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शुक्रवार , फ़रवरी 21, 2020

United States Baker Hughes US Oil Rig Count rose from previous 678 to 679

The aussie is attempting to reverse up from one-decade lows while trading well below its main daily simple moving averages (SMAs).

AUD/USD is reversing up after reaching yet again a fresh 2020 low. Resistance is seen near the 0.6647 level.   AUD/USD daily chart   The aussie is attempting to reverse up from one-decade lows while trading well below its main daily simple moving averages (SMAs). The trend is clearly bearish, however, considering the broad-based USD selling and the reversal attempt, AUD/USD might be in for a corrective move up in the coming sessions. A break above the 0.6647 level can lead to further strength towards 0.6675 and 0.6700 levels. Support is seen near 0.6613, 0.6578 and 0.6558 levels, according to the Technical Confluences Indicator.      Resistance: 0.6647, 0.6675, 0.6700Support: 0.6613, 0.6578, 0.6558    Additional key levels  

Commenting on the GBP/USD pair's action earlier this week, "GBP/USD dropped to its lowest levels since November as the pound failed to hold its own ag

Commenting on the GBP/USD pair's action earlier this week, "GBP/USD dropped to its lowest levels since November as the pound failed to hold its own against a wave of USD strength," Rabobank analysts said. Key quotes " It is our view that in the absence of a marked improvement in the news regarding coronavirus that the USD will retain its broad-based strength. That said, the outlook for GBP could reach various inflexion points this year which could spark sharp movements in the currency in either direction." "It remains our central view that GBP/USD will struggle to regain a strong footing above the psychologically important 1.30 level on both a 1 and 3 month view as the EU/UK future relationship talks progress." "While the debate about the economic outlook in the UK has heated up in the past couple of months, we suspect that politics will remain the primary driver of the pound in the coming months."

EUR/JPY is reversing up sharply from four-month lows while trading above the main daily simple moving averages (SMAs).

EUR/JPY is on the rise trading trading at three-week’s high. The level to beat for buyers is the 121.40 resistance.  EUR/JPY daily chart   EUR/JPY is reversing up sharply from four-month lows while trading above the main daily simple moving averages (SMAs).   EUR/JPY four-hour chart   The spot reversed up sharply from the 2020 lows and is now challenging the 121.40 resistance while trading above the main SMAs on the four-hour chart. Bulls are in control and a break above the above-mentioned level can lead to further upside towards the 121.74 and 122.20 levels. On the flip side, a pullback down can find support near the 121.00 and 120.47 levels, according to the Technical Confluences Indicator.        Resistance: 121.40, 121.74, 122.20Support: 121.00, 120.47, 120.00  Additional key levels  

The heavy selling pressure surrounding the greenback and a modest rebound seen in crude oil prices caused the USD/CAD pair to slide toward the 1.3200

WTI erases portion of early losses, trades above $53.US Dollar Index drops below 99.30 after dismal PMI data.Retail Sales in Canada stayed unchanged in December.The heavy selling pressure surrounding the greenback and a modest rebound seen in crude oil prices caused the USD/CAD pair to slide toward the 1.3200 handle on Friday. As of writing, the pair was down 0.35% on a daily basis at 1.3213 and was looking to close the second straight week in the negative territory. Earlier in the day, the data published by Statistics Canada showed Retail Sales in December stayed unchanged after rising 1.1% in November and fell short of the market expectation for an increase of 0.1%. USD weakens after dismal PMI data However, with the preliminary February PMI data from the US coming in much worse than expected, the USD selloff intensified and allowed the CAD to outperform the USD.  The IHS Markit's Manufacturing PMI in February slumped to 50.8 from 51.9 and the Services PMI dropped to 49.4 to show contraction in the service sector's economic activity for the first time in four years. The US Dollar Index, which touched its highest level since April 2017 at 99.91 on Thursday, fell sharply during the American trading hours and was last seen down 0.6% on the day at 99.28. Meanwhile, the West Texas Intermediate (WTI) staged a modest rebound after Saudi Arabia's energy minister denied The Wall Street Journal report claiming that Saudi Arabia was considering to break the OPEC+ alliance with Russia and helped the commodity-related CAD preserve its strength. At the moment, the barrel of WTI is trading at $53.40, still down 0.55% on the day. Technical levels to watch for  

"Evidence suggests that the ECB's rate forward guidance has been and continues to be an effective monetary policy tool," European Central Bank's chief

"Evidence suggests that the ECB's rate forward guidance has been and continues to be an effective monetary policy tool," European Central Bank's chief economist Philip Lane said in his prepared remarks delivered at the 2020 US Monetary Policy Forum on Friday. Key takeaways "The governing council is closely monitoring the risk that the impact of negative rates on bank profitability may impair the transmission of monetary policy to the real economy." "Lower real rates reduce the available policy space to counter low inflation." "This may increase the time it takes for inflation to return to target and this delay may be compounded if a prolonged period of low inflation also erodes inflation expectations." "ECB has been willing and able to calibrate the combination of its unconventional policy instruments in directions and on a scale that gives sizeable support to the economy and continues to support the convergence of inflation to our aim."

After hitting new 2020 highs every day of the week, USD/CHF is erasing the gains and trading near five-day lows. The spot is trading below the 100/200-day simp

USD/CHF erases weekly gains and is on track to end the week below the 0.9800 figure.Sellers are pressuring the 0.9770 support level.   USD/CHF daily chart   After hitting new 2020 highs every day of the week, USD/CHF is erasing the gains and trading near five-day lows. The spot is trading below the 100/200-day simple moving averages suggesting an overall bearish momentum in the long term.   USD/CHF four-hour chart   Dollar/Swiss broke below the 0.9830 support and the 50 SMA as broad-based USD weakness erased the weekly gains. After the sharp move down, bears are likely looking for an extension targetting the 0.9730 and 0.9710 price levels. The 0.9800 figure and 0.9830 resistance are likely to act as resistance on any pullback up.     Resistance: 0.9800, 0.9830, 0.9850Support: 0.9770, 0.9730, 0.9710  Additional key levels  

The US economy is expected to expand by 2% in the first quarter of 2020, the Federal Reserve Bank of New York's latest Nowcasting Report showed. "News

The US economy is expected to expand by 2% in the first quarter of 2020, the Federal Reserve Bank of New York's latest Nowcasting Report showed. "News from this week’s data increased the nowcast for 2020:Q1 by 0.6 percentage point," the publication read. "Positive surprises from regional survey and housing data drove most of the increase." USD loses traction on Friday After advancing to its highest level since April 2017 at 99.91 on Thursday, the US Dollar Index lost its traction on Friday and extended its slide after disappointing Markit PMI figures. As of writing, the index was down 0.57% on the day at 99.31.

Commenting on the Wall Street Journal report claiming that Saudi Arabia was considering a break from the OPEC+ alliance, Saudi Energy Minister Prince

Commenting on the Wall Street Journal report claiming that Saudi Arabia was considering a break from the OPEC+ alliance, Saudi Energy Minister Prince Abdulaziz bin Salman said it was "absurd and utter nonsense." "We will continue to act in a collective manner," the minister told Reuters. "Saudi Arabia is in continuous communication and dialogue with all OPEC and OPEC+ partners." Crude oil reaction The West Texas Intermediate (WTI) recovered slightly from daily lows after these comments and was last seen trading at $53, where it was still down 1.25% on the day. 

Dollar/Yen broke above an ascending channel while above its main daily simple moving averages (SMAs). The spot is correcting down after two consecutive days o

USD/JPY is retreating down after a volatile week. The consolidation might see USD/JPY trade sideways below the 112.00 figure.  USD/JPY daily chart   Dollar/Yen broke above an ascending channel while above its main daily simple moving averages (SMAs). The spot is correcting down after two consecutive days of above-average intraday rallies.   USD/JPY four-hour chart   USD/JPY is starting to correct down after an unusual spike to the upside in the last two days. The market is seen going sideways below the 112.00 figure and potentially accelerate down below the 1117.17/110.71 resistance zone, according to the Technical Confluences Indicator. On the flip side, bulls are looking for a daily close above 112.57/91 in order to extend to bull move.      Resistance: 112.00, 112.57, 112.91Support: 111.41, 111.17, 110.71    Additional key levels  

The GBP/USD pair extended its daily recovery during the American session on Friday and touched a fresh daily high of 1.2978 as the USD came under heav

Economic activity in US private sector contracts in February.US Dollar Index erases majority of weekly gains.Upbeat Manufacturing PMI from UK helps GBP gather strength.The GBP/USD pair extended its daily recovery during the American session on Friday and touched a fresh daily high of 1.2978 as the USD came under heavy selling pressure on disappointing PMI data. As of writing, the pair was up 0.7% on the day at 1.2972. Despite this rebound, the pair remains on track to post weekly losses.  PMI data impact FX market on Friday Earlier in the day, the IHS Markit reported that the Manufacturing PMI in the UK rose to 51.9 in February (preliminary) from 50 in January to show an expansion in the sector's business activity at a modest pace. The GBP capitalized on the data and started to gather strength against its major rivals. In the second half of the day, the IHS Markit's PMI report for the US revealed that the economic activity in the private sector in February contracted with the Composite PMI slumping to its lowest reading in 76 months at 49.6 following January's reading of 53.3. Moreover, the Manufacturing PMI and the Services PMI in the US fell to 50.8 and 49.4, respectively. Pressured by the disappointing data, the US Dollar Index erased a large portion of its weekly gains in a quick fashion and was last seen down 0.57% on the day at 99.32. Assessing the data,  "the deterioration in was in part linked to the coronavirus outbreak," said Chris Williamson, Chief Business Economist at IHS Markit. "However, companies also reported increased caution in respect to spending due to worries about a wider economic slowdown and uncertainty ahead of the presidential election later this year.  Technical levels to watch for  

