· The yen and the euro were on the front foot against the dollar on Monday as traders raised their bets of an interest rate cut by the U.S. Federal Reserve this month to shield the economy from the rapid spread of the coronavirus.
As U.S. shares were routed in recent days, Federal Reserve Chair Jerome Powell said on Friday the central bank will “act as appropriate” to support the economy in the face of risks posed by the coronavirus epidemic.
Investors took his comments as a hint that the Fed will cut interest rates by at least 0.25 percentage point at its next scheduled meeting on March 17-18.
There is even increasing chatter of an unscheduled move, with a U.S. bank lobby economist saying a coordinated global interest rate cut by the top central banks could happen as early as on Wednesday.
The yen last stood little changed at 108.15 to the dollar JPY=, having risen to as high as 107.00 in early Monday trade.
The Japanese currency had risen 3.2% last week, the biggest gain since July 2016. Japan’s current account surplus and the yen’s vast liquidity make the yen behave like safe haven asset.
The euro rose to one-month highs of $1.1074 and last stood at $1.1050 EUR=, up 0.3% so far in Asia, after a 1.7% gain last week, the largest in two years.
· China Beige Book, a survey of more than 1,400 Chinese companies conducted in February, showed on Monday, the coronavirus epidemic has hit China's major industries and will lead to a contraction in GDP in the first quarter.
Key findings
31% of CEOs saying that their company is still suspended for companies that have resumed work, 32% have employees working from home and 7% of employees waiting to return to work at work.
· Elon Musk says Chinese economy will surpass US by 2 or 3 times: ‘The foundation of war is economics’
Tesla and SpaceX CEO Elon Musk predicted Friday that the Chinese economy will eventually surpass the United States’ by at least two-fold – which would up the ante between the nations’ massive militaries.
Because China’s population is about four times larger than the United States, Musk said it would lower the barrier for China to surpass in economic size. The United States has roughly 330 million people, according to the U.S. Census, while China has more than 1.3 billion people.
China overtaking the American economy would likely cause increased tension between the two countries, which are already at odds on issues such as trade and 5G technology.
Throughout his conversation with Thompson, Musk repeatedly stressed the importance of innovation in the United States in order to maintain its competitive edge. When it comes to space, Musk said that the U.S. is at risk of falling behind.
· Pete Buttigieg dropped out of the race for the Democratic presidential nomination on Sunday, saying he no longer saw a chance of winning, the day after fellow moderate Joe Biden won a big victory in South Carolina.
His departure leaves six contenders in the Democratic presidential race, which once had more than 20 candidates. An adviser told Reuters that Buttigieg was dropping out to avoid helping the odds of front-runner Bernie Sanders, a senator from Vermont and self-described democratic socialist.
· South Korea reported on Monday 476 new coronavirus cases, taking its national tally to 4,212, as the government of Seoul sought a murder investigation into a controversial church at the center of the country’s outbreak.
The new cases followed the country’s biggest daily jump on Saturday of 813 confirmed infections. There were 586 more on Sunday, broadening the largest virus outbreak outside China.
The death toll rose to 22, up from 20, according to the Korea Centers for Disease Control and Prevention
· North Korea fired two unidentified projectiles off the east coast into the sea on Monday, South Korea’s defense ministry said.
The ministry said the projectiles were fired from the eastern coastal city of Wonsan, where North Korea has fired a series of short-range missiles.
The ministry did not provide details of the projectiles but said it is watching for any additional launches.
· Manufacturing activity in the country fell to record lows last month, according to a closely watched private survey. The media group Caixin said Monday that China's manufacturing purchasing managers index sank to 40.3 in February, down from January's 51.1 and the lowest reading since the survey began in 2004. It was also well below the 45.7 that analysts polled by Reuters expected.
The Caixin survey came days after the Chinese government reported that its official manufacturing PMI plunged in February to an all-time low of 35.7, down from January's reading of 50.
The official non-manufacturing PMI survey, which measures the services sector, skidded to 29.6 in February from 54.1 in January. Caixin's services survey will release later this week.
· Malaysia’s Muhyiddin Yassin, a Malay nationalist politician backed by the corruption-tarnished former ruling party, was sworn in as prime minister on Sunday after the king picked him to replace 94-year-old Mahathir Mohamad.
· France’s health minister has said that gatherings of more than 5,000 people, in a confined space, will be banned. This comes as the country’s number of confirmed cases rose to 73 on Saturday.
· Oil prices rebounded more than $1 a barrel after earlier hitting multi-year lows on Monday, as hopes of a deeper cut in output by OPEC and stimulus from central banks countered worries about damage to demand from the coronavirus outbreak.
Brent crude LCOc1 was at $51.31 a barrel, up $1.64 or 3.3%, by 0502 GMT, off $48.40, the lowest since July 2017.
Across the Atlantic, U.S. West Texas Intermediate crude CLc1 hit a 14-month low of $43.32, before recovering to $46.11, up $1.35, or 3%.
Reference: Reuters ,CNBC,CNN
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