Risk appetite faded in Asia on Thursday with a significant dip in regional markets as fears over the coronavirus impact increased.
The dollar was held in relatively tight ranges on Wednesday, but edged marginally lower with no significant domestic influences.
Risk appetite faded further in Asia on Thursday with a significant dip in regional equities as fears over the coronavirus impact increased.
The yen regained ground and the Swiss franc reversed intra-day losses. Sterling was supported by a strong boost to business sentiment in the latest CBI survey as rate-cut expectations declined.
Stronger labour-market data protected the Australian dollar as February rate cut expectations also dipped. In contrast, the Canadian dollar dipped sharply after a more dovish Bank of Canada policy statement fuelled rate-cut expectations.
There was an element of caution ahead of Thursday’s ECB policy meeting. Although markets are not expecting any change in interest rates, forward guidance and the tone of President Lagarde’s press conference will be important for Euro sentiment. A more optimistic stance would provide an element of Euro support. There was little overall change on in early Europe on Thursday with EUR/USD close to 1.1080 as the dollar held steady and markets monitored global risk conditions.
Markets were continuing to monitor coronavirus developments with reports that the Chinese authorities had asked Wuhan citizens not to travel from January 23rd. Subsequently, the authorities confirmed that there would be a travel ban in the city from Thursday with the shut-down of train and air transport while reports also suggested that road links had also been closed. Given the importance of Wuhan as a regional hub, concerns over the economic impact increased and oil prices declined.
Following the data expectations of a January Bank of England interest rate cut declined which triggered significant Sterling gains. GBP/USD pushed to 2-week highs above 1.3150 while GBP/EUR rallied to 1-month highs around 1.1865.
The EU Withdrawal Act concluded its passage through parliament and will be signed into law, paving the way for Brexit to take place on January 31st. Sterling corrected only slightly on Thursday despite a more fragile tone in risk appetite.
|08:00||World Economic Forum Annual Meetings||-||-|
|12:45||Deposit Facility Rate||-0.5||-0.5|
|12:45||ECB Rate Decision(JAN)||-||0.00%|
|15:00||Euro-Zone Consumer Confidence(JAN)||-||-8.1|
|22:45||NZD CPI (Y/Y)||1.40%||1.50%|
|22:45||NZD CPI (Q/Q)||0.60%||0.70%|
|23:30||JPY National CPI Ex-Fresh Food (Y/Y)(DEC, 2019)||-||0.50%|
|23:30||JPY National CPI (Y/Y)(DEC, 2019)||-||0.50%|