The EUR/USD pair has hovered around 1.0800 for the last three trading days, although weak US PMI have helped it trim weekly losses, now trading at aro

The EUR/USD pair has hovered around 1.0800 for the last three trading days, although weak US PMI have helped it trim weekly losses, now trading at around 1.0840. EUR/USD extreme oversold conditions point to a bullish corrective advance, according to Valeria Bednarik from FXStreet. Key quotes “The weekly chart shows that the pair remains far below all of its moving averages, while technical indicators lost strength downward, but remain well into negative territory, suggesting that in the long-term, the risk remains skewed to the downside.” “In the daily chart, the pair is barely correcting extreme oversold conditions, as it’s trading roughly 60 pips above its 2020 low after losing 320 pips pretty much straight.”  “Technical indicators have moved out extreme oversold territory for the first time in over a week, but remain well below their midlines. The 20 DMA maintains its bearish slope at around 1.0940 while holding below the larger ones.” “For the upcoming days, 1.0900 is the immediate resistance ahead of the mentioned 20 DMA. 1.0770 is immediate support.”

Weaker than expected US Markit PMI triggers some profit-taking ahead of the weekend. German business confidence tumbled, while EU data continues to in

Weaker than expected US Markit PMI triggers some profit-taking ahead of the weekend. German business confidence tumbled, while EU data continues to indicate weak growth, Valeria Bednarik from FXStreet reports.  Key quotes “The German manufacturing index rose to 47.8, better than the previous 45.3, although services output contracted to 53.3. The EU indexes were a bit more encouraging, as both beat the market’s forecasts. However, inflation in the Union was confirmed at 1.4% YoY in January. The numbers reflect the fragility of the EU’s economy.” “On a downward trend now, the Markit estimates of February preliminary PMI missed the market’s expectations. The manufacturing index came in at 50.8 while services output fell into contraction territory down to 49.4 from 53.4.” “The upcoming week will bring Q4 GDP revisions for Germany and the US. On Monday, Germany will release the IFO Business Climate index for February, foreseen at 96 from the previous 95.9. German will also publish the last version of January inflation while the Union will unveil February Consumer Confidence. “The US macroeconomic calendar will include Durable Goods Orders scheduled for Thursday and seen down by -1.5% and the January Core PCE Price Index, Fed’s favourite inflation measure, previously at 1.6%.”

XAU/USD is trading in an uptrend above its main daily simple moving averages (SMAs) while breaking above a bull channel. Gold is printing fresh 2020 highs hitt

XAU/USD is on fire printing fresh 2020 highs into Friday.The level to beat for buyers is the 1648.36 resistance.  Gold daily chart   XAU/USD is trading in an uptrend above its main daily simple moving averages (SMAs) while breaking above a bull channel. Gold is printing fresh 2020 highs hitting $1646.64 per ounce on an intraday basis.     Gold four-hour chart   Gold is spiking up breaking several resistance levels. As the buyers are being relentless, XAU/USD is about to challenge the 1648.36 resistance. A break above the above-mentioned level is likely to lead to further gains towards the 1660.00 and 1675.00 resistance levels. On the flip side, the retracement down might find support near the 1636.40, 1632.98 and 1627.85, according to the Technical Confluences Indicator.       Resistance: 1648.36, 1660.00, 1675.00 Support: 1636.40, 1632.98, 1627.85  Additional key levels  

AUD/USD has tumbled down to the lowest since 2009 amid coronavirus fears and other factors. Late February's daily chart is pointing to the downside, a

AUD/USD has tumbled down to the lowest since 2009 amid coronavirus fears and other factors. Late February's daily chart is pointing to the downside, according to FXStreet’s analyst Yohay Elam. Key quotes “The Relative Strength Index on the daily chart has dropped below 30 – indicating substantially oversold conditions.” “Momentum remains deeply to the downside, and the A$ is trading well below the 50, 100, and 200-day Simple Moving Averages.”  “Overall, there is a likelihood that an upswing is on the cards, but that the trend is to the downside.”  “The new low of 0.6585 provides initial, yet weak support. Further down, 0.6550 and 0.65 may slow the fall.”  

The significant decline seen in new COVID-19 cases in China is partly due to a change in case definition, World Health Organization (WHO) chief Tedros

The significant decline seen in new COVID-19 cases in China is partly due to a change in case definition, World Health Organization (WHO) chief Tedros Adhanom Ghebreyesus told reporters on Friday. "We are concerned about an increase in cases in Shandong province and we are seeking more information," Tedros added. Risk aversion Flight-to-safety continues to dominate markets on Friday. As of writing, the 10-year US Treasury bond yield was down 3.85% on the day and the Wall Street's three main indexes were erasing between 0.85% and 1.35%.

United States Existing Home Sales (MoM) registered at 5.46M above expectations (5.43M) in January

United States Existing Home Sales Change (MoM) registered at -1.3% above expectations (-1.8%) in January

The economic activity in the US manufacturing sector in February is expected to expand at a softer pace than it did in January with the IHS Markit's M

The economic activity in the US manufacturing sector in February is expected to expand at a softer pace than it did in January with the IHS Markit's Manufacturing PMI dropping to 50.8 in its advanced print from 51.9 in January. This reading came in worse than the market expectation of 51.5. Additionally, the IHS Markit's Services PMI dropped below the 50 mark in February to point to a contraction in the sector's activity. At 49.4, the Services PMI recorded its lowest reading in more than six years. Finally, the Composite PMI fell to 49.6 from 53.3. Commenting on the data, “with the exception of the government-shutdown of 2013, US business activity contracted for the first time since the global financial crisis in February," noted Chris Williamson, Chief Business Economist at IHS Markit. "Weakness was primarily seen in the service sector, where the first drop in activity for four years was reported, but manufacturing production also ground almost to a halt due to a near-stalling of orders." According to Williamson, the deterioration in part was caused by the coronavirus outbreak's negative impact on the demand across sectors such as travel and tourism, as well as on exports and supply chain disruptions.  USD reaction  The greenback came under heavy selling pressure following the disappointing PMI data. The US Dollar Index, which touched a fresh multi-year high of 99.91 on Thursday, was last seen erasing 0.45% on the day at 99.43.

The shared currency keeps the buying interest well and sound so far on Friday, taking EUR/USD to the area above the 1.0800 mark following the opening

EUR/USD manages well to keep daily gains beyond the 1.08 mark.Auspicious PMIs in Germany, EMU supports the upside on Friday.US flash manufacturing PMI came in at 50.8 in February.The shared currency keeps the buying interest well and sound so far on Friday, taking EUR/USD to the area above the 1.0800 mark following the opening bell in Wall St. EUR/USD propped up by data EUR/USD appears within a consolidative range in the last part of the week, always around the 1.08 neighbourhood and a above 2020 lows at 1.0777 recorded on Thursday. The renewed buying interest in the European currency has been sustained by better-than-expected advanced manufacturing PMIs in Germany and the core Euroland for the current month published during early trade. In the US calendar, Markit’s flash manufacturing PMI missed estimates at 50.8 for the month of February (vs. January’s 51.9), adding some extra downside pressure to the buck. Next on tap will be January’s Existing Home Sales. What to look for around EUR EUR/USD is seen some light at the end of the tunnel this week on the back of upbeat data in the euro docket, managing at the same time to put further sistance from recent YTD lows in the 1.0780/75 band. As usual, USD-dynamics are expected to keep ruling the pair’s price action for the time being along with the broader risk appetite trends, where the COVID-19 remains in centre stage. On another front, the ECB is expected to finish its “strategic review” (announced at its January meeting) by year-end, leaving speculations of any change in the monetary policy before that time pretty flat. Further out, latest results from the German and EMU dockets continue to support the view that any attempt of recovery in the region remains elusive for the time being and is expected to keep weighing on the currency. EUR/USD levels to watch At the moment, the pair is gaining 0.51% at 1.0839 and faces the next resistance at 1.0879 (2019 low Oct.1) seconded by 1.0892 (23.6% Fibo of the 2020 drop) and finally 1.0981 (monthly low Nov.29 2019). On the downside, a breach of 1.0777 (weekly/2020 low Feb.20) would target 1.0710 (monthly low Jan.5 2016) en route to 1.0569 (monthly low Apr.10 2017).

