influenza there.
· A top legislative body of the Chinese parliament will meet on Feb. 24 to discuss a proposal on delaying the key annual March meeting of parliament, the official Xinhua news agency reported on Monday.
· Singapore will likely spend big to soften economic blow from coronavirus outbreak
With the ongoing coronavirus outbreak threatening to stall economic growth, Singapore’s government could roll out one of its biggest budgets yet to soften the hit to its economy.
· General Motors Co (GM.N) is retreating from more markets outside of the United States and China, saying on Sunday that it will wind down sales, design and engineering operations in Australia and New Zealand and retire the Holden brand by 2021.
It also said China’s Great Wall Motor Co Ltd (601633.SS) had agreed to buy GM’s Thailand car manufacturing plant and an engine factory, a transaction expected to be completed by the end of 2020.
· Oil prices were little changed on Monday as concerns of falling fuel demand caused by the economic fallout from the coronavirus outbreak in China was offset by expectations that output cuts from major producers will tighten crude supply.
Brent crude LCOc1 was at $57.27 a barrel, down 5 cents by 0541 GMT after rising 5.2% last week, the biggest weekly gain since September 2019.
U.S. West Texas Intermediate crude CLc1 rose 8 cents to $52.13 a barrel, after a 3.4% gain last week.
Reference: Reuters, CNBC, FX Street
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