Risk off as virus trumps payrolls

 

Despite the stellar US jobs report on Friday, markets are trading with a risk-off approach subsequently as the spread, and deaths resulting from the coronavirus accelerate. The number of deaths has now surpassed SARS totals in a shorter period of time.

US indices snapped four-day winning streaks last Friday with Asia seeing a mild technical rebound this morning. US indices are up between 0.25% and 0.37% while the Japan225 index rallied 0.49% and the China50 index surged 1.3%.

The currency markets also displayed risk-on tendencies with the Japanese yen being sold and the Australian dollar bid. The pound and the Euro also posted modest gains. EUR/USD is facing its first up-day in six days as the US dollar takes a short breather from its upward climb. The 100-day moving average is at 1.1066 and has capped prices for a week.

 

EUR/USD Daily Chart

Source: OANDA fxTrade

Lunar New Year boosts inflation

With all the Lunar New Year festivities (including eating!) it is normal to expect a uptick in consumer inflation during the period. China’s consumer price index jumped to +5.4% y/y in January, up from +4.5% in December and above economists’ expectations of an increase to +4.9%.

Food inflation was +20.6% y/y, with pork prices up 8.5% m/m and a whopping 116% y/y. Non-food prices were up only 1.6% y/y. Commenting of the data, China’s Statistics Bureau cited the holiday, the spread of the coronavirus and the low base effect from last year (Lunar New Year was in February last year) for the exaggerated rise in the index.

 

Slow data flow to start the week

There’s not much to report on the data front for today. The European session features Sentix investor confidence for February, with a dip to 4.0 from 7.6 anticipated. There are no major US data releases scheduled for today, though Fed’s Bowman (neutral, voter) is scheduled to speak.

 

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.