United States Markit Services PMI registered at 49.4, below expectations (53) in February

United States Markit Services PMI came in at 49.6 below forecasts (53) in February

more to come

Markit's preliminary Purchasing Managers' Index for the services sector has come out at 49.4 points, far below expectations. EUR/USD has responded positively, breaking above the resistance line of 1.0820 which has been a separator of ranges. more to come

United States Markit Manufacturing PMI below expectations (51.5) in February: Actual (50.8)

United States Markit PMI Composite fell from previous 53.3 to 49.6 in February

Wall Street's main indexes started the last day of the week in the negative territory as investors seem to be opting out to stay away from risky asset

CBOE Volatility Index is up more than 7% on Friday.All 11 major sectors of S&P 500 are in negative territory in early trade.Wall Street's main indexes started the last day of the week in the negative territory as investors seem to be opting out to stay away from risky assets ahead of the weekend. Reflecting the risk-averse market environment, the CBOE Volatility Index, Wall Street's fear gauge, is up 7.5% on Friday. As of writing, the Dow Jones Industrial Average and the S&P 500 were both down 0.4% on the day and the Nasdaq Composite was erasing 0.45%. Energy and tech shares underperform Earlier today, China's Politburo Standing Committee said the turning point of the coronavirus outbreak in China had not come yet to hint that the number of infections was likely to continue to increase in the near-term. The latest data published by China’s National Health Commission revealed that the death toll in mainland China rose above 2,000. Among the 11 major S&P 500 sectors, the risk-sensitive Technology Index is down 1% on the day and the Energy Index is erasing 1.3% pressured by falling crude oil prices.

Crude oil prices post decisive recovery gains in the last two days and the barrel of West Texas Intermediate (WTI) rose to its highest level in nearly

Coronavirus uncertainty weighs on risk-sensitive commodities on Friday.Saudi Arabia is reportedly considering a break from oil production alliance with Russia.Coming up: Baker Hughes' weekly US Oil Rig Count.Crude oil prices post decisive recovery gains in the last two days and the barrel of West Texas Intermediate (WTI) rose to its highest level in nearly a month at $54.62 but struggled to preserve its momentum. As of writing, the WTI was trading at $52.95, down 1.38% on a daily basis. The rising number of coronavirus infections outside of China and disappointing macroeconomic data releases from Japan keep investors on edge and force them to reassess the potential negative impact of the epidemic on the global economy and the energy demand. Commenting on crude oil movements, "market participants who benefited from the price rise in recent days might prefer not to go into the weekend with a long position," UBS analyst Giovanni Staunovo told Reuters. Trouble in OPEC+? In the meantime, The Wall Street Journal on Friday reported that Saudi Arabia was considering a break of its alliance with Russia on crude oil production amid disagreements over the coronavirus' effects on the oil market. "Saudi Arabia, Kuwait and the UAE are holding talks this week to discuss a possible collective output cut of as much as 300,000 barrels a day," added The WSJ's Summer Said and Benoit Faucon. Later in the day, Baker Hughes' weekly US Oil Rig Count data will be looked upon for fresh impetus. Technical levels to watch for  

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main rivals, remains on the defensive at the end of the week around the 99.7

DXY loses momentum and test lows near 99.60.Markit’s preliminary PMI prints, Existing Home Sales next on tap.FMOC’s Bostic favoured for the continuation of the “on-hold” stance.The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main rivals, remains on the defensive at the end of the week around the 99.70/60 band. US Dollar Index now looks to data The index is giving away part of the recent gains for the first time after three consecutive daily advances, coming under some selling pressure following the rejection from YTD peaks near 100.00 the figure. In fact, some profit taking mood appears to be weighing on the buck in light of the recent and strong rally, always amidst persistent concerns regarding the Chinese COVID-19 and the current decline in US yields and the risk aversion context. Later in the US docker, initial estimates of the manufacturing and services PMIs are due seconded by Existing Home Sales for the month of January. On another front Atlanta Fed R.Bostic advocated for the continuation of the "wait-and-see" stance from the Federal Reserve, adding that he expects the GDP to be between 2%-2.25% this year. Furthermore, St.Luis Fed J.Bullard noted that market expectations are likely to return to the "on hold" outlook. What to look for around USD The index has extended the march north to new 2020 highs just below 100.00 the figure on Thursday, keeping the bid bias well in place for the time being. Investors are expected to keep looking to the performance of US fundamentals and the broader risk appetite trends for direction as well as any fresh developments from the COVID-19. In the meantime, the outlook on the dollar remains constructive and bolstered by the current “appropriate” monetary stance from the Fed (once again confirmed at the FOMC minutes on Wednesday) vs. the broad-based dovish view from its G10 peers, the “good shape” of the domestic economy, the buck’s safe haven appeal and its status of “global reserve currency”. US Dollar Index relevant levels At the moment, the index is retreating 0.21% at 99.67 and faces the next support at 98.94 (23.6% Fibo retracement of the 2020 rally) seconded by 98.54 (monthly high Nov.29 2019) and then 98.46 (38.2% Fibo retracement of the 2020 rally). On the other hand, a break above 99.91 (2020 high Feb.20) would aim for 100.00 (psychological barrier) and finally 101.34 (monthly high Apr.10 2017).

EUR/USD is trading in a downtrend below its main daily simple moving averages (SMAs) as the market remains under selling pressure near 34-month lows. The mark

EUR/USD stays under bearish pressure near 34-month lows.The level to beat for sellers is the 1.0800 support on a daily basis. A correction up cannot be ruled out.  EUR/USD daily chart    EUR/USD is trading in a downtrend below its main daily simple moving averages (SMAs) as the market remains under selling pressure near 34-month lows. The market is consolidating losses for the third day in a row.    EUR/USD four-hour chart   The euro broke below a descending channel while trading below the main SMAs on the four-hour chart. The market is consolidating losses in what most analysts consider oversold condition. The trend remains intact for now and a daily break below the 1.0800 figure can attract further selling towards the 1.0747 and 1.0660 levels. However, as the market is overstretched, a correction up cannot be ruled out. Resistance is seen at 1.0840 and more importantly at 1.0882. Further up lies the 1.0927 level, according to the Technical Confluences Indicator.     Resistance: 1.0840, 1.0882, 1.0927Support: 1.0800, 1.0747, 1.0660  Additional key levels  

The GBP/USD pair held on to its intraday gains through the early North-American session and is currently placed near the top end of its daily trading

A modest USD pullback from multi-year tops helped GBP/USD to gain some traction.The intraday uptick was further supported by stronger UK Manufacturing PMI print.Fears of a no-deal Brexit warrant some caution before placing any fresh bullish bets.The GBP/USD pair held on to its intraday gains through the early North-American session and is currently placed near the top end of its daily trading range, around the 1.2935-40 region. A modest US dollar pullback from multi-year tops helped the pair to gain some positive traction on the last trading day of the week and stage a goodish bounce from near three-month/YTD lows set in the previous session. GBP/USD supported by a combination of factors Renewed concerns over the outbreak of the deadly coronavirus triggered a fresh wave of the global risk-aversion trade on Friday. This led to a sharp intraday fall in the US Treasury bond yields and prompted some USD profit-taking. On the other hand, the British pound got a goodish lift following the release of upbeat UK Manufacturing PMI, which showed that manufacturing output grew at the fastest in 10 months and helped offset a small downward move in the services sector. Despite a goodish intraday rally of around 70-75 pips, the pair lacked any strong bullish conviction amid persistent worries that Britain might crash out of the European Union at the end of the transition period later this year. Hence, it will be prudent to wait for some follow-through buying before confirming that the recent GBP weakness might have already run its course and positioning for a further appreciating move, possibly beyond the key 1.30 psychological mark. Technical levels to watch  

Saudi Arabia is weighing a break-up of the oil production alliance with Russia amid disagreements over the coronavirus outbreak's potential impact on

Saudi Arabia is weighing a break-up of the oil production alliance with Russia amid disagreements over the coronavirus outbreak's potential impact on the global oil demand, The Wall Street Journal (WSJ) reported on Monday, citing people familiar with the matter. "Saudi Arabia, Kuwait and the UAE are holding talks this week to discuss a possible collective output cut of as much as 300,000 barrels a day," wrote the WSJ's Summer Said and Benoit Faucon. Crude oil reaction The barrel of West Texas Intermediate (WTI) largely ignored this headline and was last seen trading at $53.05, losing 1.15% on a daily basis.

Canada has just released retail sales data with no changes,Nathan Janzen from RBC Economics reports. The USD/CAD pair fell with the news but has recov

Canada has just released retail sales data with no changes,Nathan Janzen from RBC Economics reports. The USD/CAD pair fell with the news but has recovered to the previous level and is currently trading at 1.3257. Key quotes “Canadian retail sales ended 2019 about where they ended 2018. Excluding price increases, sale volumes in December were up just 0.1% from a year prior.” “Sales on a month-over-month basis were unchanged from November, both including and excluding prices, leaving overall consumer spending on track to post another lackluster increase in Q4 of last year - and in line with our expectation that overall GDP increased little if at all in the quarter.” “E-commerce sales were up a whopping 31.5% from a year ago in December.” “We think the Bank of Canada will ultimately look through most of those transitory disruptions, but underlying growth trends have also been softer, and we continue to pencil in a rate cut from the central bank in April.”  

