USD Finds Safe Haven Support
The US dollar has kicked off the new week in the green as safe-haven demand linked to the ongoing outbreak of the Chinese Wuhan virus is keeping the greenback supported. The USD index is rallying firmly above the 97.42 level now and is testing bearish trend line resistance. This week, the focus will be on the FOMC and though the Fed is now expected to adjust policy, traders will be looking for signs of any possible action in the near future.
EUR Lower on USD Strength
EURUSD has been under heavy selling pressure again today as the rally in USD continues to weigh on price. EURUSD has now fallen out of the recent bullish channel and is eyeing a test of the 1.10 level next. Recent data weakness, along with rising global risks, is keeping EUR sentiment skewed to the downside for now.
BOE Meeting In Focus
GBPUSD has been a little weaker today also though still remains supported above the 1.2978 level for now. The BOE meets this weak, ahead of Friday’s Brexit date and traders are split over the probability of a rate cut from the bank. If the BOE does not cut rates at this point, its guidance is likely to be dovish, creating downside risks for GBP this week.
Risk assets have started the week on a softer footing. With the Chinese Wuhan virus continuing to spread and the death toll rising, global uncertainty is once again edging higher. The SPX500 is sitting right back down on the 3261.46 support for now, testing the rising trend line, following a gap lower at the open last night.
JPY & Gold Gap Higher
Safe havens have been firmer today with both JPY and gold higher against the US dollar. The rising risks from the Wuhan virus outbreak are likely to keep safe havens supported in the near term. USDJPY trades 108.95 last, following a gap lower last night. XAUUSD trades 1580.61, following a gap higher at the open last night.
Crude Under Heavy Selling Pressure
Oil prices are under heavy selling pressure over the European session so far on Monday. With the risk of further damage to the global economy, in light of the Wuhan virus outbreak, there are heavy fears for the crude demand outlook. Ois gapped lower last night and is now testing the 52.73 level support.
CAD Crumbles With Crude
USDCAD continues to break out today. The combination of a firmer USD and sharply lower crude prices is helping lift the loonie which is now trading well above the 1.3145 level and looks set to continue higher.
Aussie lower on RBA Rate Cut Expectations
AUDUSD has been firmly lower today also. The wave of risk aversion sweeping the markets, as well as the economic damage in China, is keeping AUD sentiment skewed to the downside. These latest developments, combined with the recent bushfires in Australia, mean that the market is now pricing in a February RBA rate cut. AUDUSD trades .6780 last.