No antidote yet for the virus, equities

 

US indices rebound slightly

US indices traded higher in Asian markets that were still suffering from holiday-thinned liquidity, with major centres China and Hong Kong still enjoying the Lunar New Year holiday. The rebound is seen as merely a technical one after last night’s weak close, with the news in the coronavirus space still dismal and showing no signs of abating.

Latest numbers from China show total cases now at 4,515 with the death toll rising to 106. Despite the lack of positive news, US indices traded between 0.21% and 0.25% higher in slow morning activity following some of the weakest closes yesterday in almost three weeks.

Currency markets were little changed with no common theme apparent across the spectrum. USD/JPY traded 0.08% higher as equities rose, though EUR/USD only managed a 0.01% advance. The Australian dollar traded softer following some below-forecast data (see below).

USD/JPY looks on track to post the first up-day in six days as the FX pair tumbled about 1.2% from the January 17 high. The pair is nearing the 100-day moving average at 108.70, which has supported prices on a closing basis since January 3.

 

USD/JPY Daily Chart

Source: OANDA fxTrade

 

Australian confidence indicators weaken

The National Australia Bank’s business conditions index slid to 3 in December from 4 the previous month, while the business confidence index fell a more significant amount to -2 from zero. The confidence index was the lowest since mid-2013 and NAB points out that the survey was conducted before the escalation of the bushfires in New South Wales and Victoria, so there could be a further worsening in the numbers in January’s reading.

The Australian dollar traded negatively after the data, losing as much as 0.2% versus the greenback and 0.27% versus the Japanese yen. AUD/USD hit the lowest level since October 16 and is sitting on the 78.6% Fibonacci retracement of the October-December rally at 0.4748.

 

AUD/USD Daily Chart

Source: OANDA fxTrade

A quiet Europe calendar

There’s not much to report on the European calendar, apart from a speech from ECB’s Lane. The US calendar is populated with December durable goods orders, which probably rose 0.5% in the month following November’s dismal -2.1%, the latest survey of economists shows. The ex-transportation number is seen rising 0.2% after a 0.1% decline the previous month.

The Richmond Fed manufacturing index is expected to rise to 9 this month after a -5 print last December, seemingly at odds with last week’s flash PMI reading from Markit, which showed a deterioration in the same month to 51.7 from 52.4. Weekly crude oil stockpiles data from the American Petroleum Institute to January 24 concludes the session. Last week saw an increase in inventories by 1.6 million barrels.

 

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

 

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.