Belgium Leading Indicator above forecasts (-2.8) in February: Actual (-2.7)

The USD/CAD pair remained confined in its intraday trading range, around mid-1.3200s, and had a rather muted reaction to Canadian macro data. The pair

USD/CAD seesawed between tepid gains/minor losses on Friday.A modest USD pullback was negated by weaker oil prices.Mixed Canadian retail sales failed to provide any fresh impetus.The USD/CAD pair remained confined in its intraday trading range, around mid-1.3200s, and had a rather muted reaction to Canadian macro data. The pair failed to capitalize on the previous session's goodish intraday bounce from three-week lows and remained confined in a narrow trading band through the major part of Friday's trading action. Traders seemed reluctant to place fresh bets Against the backdrop of a modest US dollar pullback from multi-year tops, a sharp fall in crude oil prices undermined the commodity-linked currency – the loonie and failed to provide any meaningful impetus. The pair moved little following the release of mixed Canadian monthly retail sales figures for December, showing that headline sales remained flat as compared to consensus estimates pointing to a 0.1% rise. Conversely, sales excluding automobiles came in better than expected and rose by 0.5%. This along with an upward revision of the previous month’s upward revision helped offset the softer headline print. Market participants now look forward to the US economic docket, featuring the release of flash Manufacturing and Services PMI prints, which might produce some meaningful trading opportunities. Technical levels to watch  

Business in the US expect the coronavirus outbreak to cause short-term disruption, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, s

Businesses in the US expect the coronavirus outbreak to cause short-term disruption, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, told CNBC on Friday and added that their models pointed out to a short-term hit followed by a recovery after. "No impulses to do anything with our current policy stance," Bostic noted and reiterated that he sees the US GDP growth in 2020 around 2-2.25%. "The bond market is reflecting a low neutral rate of interest, flight to safety." USD reaction The US Dollar Index ignored these comments and was last down 0.2% on the day at 96.68.  

Energy markets have received a lift off the bottom of late as risk appetite normalizes somewhat. Oil needs to receive more news before moving higher,

Energy markets have received a lift off the bottom of late as risk appetite normalizes somewhat. Oil needs to receive more news before moving higher, according to analysts at TD Securities. Key quotes “Improved cracks and extremely low crude prices prompted some independent refiners to load up on cargoes for Q2 delivery, implying the worst of the demand shock may have been seen”.  “Furthermore, broad-reaching sanctions on Rosneft Trading S.A. and few signs that a cease-fire may be brokered in Libya, also offer modest support to the complex.”  “Before energy markets can make a sustainable move higher, an OPEC+ response is going to be needed at the March meeting, and thus far Russia is seemingly reluctant to participate in further curtailments.” “On the CTA front, we do not expect any material moves, while gasoline is trading in whipsaw territory, which could see buying above $1.635/gal.”  

Retail Sales in Canada remained virtually unchanged in December at $51.6 billion following November's increase of 1.1% (revised from 0.9%), Statistics

Retail Sales in Canada stayed unchanged in December.USD/CAD pair trades in positive territory above 1.3260.Retail Sales in Canada remained virtually unchanged in December at $51.6 billion following November's increase of 1.1% (revised from 0.9%), Statistics Canada reported on Friday. This reading came in worse than the market expectation of +0.1%. "Retail sales decreased 0.2% in the fourth quarter, after increasing 0.3% in the third quarter," the publication read. "Retail sales volumes were down 0.5%, following a 0.3% increase in the third quarter." USD/CAD reaction The USD/CAD pair rose modestly after the uninspiring data and was last seen trading at 1.3262, adding 0.02% on the day.

Gold continues its surge north of $1,600/oz, driven by a combination of coronavirus uncertainty and a Federal Reserve that remains anxious about infla

Gold continues its surge north of $1,600/oz, driven by a combination of coronavirus uncertainty and a Federal Reserve that remains anxious about inflation, strategists at TD Securities inform. Key quotes “A portion of the recent surge can surely be attributed to a safe haven bid, but risk markets have not experienced the pain that typically coincides with a haven bid, suggesting there is more to this rally in safe assets than just the uncertainty driven bid.”  “Gold and rates appear to be telling the Fed they need to cut once again if their inflation goal is to be reached. Indeed, the structural bid in gold remains driven by real rate suppression from global central banks and the general willingness to let inflation overshoot for some time, should it be achieved.”  “While pullbacks could be in the cards as the virus story eventually fades, global central banks' asymmetric reaction function should continue to support gold through 2020, suggesting any dips should be bought.”  

Canada Retail Sales ex Autos (MoM) above expectations (0.4%) in December: Actual (0.5%)

Canada Retail Sales (MoM) below forecasts (0.1%) in December: Actual (0%)

The week ends with some modest consolidation in the USD but it's only a distraction to a solid start of the year. Analysts at TD Securities see the US

The week ends with some modest consolidation in the USD but it's only a distraction to a solid start of the year. Analysts at TD Securities see the USD/JPY rally running out of steam.  Key quotes “Our year-end view rested on the fact that a weak USD narrative would require a positive shift to the non-US growth story in H1 and the emergence of a risk premium in H2, which would drive it lower given frothy slower-moving valuations.”  “For now, risk markets should remain on edge into Super Tuesday, as markets start to grapple with the Bern factor.” “The USD should remain upbeat but looks vulnerable over the next two weeks on month-end and US political risks. Still, that's just another reason to fade the rally in USD/JPY.”  

The PMI data that was published earlier today were largely in line with the European Central Bank's (ECB) latest forecasts, ECB chief economist Philip

The PMI data that was published earlier today were largely in line with the European Central Bank's (ECB) latest forecasts, ECB chief economist Philip Lane told Bloomberg on Friday. Regarding the coronavirus outbreak, Lane noted that it was definitely a downside risk until it gets contained and added that its impact on the economy was expected to be "V-shaped." "The only way to ensure the ECB's credibility is revived inflation," Lane said. "The euro area economy is growing as domestic demand increases." EUR/USD reaction The EUR/USD pair ignored these comments and was last seen trading at 1.0800, adding 0.15% on the day.

Negative rates shouldn't be used unless it's absolutely necessary as they can lead to a build-up of financial risks, Swedish central bank (Riksbank) D

Negative rates shouldn't be used unless it's absolutely necessary as they can lead to a build-up of financial risks, Swedish central bank (Riksbank) Deputy Governor Henry Ohlsson argued on Friday while speaking to reporters at a conference in Stockholm. "If there is a crisis, then we can make monetary policy more expansive but we need to look at the whole toolbox," Ohlsson added. "I don't think that the monetary policy should react to changes of tenths of percentage points one way or the other." EUR/SEK reaction The EUR/SEK pair edged slightly lower following these comments and was last seen trading at 10.5691, down 0.1% on the day.

After the 2018 bull-market, the USD/INR has been consolidating in a rectangle formation. The spot is trading above its main weekly simple moving averages (SMA

USD/INR is trading at levels last seen in early January.  The level to beat for buyers is the 72.00 resistance.   USD/INR weekly chart   After the 2018 bull-market, the USD/INR has been consolidating in a rectangle formation. The spot is trading above its main weekly simple moving averages (SMAs), suggesting a bullish momentum in the long term.     USD/INR daily chart   USD/INR is rising to six-week highs while challenging the 72.00 figure. Bulls want a weekly close above the 72.00 level in order to target higher levels near 72.35 and 72.66. Support is seen near 71.60 and 71.20 levels.      Additional key levels  

The AUD/USD pair trimmed a part of its early losses to 11-year lows, albeit seemed struggling to extend the momentum further beyond the 0.6600 round-f

AUD/USD remained depressed amid a fresh wave of the global risk-aversion trade.A modest USD pullback from multi-year tops helped ease the bearish pressure.The upside seems limited and recoveries might still be seen as a selling opportunity.The AUD/USD pair trimmed a part of its early losses to 11-year lows, albeit seemed struggling to extend the momentum further beyond the 0.6600 round-figure mark. The pair added to its recent losses and witnessed some follow-through selling on the last trading day of the week. Pessimism about the global economy deepened further after the World Health Organization (WHO) officials warned that the novel coronavirus could spread far and wide throughout the world. Attempted recovery lacks conviction Concerns over deepening economic fallout from the deadly virus triggered a fresh wave of the global risk-aversion trade. This eventually dented the already weaker sentiment surrounding the China-proxy Australian dollar and dragged the pair below the 0.6600 mark for the first time since April 2009. The pair tumbled to an intraday low level of 0.6586 but managed to find some support amid a modest US dollar pullback from multi-year tops. The risk-off mood-led downfall in the US Treasury bond yields prompted some USD profit-taking, which turned out to be the only factor that helped ease the bearish pressure. Meanwhile, the attempted recovery lacked any strong bullish conviction and might still be categorized as some intraday short-covering amid extremely oversold conditions. Hence, any subsequent positive move runs the risk of fizzling out rather quickly and might still be seen as a selling opportunity. Moving ahead, market participants now look forward to the US economic docket, featuring the release of flash Manufacturing and Services PMI, which might influence the USD price dynamics and produce some short-term trading impetus. Technical levels to watch  

"Valuations look high, but not at this level of interest rates, I think we're ok for now," St Louis Fed President James Bullard told CNBC on Friday. B

"Valuations look high, but not at this level of interest rates, I think we're ok for now," St Louis Fed President James Bullard told CNBC on Friday. Bullard further argued that financial stability risks were moderate at this point. "Banks' business models will evolve to handle the low interest rate environment," he added. USD reaction These comments don't seem to be having a noticeable impact on the greenback's performance. As of writing, the US Dollar Index was down 0.14% on the day at 97.74.

