The USD is stronger this morning against the EUR and JPY and weaker against the GBP. Traders continue to monitor the Coronavirus but are once again focusing on economic releases. The “main event” today will be the release of FOMC minutes from last month’s meeting. Analysts are expecting that the minutes will state that policy is in a good place as the Fed remains in a “wait and see” mode, regarding rates. US Equity markets look to open higher this morning after the last few days of negative trading. Dow Futures indicate an opening of around 75 points later this morning. Traders remain concerned about the potential global economic fallout that is due to the coronavirus.
The EUR continues to fade testing new support levels as traders are selling the single currency against both the USD and the GBP. Continued poor European economic news, coupled with positive news coming out of both the US and UK have put the EUR at its lowest levels since 2017 and traders seem poised to continue to test the downside. These poor economic releases have traders expecting the European Central Bank to further ease policy.
GBP/USD traded higher overnight after the UK released inflation numbers which moved up to 1.8% against the expected 1.6% in January. The previous number had been 1.3% and traders are now looking at a possible rate hike down the road from the Bank of England when recently there had been a concern of rate cuts. Brexit negotiations will continue to weigh on the pound until traders see a positive sentiment coming out of the negotiations.
USD/JPY had moved higher testing one-month highs as traders once again exit their safe-haven trades and take on risk. Reports that the number of cases had possibly slowed put traders in a more friendly risk mood. Adding to the JPY decline is continued positive US economic news, while news from Japan still has the economy teetering on possible recession.
The Canadian Dollar is trading higher overnight as stronger oil prices are aiding the currency. Oil prices moved around 1.0% higher overnight as the US put sanctions on Venezuelan oil. The sanctions were placed on Rosneft Trading SA, a Geneva company that is the primary source for Venezuela putting their oil into the market. Brent crude was trading at $58.24, while U.S. oil was also higher at $52.60 per barrel.
Speaking of the virus, an additional 1,749 cases have been reported in China, with 136 more deaths. The amount of those infected has now gone over 74,000 with the death toll now above 2,000. The World Health Organization has declared the Coronavirus “public enemy number one”. Possible vaccination against the virus is now estimated to be ready around 18 months from now. There have been some estimates that this virus could possibly infect between 60-80% of the population according to Professor Gabriel Leung, the chair of public health at Hong Kong University.