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· Asian currencies slid on Monday as the rapid spread of the coronavirus outside China drove fears of a pandemic and sent investors flocking to gold and the dollar for safety.

Yet risk aversion, which also saw stocks tumble and gold and bonds rise, offered surprisingly little support to the yen .

After partially recovering last week’s drop on Friday, it traded flat at 111.55 per dollar as Asian investors discount its safety value owing to Japan’s virus exposure.

Against a basket of currencies, the dollar crept back toward an almost three-year peak touched last week, before soft economic data knocked it from its perch on Friday.

It was firmer against the euro at $1.0827 and pound at $1.2946. It last traded at $0.6613 per Australian dollar $0.6324 per kiwi.

· France has seen a 30% to 40% fall in tourists following the coronavirus outbreak: Finance minister

France’s tourism sector has taken a beating following the coronavirus outbreak, according to the country’s finance minister.

“We have less tourists, of course, in France, about 30%, 40% less than expected,” Bruno Le Maire told CNBC’s Dan Murphy on Sunday at the G-20 Finance Ministers and Central Bank Governors’ Meetings in Riyadh, Saudi Arabia.

“That’s, of course, an important impact for the French economy,” he said.

France is one of the most visited countries in the world. According to the country’s Ministry for Europe and Foreign Affairs, 89.4 million visitors toured France in 2018 and tourism accounts for nearly 8% of its gross domestic product.

· Virus Spread Spooks Risk Assets; JPY Resumes Slump: Macro Squawk

(Bloomberg) -- Reports of the spread of coronavirus beyond China sets the tone for European trade with yield curves bull flattening. German bond futures initially snapped higher after South Korea reported their first fatality from coronavirus but subsequently faded the knee-jerk reaction. Peripheral spreads still manage to tighten in the risk-off move. Major equity indexes slip into the red, Spanish IBEX underperforms, dropping 0.6%. Household and personal goods, insurance and tech names are the weakest sectors, industrial names and bank post small gains. S&P futures trade either side of unchanged. Cable pops back above 1.2900 and gilts bear flatten slightly after U.K. retail sales in January surprise to the upside. FTSE 100 trades a tight range. JPY remains well offered, touching the 112-handle against the dollar. NZD and AUD underperform in G-10. Yuan little changed after data showed credit surged in January. Crude futures fade from best levels, WTI finds support at $53.50, Brent near $59.00. Spot gold bounces off $1,605 but trades within Wednesday’s range. Base metals dip, with LME Led lagging.





KEY HEADLINES:


China Official says some positive changes happening in Hubei, Wuhan; situation is still serious

China MofCom says consumption market may recover in 2Q from virus; will roll out more measure to stabilize trade

China’s Jan. new loans 3.34T yuan vs. 3.1T yuan est.

U.K. Jan. Retail Sales ex. fuel +1.6% vs. +0.8% est.

S&P says China 2020 growth will fall to 5%; recovery seen in 3Q

API inventories according to people familiar w/data: Crude +4.2m, Gasoline -2.7m, Distillates -2.6m

· South Korea is on high alert after the number of reported coronavirus infections surged past 760 cases on Monday, and Cit economists warn economic difficulties for the country will be imminent.

“Fear of the virus is spreading throughout the country, at a much faster rate than the virus itself,” Marie Kim and Jeeho Yoon from Citi wrote. “We expect the economic fallout to not be limited to certain regions (and) cities.”

· Four Chinese provinces lower coronavirus emergency response level

Four Chinese provinces Yunnan, Guangdong, Shanxi and Guizhou on Monday lowered their coronavirus emergency response measures, local health commissions said.

Yunnan and Guizhou cut their emergency response measures from level I to level III, while Guangdong and Shanxi lowered their measures to level II.

China has a four-tier response system for pubic health emergencies that determines what measures it will implement, with level I the most serious.

· Coronavirus concerns spur odd market moves

Some asset prices are moving together in unusual ways, an indication that investors may be preparing their portfolios for a coronavirus-led global slowdown.

U.S. stocks, gold, Treasuries and the dollar have all surged in 2020, a climb that has taken place alongside persistent concerns over the outbreak’s economic fallout.