Friday's four-hour chart is pointing to a resumption of the falls in the cable, according to Yohay Elam from FXStreet. GBP/USD is trading at 1.2928 ri

Friday's four-hour chart is pointing to a resumption of the falls in the cable, according to Yohay Elam from FXStreet.  GBP/USD is trading at 1.2928 right now. Key quotes “Sterling's recovery has been enough to push it out of oversold conditions according to the Relative Strength Index on the four-hour chart. However, momentum remains to the downside while it faces massive resistance. The 50, 100, and 200 Simple Moving Averages are converging around 1.30 and may prove a hard barrier for the pound.”  “Initial resistance awaits at 1.2975 which was a swing low last week. The round number of 1.30 almost converges with the 200 SMA.” “Support awaits at 1.29, a round number that provided support in January.”  

After breaking above the critical $1,600 mark at the start of the week, the troy ounce of the precious metal extended its relentless rally and touched

Risk aversion helps safe-haven gold continue to gather strength.US Dollar Index pulls away from highs ahead of PMI data.10-year US Treasury bond yield erases more than 1.5% on Friday.After breaking above the critical $1,600 mark at the start of the week, the troy ounce of the precious metal extended its relentless rally and touched its highest level since February 2013 at $1,636.60 on Friday. With the market action turning subdued ahead of the American session, the XAU/USD pair is consolidating its gains near $1,635, where it was up 1% on the day. Risk perception The disappointing macroeconomic data releases from Japan and concerns over the coronavirus outbreak further weighing on the country's economic performance caused the JPY to lose its safe-haven status lately and allowed gold to gather strength on risk-off flows. On coronavirus-related headlines, China's Politburo Standing Committee noted that the turning point of the coronavirus outbreak had not come yet and acknowledged that it would have an "obvious impact" on the economy at least in the near-term. On the other hand, the greenback seems to be having a tough time finding demand on Friday after registering decisive gains against its major rivals throughout the week and helping the pair's bullish momentum remain intact. The last significant data release from the US will be the IHS Markit's preliminary Manufacturing and Services PMI data from the US. As of writing, the US Dollar Index was down 0.14% on the day at 99.74. Technical levels to watch for  

GBP/USD has recovered after upbeat UK PMIs and some dollar weakness. Brexit and coronavirus headlines may shape trading in additional data, Yohay Elam

GBP/USD has recovered after upbeat UK PMIs and some dollar weakness. Brexit and coronavirus headlines may shape trading in additional data, Yohay Elam from FXStreet briefs.  Key quotes “The ‘Boris Bounce’ is alive but not kicking – Markit's preliminary Manufacturing Purchasing Managers' Index for February leaped to 51.9 points, indicating a return to growth in the beaten sector. The Services PMI came out at 53.3, a tad below 53.4 and also pointing to growth.” “Sterling traders remain wary of Brexit, just over a week before official talks on future relations begin. Comments from both officials in Brussels – busy trying to fill the hole Britain leaves in the bloc's budget – and London, may move markets.” “In the US, data continues beating expectations. The Philly Fed Manufacturing Index came out at 36.7 points in February, smashing estimates. Markit's PMIs are due out later on and may extend the positive trend.”  “Coronavirus concerns may also boost the safe-haven US dollar. Confusion about Chinese statistics has led investors to worry about its neighbors – Japan and South Korea. Seoul has reported over 200 cases, including one in a military base.”  

The GBP/JPY cross jumped to fresh YTD tops on the last trading day of the week, with bulls now eyeing a move beyond the key 145.00 psychological mark.

GBP/JPY quickly reversed an early dip and turned positive for the third straight day.The British pound got a modest lift following the release of UK Manufacturing PMI.The JPY trimmed early gains – led by coronavirus worries – and remained supportive.The GBP/JPY cross jumped to fresh YTD tops on the last trading day of the week, with bulls now eyeing a move beyond the key 145.00 psychological mark. Following an early European session dip to the 143.75-70 region, the cross attracted some aggressive buying interest and turned positive for the third consecutive session on Friday. The uptick was primarily led by a modest rebound in the British pound, which gained some traction in reaction to upbeat UK Manufacturing PMI. GBP/JPY supported by a combination of factors According to IHS Markit/CIPS data, the UK manufacturing sector activity expanded at its fastest rate in 10- months during February. The gauge jumped to 52.8 from January's final reading of 50.1. This helped offset a slight disappointment from the Services PMI, falling to a two-month low level of 53.3, and provided a modest lift to the British pound. On the other hand, the Japanese yen trimmed a part of its early strong gains – led by fresh worries over the outbreak of the deadly coronavirus – and remained supportive. The cross has now rallied over 100 pips and a subsequent strength beyond the 145.00 mark should set the stage for an extension of the bullish momentum witnessed over the past two weeks. Technical levels to watch  

After climbing to fresh 4-week highs near 121.50 on Thursday, EUR/JPY met some selling pressure and it has now receded to the 121.00 area amidst excha

EUR/JPY alternates gains with losses below the 121.00 mark.The yen regains some buying interest and weighs on the cross.Better-than-expected PMIs in the core Euroland lends support to EUR.After climbing to fresh 4-week highs near 121.50 on Thursday, EUR/JPY met some selling pressure and it has now receded to the 121.00 area amidst exchanged risk-appetite trends. EUR/JPY focused on China, data Auspicious results from the preliminary readings of the manufacturing PMIs in the core euro area for the current month have given much-needed oxygen to the single currency and boosted the cross to levels just above 121.00 the figure during early trade. However, unabated concerns around the Chinese COVID-19 have spurred the demand for the safe haven universe and at the same time mitigated the recent selling pressure in the Japanese currency, limiting the upside in the cross somehow. In the docket, and other than European PMIs, market will publish its advanced gauges in the US economy for the month of February later in the session seconded by Existing Home Sales and several speeches from FOMC members. EUR/JPY relevant levels At the moment the cross is gaining 0.05% at 120.95 and faces the next barrier at 121.39 (weekly high Feb.20) followed by 122.65 (monthly high Dec.13) and then 122.87 (2020 high Jan.16). On the other hand, a drop below 118.46 (2020 low Feb.18) would expose 117.07 (monthly low Oct.7 2019) and finally 115.86 (2019 low Sep.3).

There is a high probability that the coronavirus will "blow over," St Louis Fed President James Bullard told CNBC on Friday and added that there was a

There is a high probability that the coronavirus will "blow over," St Louis Fed President James Bullard told CNBC on Friday and added that there was a good chance the outbreak will be a temporary shock.  "Market expectations are likely to return to on-hold outlook," Bullard said and noted that he is concerned about the yield curve issues. Regarding the upcoming presidential election, Bullard argued that there will be little impact on the Fed from the election cycle. USD reaction The US Dollar Index largely ignored these comments and was last seen down 0.17% on the day at 99.71.

Statistics Canada will publish the monthly retail sales report for December later this Friday at 13:30 GMT, with consensus estimates pointing to modes

Canadian retail sales overview Statistics Canada will publish the monthly retail sales report for December later this Friday at 13:30 GMT, with consensus estimates pointing to modest growth for the second consecutive month. The headline sales are expected to post a growth of 0.1% as compared to the previous month's solid rise of 0.9%. Meanwhile, sales excluding automobiles are anticipated to rise by 0.4% as against a modest 0.2% increase recorded in November. How could it affect USD/CAD? Ahead of the key release, the pair was seen oscillating in a range just above mid-1.3200s and struggled to capitalize on the previous session's goodish bounce from three-week lows. A surprisingly stronger reading might be enough to prompt some fresh selling and accelerate the slide back towards the very important 200-day SMA support near the 1.3220-15 region. Some follow-through selling should now pave the way for an extension of the recent corrective slide from four-month tops and has the potential to drag the pair further below the 1.3200 round figure mark towards testing its next major support near the 1.3155-50 horizontal zone. Conversely, a weaker reading should assist the pair to build on the overnight positive move and make a fresh attempt towards reclaiming the 1.3300 round-figure mark. The momentum could further get extended towards the recent swing highs, around the 1.3330 region, above which the pair seems all set to resume its bearish trajectory witnessed since early January. Key Notes USD/CAD steadies in positive territory near 1.3260 USD/CAD Analysis: Could still edge higher About Canadian retail sales The Retail Sales released by Statistics Canada is a monthly data that shows all goods sold by retailers based on a sampling of retail stores of different types and sizes. The retail sales index is often taken as an indicator of consumer confidence. It shows the performance of the retail sector in the short term. Generally speaking, the positive economic growth anticipates bullish movements for the CAD.

