US traders return to the markets this morning and are greeted by the news that Apple does not expect to meet its second-quarter forecast for revenue. The reason for this is said to be the weaker demand in China being caused by the Coronavirus. Their original forecast for net sales was expected to be between $63 and $67 billion for the second quarter. They have not issued a new forecast. This news has seen Dow Futures move lower indicating an opening of around 165 points when traders return to the market later this morning. This news has not affected the USD, which remains strong against the EUR and GBP, as those currencies have moved lower overnight.
EUR/USD remains under pressure, trading near levels not seen since 2017. Germany released its ZEW survey and the number was lower than expected, coming in at 8.7 in February, 21.5 was expected. Eurozone ZEW was reported at 10.4 in February vs the 30.0 that was expected. Germany, France, and Italy continue to have slumping economic conditions and this is pressuring the EUR. The latest report by Apple has not helped either as traders are concerned this could be the first of global companies to lower economic expectations due to the Coronavirus. While technically oversold, there is still pressure on the single currency and a test of support sometime this week is not out of the question.
GBP/USD has moved lower after UK jobs figures were lower than expected. Average weekly earnings fell from 3.2% to 2.9%, while the unemployment rate remained at 3.8%. Brexit concerns are affecting the pound. The chief UK negotiator David Frost has rejected the EU’s demand that the UK follow their guidelines, saying the UK would rather follow their own. Prime Minister Johnson has repeatedly said that he will not request an extension and Great Britain will leave the EU as expected at year’s end.
USD/JPY is trading lower as risk-off trades have traders moving back to the safe-haven of JPY. Virus concerns and Apple concerns are being cited as the main reason for traders returning to JPY. USD/JPY is currently trading near overnight lows, however, this level could be broken later this morning as the North American markets open.
The Canadian dollar is trading lower this morning as weaker oil prices are having an effect on the currency. Strong USD sentiment is also pressuring the CAD, along with continued concerns over the Coronavirus, commodity-linked currencies may continue to move lower.
The number of those stricken with the Coronavirus continues to rise as the death toll climbs above 1860 people. The economic effect of the virus is starting to be seen as Moody’s has lowered its forecast for Chinese growth from 5.8% to 5.2% in 2020. It stated that lower Chinese import demand would be the primary reason for slowing economic growth.