MTS Help Center

China reported a drop in new infections on Thursday, but scientists warned the pathogen may spread more easily than previously believed as two elderly passengers from a ship quarantined in Tokyo became the latest to die.


As a result, the dollar celebrated its largest gain in six month to stand at 111.38 yen on Thursday, smashing a chart barrier around 110.30 that had held firm since last May.


The euro was also taking in the view at 120.21, having climbed 1.5% overnight for its best rise since mid-2017. The single currency had no such luck on the dollar and remained pinned at $1.0798.


The shift to all things American, saw the U.S. dollar climb 0.3% on the Chinese yuan to 7.0215 and the Australian dollar sink to 11-year lows at $0.6630.

· EUR/USD Forecast: At risk of resuming its decline despite extremely oversold

The EUR/USD pair has spent Wednesday confined to a tight range around the 1.0800 level, extending its yearly decline by a few pips to 1.0781. Coronavirus-related concerns eased amid Chinese authorities reporting that the pace of contagion outside the Hubei province has slowed, although the dollar and gold, both considered safe-haven, retained their strength, suggesting investors are still cautious.


EUR/USD short-term technical outlook

The EUR/USD pair hovers around 1.0790 ahead of the Asian opening, holding on to its bearish stance according to the 4-hour chart. The pair continues to develop below a bearish 20 SMA, while the Momentum indicator eases within negative levels and the RSI consolidates in oversold levels. The pair is extremely oversold but with no signs of changing course. A bullish corrective advance is not out of the cards, although a break below 1.0770 should open doors for another leg south.



Support levels: 1.0770 1.0725 1.0690

Resistance levels: 1.0840 1.0885 1.0910





· Infections drop in virus epicenter: Confirmed cases in mainland China increased by 394, according to the country's National Health Commission. Only 45 of those new cases were outside of Hubei, according to the NHC's official figures.

The total number of confirmed cases in mainland China is now 74,576, bringing the global total to 75,674.



"Confirmed case" definition changes: The fall comes as the Chinese government said it would no longer count "clinically confirmed" cases among the official total infections. It was a reversal from a decision made a week ago to include patients who had tested negative for the virus but showed symptoms.



Death toll rises: The number of people killed by the virus continues to rise, with 114 more deaths announced in mainland China today. In total, the global death toll is now 2,128.

· U.S. economy to dodge coronavirus blow, but risks to downside: Reuters poll

The impact of the coronavirus outbreak in China on U.S. economic growth will be negligible and short-lived, according to economists in a Reuters poll who nonetheless now say risks to their forecasts are skewed more to the downside.


The outbreak has also significantly increased the chance Beijing doesn’t comply with all of the terms of a Jan. 15 initial trade agreement signed with Washington, potentially reigniting a damaging trade war between the world’s two largest economies.


The forecast for growth in the current quarter was reduced just 0.1 percentage point to a seasonally adjusted annualized rate of 1.5% - already slow, even by recent standards. The economy was then expected to grow 1.8-2.0% each quarter until end-2021.

· China posts sharp drop in new coronavirus cases after criteria change

Mainland China reported on Thursday the lowest number of confirmed cases of a new coronavirus since late January, partly because of a change in diagnostic criteria for patients in Hubei province, the epicenter of the outbreak.


China had 394 new confirmed cases on Wednesday, the National Health Commission (NHC) said, sharply down from 1,749 cases a day earlier and the lowest since Jan. 23.


That brings the total accumulated number of confirmed cases in mainland China to 74,576.


Initially, authorities were using nucleic acid tests to identify the presence of the virus, but such tests require days of processing.


So last week, Hubei introduced a new, quicker diagnostic method through computerized tomography (CT) scans, which use X-rays, to reveal lung infections, and to confirm the presence of the virus.


That led to a surge of more than 15,000 new coronavirus infections for Feb. 12, and sparked unfounded fears that the virus was suddenly spreading much faster.


But on Wednesday, the NHC said it was removing that category of clinically diagnosed cases from its criteria for confirmed cases, meaning 279 cases would be removed from the Hubei tally.


