· Trade-exposed Asian currencies edged ahead on Wednesday, buoyed by optimism that the spread of coronavirus had slowed, while the kiwi leapt after the central bank dropped its easing bias.
The Australian dollar, sensitive to China's fortunes because of Australia's commodity-driven export profile, firmed 0.3% to $0.6728 AUD=D3. China's yuan CNY= was modestly stronger and the safe-haven Japanese yen JPY= was a little softer.
Recession fears in Europe also dragged the euro EUR= to a four-month low overnight, though it has since recovered by about 0.2% to $1.0916. The pound GBP= sat at its highest in a week after fourth-quarter growth beat sluggish forecasts.
Elsewhere, the New Zealand dollar NZD=D3 jumped 0.8% to $0.6462, its sharpest rise in two months, after the central bank removed the chance of a rate cut from its forward projections.
· USD/JPY bulls lapping up positive tones all around, eyeing 110.00
USD/JPY ranged between 109.75 and 109.95, as the defensive yen was underperforming in a risk-on environment on Wall Street. China’s National Health Commission said the number of new, confirmed coronavirus cases fell to 2,478 from 3,062 a day earlier.
The USD/JPY pair is technically neutral, according to the 4-hour chart, as it has spent the day hovering around a directionless 20 SMA, which holds above the larger one, also directionless. Technical indicators continue to lack directional strength, the Momentum indicator stuck around its 100 level since last week and the RSI is easing from its highs, currently at around 57. The risk is skewing to the downside, although the pair would need to break below 109.00 to become bearish.
Support levels: 109.40 109.00 108.65
Resistance levels: 110.00 110.35 110.70
· Bernie Sanders narrowly won New Hampshire’s Democratic presidential primary on Tuesday, solidifying his front-runner status in the nominating race and dealing a setback to moderate rival Joe Biden, who appeared likely to finish a disappointing fifth.
· The new coronavirus that has already killed more people than the 2003 SARS epidemic appears to be sparing one population group: kids.
Of the more than 43,100 people it’s infected since Dec. 31, World Health Organization officials say the majority are over 40 years old and it’s hitting those with underlying health conditions and the elderly particularly hard.
“Increasing age increases the risk for death,” Dr. Maria Van Kerkhove, head of WHO’s emerging diseases and zoonosis unit, said Thursday at a news conference at the agency’s headquarters in Geneva. “It appears even over 80 is the highest risk factor.”
Some infectious disease specialists and scientists say older adults may be more vulnerable to the virus, which has been named COVID-19, due to their weaker immune systems.
· Britain’s economy stagnated in the final quarter of 2019, as political uncertainty, Brexit worries, a slowing eurozone and trade tensions all hurt growth.
GDP flatlined in the October-December, the ONS reported this morning.
But while the economy shrank by 0.3% in November, it bounced back with 0.3% growth in December. There may be some green shoots peeking out.
During the quarter, the services sector grew by 0.1% while industry shrank by 0.8% -- extending a decline that began early in 2019. Business investment shrank 1%, as firms were deterred from investing in new offices and machinery.
· Andrew Yang, an entrepreneur whose unlikely White House bid evolved into a serious campaign, pulled out of the Democratic presidential race on Tuesday after New Hampshire delivered him a second straight poor showing.
· Wang Tao, Chief China Economist of UBS said on Wednesday, the US may, informally, slightly slow China's purchase quota amid the outbreak of novel coronavirus pneumonia (NCP), if China expands its US imports on a large-scale, as reported by Global Times.
Earlier today, White House National Security Adviser O'Brien said that the China coronavirus could have an impact on the size of China's purchases of agricultural products from the US.
· 'Everyone is guessing' about coronavirus economic impacts, say experts
Most believe China faces a short but sharper economic shock than originally thought, one that will be felt around the world. Expectations of how harsh the impact will be vary widely, however. Health professionals and economists say opaque Chinese data and lack of precedent hinder clear estimates.
Analysts from S&P, meanwhile, estimated Tuesday that the virus could lower China’s GDP growth to 5.0% this year, with a peak effect in the first quarter before a rebound begins in the third quarter.
“The numbers are very imperfect, and that’s the basic reason behind the wide range of estimates,” said Lardy. “Everyone is guessing.”
· Coronavirus outbreak will speed up US-China ‘decoupling’ more than the trade war, Milken Institute analyst says
Talk of the risk of the world’s two major powers “decoupling” surfaced as their trade battle, which began in 2018, heated up — leading to billions of dollars of tariffs imposed on each other’s goods.
In the arena of technology, ties between the countries also steadily worsened, and China was said to start efforts to wean itself off U.S. tech.
“We talked about China and the U.S. decoupling. The coronavirus more than the trade war has sped some of that decoupling as countries, as businesses think about their supply chain for the long run,” said Curtis Chin, an Asia fellow at the Milken Institute.
“It can’t all be in China, we’ve seen some of the consequences of over reliance on just one key market,” he added.
· Oil prices extended gains on Wednesday as China reported its lowest daily number of new coronavirus cases since late January, stoking investor hopes that fuel demand in the world’s second-largest oil consumer may begin to recover from the epidemic.
Brent crude LCOc1 was up $1.12, or 2.1%, at $55.13 per barrel at 0748 GMT. U.S. West Texas Intermediate (WTI) CLc1 rose 74 cents, or 1.5%, to $50.68 a barrel.
· The U.S. Energy Information Administration (EIA) on Tuesday forecast Brent crude oil spot prices would average 61 U.S. dollars per barrel in 2020, compared with 65 dollars per barrel projected a month ago.
In its February Short-Term Energy Outlook (STEO), EIA forecast Brent prices would average 58 dollars per barrel during the first half of the year and 64 dollars per barrel during the second half of the year.
EIA also forecast Brent prices would average 68 dollars per barrel in 2021, the same level as it forecast last month.
Reference: Reuters, CNBC, Xinhua, Yahoo Finance, The Guardian
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