EUR/USD has managed to regain some traction after recording fresh 2020 lows in the 1.0780 region earlier in the week. In the meantime, extreme “overso

EUR/USD is now attempting to extend the rebound from YTD lows.Rallies are seen struggling initially in the 1.0885/90 band.EUR/USD has managed to regain some traction after recording fresh 2020 lows in the 1.0780 region earlier in the week. In the meantime, extreme “oversold” conditions, as per the RSI indicator, could spark occasional bouts of strength that should face initial hurdle in the 1.0890 region, where sits a Fibo retracement of the 2020 drop and the October 2019 low. On the broader scenario, the bearish view remains unchanged as long as the spot trades below the 55-day SMA, today at 1.1050. EUR/USD daily chart  

The NZD/USD pair continued to push lower on Friday and touched its lowest level since mid-October at 0.6303 before going into a consolidation phase. A

China doesn't think coronavirus outbreak is at turning point.US Dollar Index retreats to 99.70 area on Friday.Markit's US Manufacturing and Services PMI coming up in American session.The NZD/USD pair continued to push lower on Friday and touched its lowest level since mid-October at 0.6303 before going into a consolidation phase. As of writing, the pair was trading at 0.6311, down 0.27% on a daily basis. In the absence of significant macroeconomic data releases during the Asian trading hours, the sour market mood forced the risk-sensitive NZD to continue to weaken. Additionally, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr said that the RBNZ needs to be prepared for the unexpected and added that he was happy with the policy rate for the time being. Meanwhile, "the turning point of the coronavirus outbreak in China has not come yet," China's Politburo Standing Committee noted on Friday, as reported by the Chinese state television, to further weigh on the sentiment ahead of the American session. Focus shifts to US PMI data On the other hand, the US Dollar Index (DXY) is staging a technical correction following the sharp upsurge witnessed this week and seems to be helping the pair limit its losses for the time being. Ahead of the IHS Markit's preliminary Manufacturing and Services PMI reports for the US, the DXY,ü which touched a multi-year high of 99.91 on Thursday, is down 0.2% on the day at 99.69. Technical levels to watch for  

India FX Reserves, USD up to $476.09B in February 14 from previous $473B

China's fiscal policy will be more proactive and effective, the prudent monetary policy will be more flexible, the Chinese state television reported o

China's fiscal policy will be more proactive and effective, the prudent monetary policy will be more flexible, the Chinese state television reported on Friday, citing China's Politburo Standing Committee. Key takeaways "The turning point of the coronavirus outbreak in China has not come yet." "Coronavirus outbreak has an obvious impact on China's economy, but long-term improving momentum of the economy will not change." "Will fend off systemic financial risks." Markets remain risk-averse following these comments with major European equity indexes trading in the negative territory and the 10-year US Treasury bond yield erasing 1.8% on a daily basis.

The USD/JPY pair maintained its offered tone through the mid-European session, albeit has managed to trim a part of the early losses to mid-111.00s. H

A combination of factors prompts some long-unwinding around USD/JPY on Friday.The risk-off mood benefitted the JPY; sliding US bond yields undermined the USD.The downside remains cushioned and might still be seen as a buying opportunity.The USD/JPY pair maintained its offered tone through the mid-European session, albeit has managed to trim a part of the early losses to mid-111.00s. Having witnessed some heavy selling over the past two trading sessions, the Japanese yen attracted some safe-haven flows on the last trading day of the week and seemed rather unaffected by a further drop in the Japanese manufacturing PMI. Bulls opt to take some profits off the table The latest warning by the World Health Organization – that a global outbreak of the deadly coronavirus could happen at any time – triggered a fresh wave of the risk-aversion trade and provided a goodish lift to the JPY's perceived safe-haven status. Meanwhile, the risk-off mood-led sharp fall in the US Treasury bond yields prompted some US dollar profit-taking from multi-year tops. This eventually led to some long-unwinding trade and dragged the pair to an intraday low level of 111.49. Against the backdrop of the recent weakness in the Japanese economic data and mounting concerns over deepening economic fallout from the coronavirus outbreak, the downside is likely to remain limited, rather attract some dip-buying interest. Hence, it will be prudent to wait for some strong follow-through selling before confirming that the pair might have actually topped out in the near-term and positioning for an extension of the corrective slide from 10-month tops set in the previous session. Moving ahead, market participants now look forward to the US economic docket, highlighting the release of the flash Manufacturing and Services PMI, which might influence the USD price dynamics and produce some short-term trading opportunities. Technical levels to watch  

The coronavirus (COVID-19) epidemic is changing supply and demand in the global economy. The shutting down of Chinese factories clearly hits global su

The coronavirus (COVID-19) epidemic is changing supply and demand in the global economy. The shutting down of Chinese factories clearly hits global supply chains. Commodity prices have fallen as Chinese demand has weakened. Paul Donovan, the Chief Economist of UBS Global Wealth Management, analyzes the implications for global inflation. Key quotes “Economic theory says that if supply goes down, prices should go up. But firms may choose to keep prices stable. Instead, firms delay sending goods to their customers.” “China is a more efficient producer of goods. China is a less efficient consumer of commodities. Past outsourcing to China lowered goods inflation but raised commodity inflation. The net effect was to (mildly) raise global inflation.” “China's lower commodity demand is likely to be more important than delays in goods supply. If there is any impact at all, the coronavirus should be a very small negative for global inflation rates. However, in advanced economies the most important drive of local consumer prices remains local labor costs.”  

The budget proposed by the EU is not acceptable, Irish Prime Minister Leo Varadkar said and added that the position of the frugal four, Austria, Denma

The budget proposed by the EU is not acceptable, Irish Prime Minister Leo Varadkar said and added that the position of the frugal four, Austria, Denmark, Netherlands and Sweden, has not changed. The group insists that the budget cannot go over 1% of the total economic output of the EU. "Ireland can't accept a cut in common agriculture policy funding," Varadkar explained. EUR/USD reaction The EUR/USD pair continues to pull away from the session high that it set at 1.0820 during the European morning. As of writing, the pair was trading near 1.0800, still adding 0.15% on the day.

The preliminary Markit PMIs for February will lead the US data calendar on Friday, as market participants continue to look for any signs of concern re

The preliminary Markit PMIs for February will lead the US data calendar on Friday, as market participants continue to look for any signs of concern related to the novel coronavirus. JPY has strengthened across the board (+0.25% vs USD), analysts at TD Securities inform. Key quotes “The surveys released so far related to Markit PMIs for Feb have not only failed to flag any issues but have also surprised to the upside.” “We look for existing home sales to decline 2.3% m/m in Jan following the firm 3.6% rise registered in Dec.” “Lastly, a number of Fed officials will be participating in the Chicago Booth's US Monetary Policy Forum that is scheduled to start at 10:15am ET. Key participants include Fed voters Clarida, Brainard and Mester, and the ECB's Philip Lane.” “JPYUSD is trading ~3.5% rich on our tactical model, suggesting the ominous rally sits on thin ice especially as major global equity benchmarks look overbought.”  

EUR/USD has bounced off 34-month lows after upbeat German data. Friday's four-hour chart is showing critical resistance looms, as FXStreet’s analyst Y

EUR/USD has bounced off 34-month lows after upbeat German data. Friday's four-hour chart is showing critical resistance looms, as FXStreet’s analyst Yohay Elam notes. Key quotes “Euro/dollar is capped under 1.0820, which has capped it in recent days and has also provided support earlier. Moreover, it is the upper bound of the ‘Macron Gap’ from 2017. Failure to breach it opens the door to fresh falls.” “The pair's technical state is exacerbated by the return of the Relative Strength Index on the four-hour chart above the 30 level – implying an exit from oversold conditions. EUR/USD continues trading below the 50, 100, and 200 Simple Moving Averages. Momentum remains to the downside.”  “Critical support awaits at 1.0777, the new 2020 trough, and the lowest since 2017. The next line to watch is 1.0720.”  

The US presidential election takes place on 3 November, and the race to determine who will face president Trump – the Democratic primaries – has offic

The US presidential election takes place on 3 November, and the race to determine who will face president Trump – the Democratic primaries – has officially kicked off. Bill Diviney, Senior economist at ABN Amro, analyzes the chances of the candidates in the primary contests. Key quotes “Primary contests take place in all 50 states, plus US overseas territories, to choose a presidential candidate. With 6 viable candidates and a relatively even split in support, the chances are relatively high that the contest does not produce a clear winner with more than 50% of the delegates.” “All candidates support a $15 hourly minimum wage, higher corporation taxes, significant investment to combat climate change (a ‘green new deal’), and rejoining the Paris Climate and Iran Nuclear accords.” “The frontrunner in both polls and betting markets is left-wing candidate Bernie Sanders. His radical policies include abolishing private health insurance and replacing it with a public ‘single payer’ system. He also proposes a wealth tax and significant rises in other taxes.” “Centrist billionaire Michael Bloomberg has significant polling momentum, and his unorthodox strategy of focusing on the Super Tuesday contests could yet win him the nomination.” “Opinion polls suggest all candidates – by varying margins – would beat Trump in a head-to-head, but it is historically rare for a presidential incumbent not to win a second term in the absence of a recession.”  