Such synchronous moves are not typical, as investors usually have different reasons for buying each asset class. A bullish bet on stocks, for example, is often a wager on stronger economic growth, while gold and bonds tend to find favor in more pessimistic times.

That conventional wisdom has not applied this year. The S&P 500 is up 3.3% in 2020 and stands just off a record high despite Friday’s drop, gold is up 8.3% and near its highest level in seven years while the U.S. Dollar Index is up 3% and hovering near a three-year high. Stocks, gold and the dollar have all notched yearly gains of 3% or more only twice in the past decade.

Several forces may be fueling the multipronged rally, analysts said. While investors are loathe to reduce their stock exposure—a losing strategy over the more than-decade-long bull market—many are buffering their portfolios with haven assets such as gold, bonds and the dollar in case the outbreak accelerates or its economic fallout is greater than expected.

At the same time, investors are favoring U.S. stocks and bonds, as many expect the U.S. economy to be less vulnerable to a hit from the coronavirus than those in Asia and the eurozone. That has boosted the dollar while sending yields on some U.S. government bonds to record lows.

· China eases restrictions as other countries report surge in cases

Fears of a coronavirus pandemic grew on Monday after sharp rises in new cases reported in Iran, Italy and South Korea but China relaxed restrictions on movements in several places including Beijing as its rates of new infections dropped.

In mainland China, where the virus originated late last year, more than 20 province-level jurisdictions including Beijing and Shanghai, as well as provinces such as Henan and Anhui, reported zero infections, the most since the outbreak began.

Excluding central Hubei province, the epicenter of the outbreak, mainland China reported 11 new cases, the lowest number since the national health authority started publishing nationwide figures on Jan. 20.


· Fourteen countries and a U.S. territory placed tighter entry restrictions on people traveling from South Korea after a sharp jump in coronavirus cases prompted the government in Seoul to raise its infectious-disease alert to the highest level.

These includes: Israel, Bahrain, Jordan, Kiribati, Samoa, Brunei, U.K., Turkmenistan, Kazakhstan, Macau, Oman, Ethiopia and Qatar, Uganda, and U.S.

· Malaysian Prime Minister Mahathir Mohamad has submitted his resignation to the king, two sources with direct knowledge of the matter told Reuters on Monday, amid talks of forming a new coalition to govern the country.

· China’s largest industrial businesses resume work gradually

Work is picking up in China’s top three exporting provinces, according to the National Development and Reform Commission.

For industrial enterprises greater than a certain scale, the resumption of work has topped 90% in Zhejiang province, and more than 70% in Guangdong and Jiangsu, officials said. That refers to enterprises with annual revenue of at least 20 million yuan ($2.86 million) from their primary business operations. Nationwide, coal mine production is around 76%, food processing at 70%, and railcar load has recovered to about 95% to pre-Lunar New Year holiday levels, the commission said. Iron and steel production is about 67% and that of nonferrous metals has resumed at a rate of around 86%.


· Oil prices tumbled by 3% on Monday, as the rapid spread of a coronavirus in several countries outside China left investors fretting about a hit to demand.
Global shares also extended losses as concerns about the impact of the new virus grew, with the number of infections jumping in Iran, Italy and South Korea.
Brent crude was down $1.78, or 3%, to $56.72 a barrel by 0755 GMT, after falling to an intraday low of $56.53 earlier. U.S. crude futures fell by $1.53, or 2.9%, to $51.85.

· “It’s pretty clear in the middle of last week that the consensus overall was that it would be a temporary economic impact and that would be at least offset by the actions of central banks,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“But as we’ve seen European and U.S. markets react on Friday night and then further news over the weekend about the global spread of the virus, investors now are questioning the assumption about economic growth and that of course is weighing on oil markets.”

South Korea’s government put the country on high alert after the number of infections surged to over 700 with seven deaths, while in Italy, officials said a third person infected with the flu-like virus had died, as the number of cases jumped to above 150 from just three before Friday.


Reference: Reuters ,CNBC, FXstreet,Bloomberg