The commission said the nucleic acid test was the preferred method of diagnosis.


Allen Cheng, an infectious diseases expert at Monash University in Melbourne, said he did not understand why cases diagnosed by different methods at different times had to be added or subtracted to tallies on other days.

“Best practice would be to assign the cases to the date they are reported. This was also an issue with the large number of cases reported on Feb. 12,” he said.

· South Korea says another 31 new cases found

South Korea’s Centers for Disease Control and Prevention has confirmed another 31 new cases, bringing the total number of people infected to 82.


One case was identified in the capital of Seoul, the rest were in the city of Daegu and the Gyengbuk province, KCDC said.

· The extended shutdown in China due to the coronavirus outbreak brought the economic giant to a virtual standstill, as factories struggle to get back on their feet and consumers stop traveling, shopping or eating out.

Progress on the return to work has been slow, analysts say. Even after workers come back they must follow quarantine orders, limiting production at factories.


“Controls in place to stem the spread of the virus have halted the movement of people, brought business activity to a standstill and closed offices up and down the country,” ratings giant S&P Global said in a report on Wednesday.


The outbreak, it said, will cause a short-term blow to consumption, an increasingly vital part of the country’s growth, and that will have a knock-on effect on other sectors, the S&P Global report said.


This is how the fallout from the outbreak will affect various sectors in China, according to reports from S&P Global and Morgan Stanley this week.


The restaurant sector in China will see a “significant” fall in first-quarter sales, S&P Global said. The firm projected those figures will only be around 45% to 55% of sales revenue during the same period last year.



Morgan Stanley added that the two-week shutdown of casinos in Macao will cost operators. It could result in a decline of more than 50% in first-quarter earnings before interest, tax, depreciation and amortization for the sector — a measure of a company’s operating performance.



The outbreak coincided with the Lunar New Year holiday season — a peak travel period that S&P Global notes made up 16% of tourism revenue for the first half of 2019.

· Business activity in China may look like it’s at a standstill amid the COVID-19 outbreak, but investors should start planning their next moves, experts said on Thursday.

“China is still China, the economy is still the economy, the consumers are still consuming,” said Frank Lavin, CEO of Export Now, a digital solutions company.

“Whatever the initial logic was that might have propelled you to go to the China market six months ago still holds today — even though we are the middle of some very bad weather,” said Lavin, a former U.S. ambassador to Singapore under the George W. Bush administration.

Although China’s economy this year will be hit by the ongoing health crisis, it would “still be a very nice year for the Chinese GDP,” said Lavin. China posted 6.1% GDP growth in 2019.

Lavin said he thinks there could still be a few more weeks of bad news after China “got off to a very bad start” handling the new coronavirus crisis. But Chinese authorities are “more or less getting their arms around it” now, Lavin told CNBC’s “Capital Connections.”

· China said on Thursday it lowered its benchmark lending rates — a move that was widely expected by analysts as the world’s second-largest economy faced threats from an outbreak of a deadly coronavirus.

The country’s central bank, the People’s Bank of China, cut the one-year loan prime rate from 4.15% to 4.05%, and the five-year rate from 4.80% to 4.75%. The PBOC publishes the rates every month. Thursday’s move was the first cut since October last year, according to Refinitiv data.


· Oil prices rose on Thursday, extending gains from its previous session, as the market shifted focus to supply disruptions, while demand concerns eased some after a sharp drop in new coronavirus cases at the epicenter of the outbreak.

Conflict in Libya that has led to a blockade of its ports and oilfields shows no signs of a resolution, while U.S. sanctions on a subsidiary of Russian state oil major Rosneft (ROSN.MM) could cut more Venezuelan crude from the market, rekindling global oil supply worries.

Brent crude futures LCOc1 were up 14 cents, or 0.2%, to $59.26 a barrel by 0505 GMT, after climbing to as high as $59.71 earlier in the day. The international benchmark rose 2.4% on Wednesday.

West Texas Intermediate (WTI) crude futures CLc1 climbed 25 cents, or 0.5%, to $53.54 per barrel.


Reference: Reuters ,CNBC,DailyFX, FXstreet