The USD/CHF pair touched its highest level since late December at 0.9849 on Thursday but lost its traction on Friday. As of writing, the pair was trad

US Dollar Index starts retracing weekly rally on Friday.Major European equity indexes post small daily losses.Coming up: Markit Manufacturing and Services PMI reports from US.The USD/CHF pair touched its highest level since late December at 0.9849 on Thursday but lost its traction on Friday. As of writing, the pair was trading at 0.9823, losing 0.16% on a daily basis. USD weakens after impressive rally A broad-based USD weakness seems to be allowing the pair to edge lower on Friday. The US Dollar Index (DXY) gained a total of 0.75% in the last three trading days and rose to its highest level since April 2017 at 99.91. With the major European currencies attracting some investor interest on the back of upbeat PMI data, the USD lost its strength and the DXY was last seen down 0.17% on the day at 99.70. Meanwhile, major European equity indexes are posting small daily losses to reflect a neutral market sentiment, which allows the USD's market valuation to drive the pair's movements. In the second half of the day, the IHS Markit's preliminary Manufacturing and Services PMI for the US will be looked upon for fresh catalysts. Additionally, FOMC members Brainard, Mester and Clarida will be delivering speeches. Technical levels to watch for  

EUR/USD has advanced in response to encouraging headlines, but there is more than meets the eye. Coronavirus news and reactions to PMIs are set to dom

EUR/USD has advanced in response to encouraging headlines, but there is more than meets the eye. Coronavirus news and reactions to PMIs are set to dominate trading, according to Yohay Elam from FXStreet. Key quotes “Markit's preliminary read for February has shown that the German Manufacturing Purchasing Managers' Index scored 47.8, far above 44.8, that was expected and 45.3 recorded in January.” “Investors are becoming more worried about the spread of respiratory disease in South Korea, which has designated two cities as ‘special care zones.’ Seoul reported 204 cases, including in a military base.” “Further headlines are set to move markets. In previous Fridays, the mood tended to worsen as the end of the trading week drew closer.” “Markit's preliminary PMIs for the US are due out in the American session and could move markets. It is essential to note that in America, ISM's surveys carry more weight than Markits'.”  

The AUD has fallen to a multi-year low, as growth differentials and concerns over the global growth outlook weigh. Analysts at ANZ Research share thei

The AUD has fallen to a multi-year low, as growth differentials and concerns over the global growth outlook weigh. Analysts at ANZ Research share their outlook for the AUD/USD pair which is currently trading at 0.6595. Key quotes “While easing geopolitical risks and accommodative global policy have been supportive, only a globally synchronous rise in growth would lift the AUD much above current levels.”  “While RBA easing is likely to have been pushed out by improving labour market momentum, lack of carry from low domestic yields will hamper the AUD in the medium term.”  

China will release manufacturing PMI numbers on 29 February. A big drop is expected by economists at Standard Chartered Bank. USD/CNY is being exchang

China will release manufacturing PMI numbers on 29 February. A big drop is expected by economists at Standard Chartered Bank. USD/CNY is being exchanged at 7.031.  Key quotes “We expect the official manufacturing PMI to plunge to 36 in February from 50 last month, reflecting the impact of the coronavirus outbreak.” “While newly confirmed cases have shown a downtrend since the beginning of February and restrictions on transport have been eased in some cities, we think disruption to production activity within the survey period will result in the official index reaching a historical low.”  “We expect the non-manufacturing PMI to drop to 44 in February from 54.1 prior, entering contractionary territory for the first time on record, as the retail, catering and accommodation, transportation and real-estate sectors have been hit hard by the outbreak.”  

Taiwan is scheduled to release January industrial production (IP) and unemployment data on 24 February, while the release of the Monitoring Indicators

Taiwan is scheduled to release January industrial production (IP) and unemployment data on 24 February, while the release of the Monitoring Indicators Index for January is scheduled on 27 February. Analysts at Standard Chartered Bank with the preview. USD/TWD trades at 30.415. Key quotes “IP likely fell 7.8% y/y, in line with the 17.7% y/y fall in custom exports in January. Weak IP data can also be partly attributed to calendar effects, as January had fewer working days this year compared to last year (Lunar New Year fell in January 2020 versus February 2019).” “The index – deemed a forward-looking indicator of real economic activity – likely dropped to 22pts from 27pts in December. This indicates the economy slipped into the ‘yellow-blue’ zone, suggesting that real activity was in ‘slow-growth’ mode.” “Further, the coronavirus outbreak has dampened the near-term growth outlook and will likely exert downward pressure on exports, manufacturing production, and consumer spending.”  

Inflation in the euro area, as measured by the Consumer Price Index (CPI), fell to -1% on a monthly basis in January and stayed unchanged at 1.4% on a

Annual core inflation in eurozone remained unchanged at 1.1% in January.EUR/USD pair pulls away from session highs after soft inflation data.Inflation in the euro area, as measured by the Consumer Price Index (CPI), fell to -1% on a monthly basis in January and stayed unchanged at 1.4% on a yearly basis, the data published by the Eurostat revealed on Friday. These readings came in line with market estimates. Further details of the report showed that the core CPI, which strips volatile food and energy prices, remained steady at -1.7% and 1.1% on a monthly and yearly basis, respectively. EUR/USD reaction After advancing to a daily high of 1.0820 on the upbeat PMI data earlier in the session, the EUR/USD pair lost its traction and was last seen trading at 1.0805, still up 0.2% on the day.

The bullish momentum in DXY seems to have run out of steam in the proximity of the key barrier at 100.00 the figure on Thursday. The current overbough

DXY is facing some profit taking sentiment and recedes from YTD highs.While above the 200-day SMA there is still room for a test of 100.00.The bullish momentum in DXY seems to have run out of steam in the proximity of the key barrier at 100.00 the figure on Thursday. The current overbought levels in the dollar is also helping with the ongoing knee-jerk, although the underlying positive tone appears unaltered in the short-term horizon. Looking at the broader picture, while the 200-day SMA at 97.81underpins, the index could still attempt a move to the psychological 100.00 neighbourhood. DXY daily chart  

The Department of Statistics will release January inflation data on 24 February and January industrial production (IP) data on 26 February. Strategist

The Department of Statistics will release January inflation data on 24 February and  January industrial production (IP) data on 26 February. Strategists at Standard Chartered bank share their forecast. USD/SGD is sitting at 1.4000. Key quotes "We expect core and headline inflation to have remained subdued at 0.8% y/y and 0.9% y/y, respectively, both inching up a mild 0.1ppt from December."  “We expect IP to have fallen 15.2% y/y, versus a 0.7% y/y decline in December, largely due to the Lunar New Year calendar effect.” “We think the coronavirus only had a partial impact, if any, on IP in January. The adverse impact of the virus should be felt more acutely in February due to supply chain disruptions.”  

Italy Consumer Price Index (YoY) below forecasts (0.6%) in January: Actual (0.5%)

Italy Consumer Price Index (MoM) came in at 0.1%, below expectations (0.2%) in January

Italy Consumer Price Index (EU Norm) (YoY) came in at 0.4% below forecasts (0.5%) in January

Italy Consumer Price Index (EU Norm) (MoM) below forecasts (-1.7%) in January: Actual (-1.8%)

Following two consecutive sessions posting strong gains, EUR/JPY is now losing some momentum amidst some JPY-buying. If the buying bias gathers extra

The sharp recovery in EUR/JPY run out of steam in the vicinity of 121.50.Further upside now targets the 2020 highs near the 123.00 mark.Following two consecutive sessions posting strong gains, EUR/JPY is now losing some momentum amidst some JPY-buying. If the buying bias gathers extra impetus, then the YTD high in levels just below 123.00 the figure (January 16th) should emerge as the next target of relevance. Above the key 200-day SMA, today at 120.38, the outlook on the cross is expected to remain positive. EUR/PY daily chart  

European Monetary Union Consumer Price Index - Core (MoM) meets forecasts (-1.7%) in January

European Monetary Union Consumer Price Index (YoY) meets forecasts (1.4%) in January

European Monetary Union Consumer Price Index (MoM) in line with expectations (-1%) in January

European Monetary Union Consumer Price Index - Core (YoY) in line with expectations (1.1%) in January

According to FX Strategists at UOB Group, there is still scope for USD/CNH to edge higher in the near-term. Key Quotes 24-hour view: “While we indicat

According to FX Strategists at UOB Group, there is still scope for USD/CNH to edge higher in the near-term. Key Quotes 24-hour view: “While we indicated yesterday that ‘there is still chance for USD to move above the February peak of 7.0230’, we did not anticipate the sudden acceleration as USD surged to high of 7.0548. The rapid rise appears to be running ahead of itself but there is room for the advance to extend to 7.0600 before the current strong upward pressure should ease. Support is at 7.0350 followed by 7.0250.” Next 1-3 weeks: “We noted on Wednesday (19 Feb, spot at 7.0100) that the ‘consolidation phase could be close to an end’. However, the manner by which USD blew above the early February peak of 7.0230 was not exactly expected. From here, further USD strength is likely but at this stage, it is too early to anticipate a move the December’s peak at 7.0865 (there is another resistance at 7.0660). For the next few days, the ‘strong support’ level at 7.0150 is likely strong enough to hold.”

South Korea will announce January industrial production (IP) data on 28 February. Meanwhile, the Bank of Korea (BoK) will hold a meeting on 27 Februar

South Korea will announce January industrial production (IP) data on 28 February. Meanwhile, the Bank of Korea (BoK) will hold a meeting on 27 February. Economists at Standard Chartered Bank predict the result of these events. USD/KRW trades at 1209.20. Key quotes “We expect the Bank of Korea (BoK) to keep the policy rate unchanged at its 27 February meeting.”  “We think the BoK will wait for more data to gauge the impact of the coronavirus.”  “IP likely fell 2.1% m/m and 1.6% y/y, after having risen 3.5% m/m and 4.2% y/y in December, due to fewer working days than January last year (Lunar New Year was in January this year versus in February last year).”  

The GBP/USD pair maintained its bid tone near session tops – around the 1.2920-25 region – and had a rather muted reaction to the mixed UK macro data.

