Markets Shrug Off Coronavirus

USD Rallies on better Factory Data

The US dollar has been higher again today, extending yesterday’s gains seen in response to stronger US data. The ISM manufacturing number was seen at 50.9 in January, moving back into expansionary territory for the first time in six months. The data reflects a higher degree of optimism among the factory sector following the signing of the US/China trade deal. However, it doesn’t account for the recent downside impact from the coronavirus outbreak which has yet to be determined. USD index trades 97.73 last.

EURUSD Holds Steady

EURUSD has been a little firmer today, despite the strength in USD. Price has recovered off yesterday’s 1.1035 lows to trade 1.1055 last, heading back up towards the 1.1072 level resistance. A quiet data-sheet means that flows are likely to be muted today though any USD action could offer volatility.

GBP Shaky Over Brexit Talks

GBPUSD had been weaker initially today, trading below the 1.2978 level support, though price is now trading back above the level following a recovery rally. There are fears over the likelihood of the UK and the EU agreeing to a trade deal in the current timeframe. This is given the clashing statements delivered this week. Yesterday, UK manufacturing data showed the sector having recovered to the neutral 50-mark last month. GBPUSD trades 1.2988 last.

Risk Appetite Improves

Risk assets have had a much better day today. Despite news of the coronavirus outbreak worsening (over 20,000 confirmed cases in China, death toll 400+, second death confirmed outside of China) risk appetite appears to be improving. Better manufacturing data from the UK and US is helping boost confidence with the SPX500 trading back up to 3283.18 last, just shy of the 3285.55 level.

JPY & Gold Lower

Safe havens have been weaker today In light of the recovery in equities prices which has seen both JPY and gold lower against the US dollar. XAUUSD trades 1567.16 last, heading back down towards the 1554.69 level. USDJPY trades 109.06 last, as the rally off the rising trend line support continues.

Crude Rallies Again

Oil prices have posted a recovery today also, in light of the better tone to risk markets generally. Following a move below the 50.65 level yesterday, crude is now trading 51.11 last. Later today traders will receive the API inventories report ahead of tomorrow’s headline EIA release.

Loonie Capped At 1.33

USDCAD has been weaker today. Price rallied as high as the 1.33 level yesterday, briefly piercing above, before reversing back beneath as the rally in crude prices helped lift CAD. While below here, there is a risk of a further drop lower to the 1.3207 level, though such a move would require a much larger correction higher in crude.

RBA Holds Rates Steady

AUDUSD has weakened a little today, giving back some of the gains made overnight in response to the RBA meeting. The RBA kept rates on hold, which came as a surprise to some players who ere expecting a rate cut in light of the economic damage caused by the bushfires recently. The RBA cited strength in labor conditions and the property market as supporting factors though highlighted risks from the downturn in China. AUDUSD trades .6711 last.