JPY Crashes On Recession Fears

USD Supported By Positive FOMC Minutes

The US dollar remains well supported today on the back of a set of broadly positive FOMC meeting minutes yesterday. The Fed cited an easing of trade tensions and a better global growth outlook in its decision to hold rates steady, which it believes will remain appropriate in the near term. In terms of downside risks, coronavirus was the most notable factor. USD index trades 99.66 last, continuing to push towards 100.

EURUSD Holding Near 1.08

EURUSD is fighting to hold above the 1.08 level following a move below it earlier in the session. Today, traders will be watching for the ECB meeting minutes. Lagarde warned markets that ECB monetary policy will not be on auto-pilot this year while it conducts its strategy review and traders will now be keen to see if there was any support for further easing. EURUSD trades 1.08 last.

GBP Near 2020 Lows

GBPUSD has been lower again today despite a better than expected January CPI print yesterday which came in at 1.8% vs 1.7% expected, well above the prior month’s 1.3% reading. Concerns over the EU/UK trade talks are weighing on sentiment, as is the rally in USD. GBPUSD trades 1.2902 last, just off the 2020 lows for now.

Risk Assets Improve But Price Action is Choppy

Risk assets have been a little weaker today. Price action has been choppy all week as traders continue to react to incoming headlines around coronavirus. Midweek it was reported that new cases of the virus have begun to slow in China. However, the WHO has warned that the virus has not peaked. For now, SPX500 trades 3384.53, down off the week’s highs.

JPY Crashes

Safe havens have had a mixed start to the day once again with JPY down heavily against USD while gold has been higher. JPY continues to trade lower following weak growth data earlier in the week which has heightened concerns about a new recession in Japan, stoking expectations of BOJ easing. USDJPY trades 111.97 last, breaking out to fresh highs on the year. XAUUSD trades 1610.29 last with price capped by the 1611.05 resistance level for now.

Crude Rally Pauses

Oil prices have softened a little so far today with price drifting back from yesterday’s highs on the week to trade 53.70 last. The rebound in risk appetite this week has helped keep the crude rally on track though today’s pause in equities prices is capping crude here though EIA data later today offers the risk of more volatility.

Loonie Recovering Firmly

USDCAD has been firmly higher again today as the rally in USD and the pause in crude upside have weighed on CAD here. USDCAD trades 1.3256 last with price recovering firmly off the 1.3225 level tested earlier in the week.

AUD Hits 2008 Levels

The collapse in the Australian dollar is really gathering pace now with price breaking down to .6625 last, levels not seen since 2008. The fears of an economic slowdown in China as a result of coronavirus are weighing heavily on AUD, along with the continued USD rally,  and show no signs of letting up.