GBP/USD stages a goodish rebound from three-month lows set on Thursday.A modest USD pullback from multi-year tops remained supportive of the move.Mixed UK flash Manufacturing/Services PMI did little to provide any fresh impetus.The GBP/USD pair maintained its bid tone near session tops – around the 1.2920-25 region – and had a rather muted reaction to the mixed UK macro data. The pair managed to gain some positive traction on the last trading day of the week and built on the previous session's intraday bounce from near three-month lows amid a modest US dollar pullback from multi-year tops. GBP/USD supported by retreating USD Fears surrounding the outbreak of coronavirus beyond China triggered a fresh wave of the global risk-aversion trade and led to a sharp downfall in the US Treasury bond yields, which prompted some USD profit-taking. Apart from the USD weakness, the uptick was further supported by stronger UK flash Manufacturing PMI, which remained in the expansion territory and came in at 51.9 for February vs. a dip to 49.7 expected. The positive reading, to some extent, was offset by a slight disappointment from the UK flash Services PMI, which edged lower to 53.3 during the reported month as compared to 53.4 anticipated and 53.9 previous. It, however, remains to be seen if the pair is able to capitalize on the recovery or meets with some fresh supply amid persistent fears that Britain might crash out of the European Union at the end of the transition period. Technical levels to watch  

The February PMIs beat expectations, but show early signs of spill-overs from the Wuhan virus outbreak to activity in the Euro area, analysts at Norde

The February PMIs beat expectations, but show early signs of spill-overs from the Wuhan virus outbreak to activity in the Euro area, analysts at Nordea reports. EUR/USD has jumped to 1.0815 with the news. Key quotes “The composite index rose to 51.6 from 51.3 last month, signaling steady expansion in business activity and beating expectations. Both the manufacturing and services components increased.” “Manufacturing remained in decline, at 49.1, but climbed to a one-year high. This is partly due to undeservedly positive effects from an increase in suppliers’ delivery times, which normally means there is high demand and thus good news, but this time actually reflects the shock to supply from the Wuhan virus outbreak. “A slower fall in new orders was a positive sign however, strengthening the case of a bottoming out in the industry.” “Looking ahead, today’s numbers might ease some minds concerning the virus, they do appear to show early signs of disruptions which may weigh on especially the manufacturing sector in the coming months.”  

India will release GDP data for Q3-FY20 (ended December 2019) and the second advance estimate for FY20 growth on 28 February. Analysts at Standard Cha

India will release GDP data for Q3-FY20 (ended December 2019) and the second advance estimate for FY20 growth on 28 February. Analysts at Standard Chartered estimate a growth recovery in the third quarter. USD/INR trades at 71.923. Key quotes “We estimate that growth recovered to 4.8% in Q3 from a six-year low of 4.5% in Q2.” “While GDP growth likely averaged 4.8% in the first three quarters of FY20, we are keeping our full-year growth forecast unchanged at 5% due to technical factors; FY19 growth was recently revised lower to 6.1% from 6.8%, which may lead to data revisions in quarterly growth rates and the second advance estimate for FY20. This may pose upside risks to our Q3 estimate.” “While GDP growth appears to have bottomed out, we see risks from global headwinds, especially the coronavirus outbreak, which could weigh on India’s Q4-FY20 growth. The Reserve Bank of India estimates that a 50bps drop in global growth would shave off 20bps from India’s growth.”  

-- more to come Markit's Manufacturing Purchasing Managers' Index was expected to drop from 50 – the break-even level 0 to 49.7 points. The Services P

The UK industrial sector is growing once again. Markit's Manufacturing PMI beat expectations with 51.9 compared with 49.7 expected, a significant positive surprise. The Services PMI marginally missed expectations with a score of 53.3 points versus 53.4 expected.  GBP/USD has extended its gains, hitting a high of 1.2927 at the time of writing. The forward-looking gauges indicate an economic recovery in the first quarter of 2020 after stagnation in the fourth quarter of 2019. UK Public Sector Net Borrowing stood at around -£10.5 billion in January compared with around -£12 projected.  Markit's Manufacturing Purchasing Managers' Index was expected to drop from 50 – the break-even level 0 to 49.7 points. The Services PMI was projected to slide from 53.9 to 53.4 points. Both indicators rose in January in response to better business sentiment after the elections. The landslide victory of Prime Minister Boris Johnson provided some clarity after substantial Brexit turbulence.  GBP/USD advanced ahead of the publication and topped 1.29. The US dollar is taking a breather from its gains.  Coronavirus headlines continue worrying investors all over the world. 

United Kingdom Markit Services PMI below expectations (53.4) in February: Actual (53.3)

United Kingdom Markit Manufacturing PMI came in at 51.9, above forecasts (49.7) in February

United Kingdom Public Sector Net Borrowing above expectations (£-12.05B) in January: Actual (£-10.538B)

In 2019, Indonesian economic growth decelerated slightly to 5%. A path of growth close to its potential but still insufficient to increase significant

In 2019, Indonesian economic growth decelerated slightly to 5%. A path of growth close to its potential but still insufficient to increase significantly its GDP per capita. Without large structural reforms, Indonesia will grow old before it gets rich, Johanna Melka from BNP Paribas informs. USD/IDR trades at 13814.90. Key quotes “Over the past five years, Indonesia has confirmed its ability to withstand international shocks. Its growth has remained solid and its macroeconomic fundamentals have remained robust.” “Behind these good results lies a more nuanced reality. The main structural constraints on growth are: - The concentration of employment in agriculture - The low level of education of the population in spite of the increase in expenditure - The low share of women in the labour force - Major infrastructure needs - Institutional constraints.” “Several laws will be presented to parliament during the year 2020. The ‘Omnibus law on job creation’ is the most controversial of these. By relaxing the rules governing the Indonesian labour market, it could help to attract more foreign direct investment.”  

The EUR/GBP cross extended its sideways consolidative price action – below the 0.8400 mark – and moved little post-Eurozone PMI prints. Following the

EUR/GBP remains confined in a range despite stronger Eurozone PMI prints.A modest bounce in the pound negated positive factor and capped gains.The fundamental backdrop support prospects for some near-term recovery.The EUR/GBP cross extended its sideways consolidative price action – below the 0.8400 mark – and moved little post-Eurozone PMI prints. Following the previous session's intraday pullback from over one-week tops, the cross was seen oscillating in a narrow trading band through the early European session on Friday. The shared currency found some support from slightly better=than-expected German Manufacturing PMI, which largely negated a slight disappointment from Services PMI. The intraday bid tone remained unabated, rather got an additional boost after the broader Eurozone PMI prints also came in stronger than consensus estimates. The positive factor, however, was largely offset by some recovery witnessed around the British pound and eventually led to a subdued/range-bound price action on the last trading day of the week. Meanwhile, persistent market fears that Britain might crash out of the European Union at the end of the transition period later this year might keep a lid on any runaway rally for the British pound and might assist the cross to built on this week's recovery move from two-month lows. Technical levels to watch  

The single currency is now trading on a better mood and is lifting EUR/USD to fresh daily highs in the 1.00820 zone at the end of the week. EUR/USD up

EUR/USD pushes higher to the 1.0820 region, session highs.Flash manufacturing PMIs in Germany, EMU lift the mood around euro.USD-selling also favours the better tone in the pair.The single currency is now trading on a better mood and is lifting EUR/USD to fresh daily highs in the 1.00820 zone at the end of the week. EUR/USD up on better-than-expected data EUR/USD appears to have stabilized in the lower end of the yearly range around the 1.0800 neighbourhood, always amidst the ongoing alternating risk appetite trends and generalized strength in the buck. In fact, concerns around the Chinese coronavirus (COVID-19) remain far from abated and are expected to keep swinging the mood in the global markets via its impact on economic growth prospects. The greenback, in the meantime, is seeing some profit taking on Friday and allowing some recovery in the risk-associated universe at the same time. The dollar, however, looks well supported by solid results in US fundamentals as of late, coronavirus fears and the steady Fed. The euro met extra buying interest on Friday after German and EMU advanced manufacturing PMIs are seen improving to 47.8 and 49.1, respectively, during February, bettering consensus. Further data in the region showed Italian Industrial New Orders expanded at a monthly 1.4% in December while Industrial Sales contracted 3.0% MoM in the same period. Across the pond, advanced PMIs, Existing Home Sales and another round of Fed-speakers should keep the interest on the buck later in the NA session. What to look for around EUR EUR/USD is seen some light at the end of the tunnel this week on the back of upbeat data in the euro docket, managing at the same time to put further sistance from recent YTD lows in the 1.0780/75 band. As usual, USD-dynamics are expected to keep ruling the pair’s price action for the time being along with the broader risk appetite trends, where the COVID-19 remains in centre stage. On another front, the ECB is expected to finish its “strategic review” (announced at its January meeting) by year-end, leaving speculations of any change in the monetary policy before that time pretty flat. Further out, latest results from the German and EMU dockets continue to support the view that any attempt of recovery in the region remains elusive for the time being and is expected to keep weighing on the currency. EUR/USD levels to watch At the moment, the pair is gaining 0.31% at 1.0817 and faces the next resistance at 1.0879 (2019 low Oct.1) seconded by 1.0892 (23.6% Fibo of the 2020 drop) and finally 1.0981 (monthly low Nov.29 2019). On the downside, a breach of 1.0777 (weekly/2020 low Feb.20) would target 1.0710 (monthly low Jan.5 2016) en route to 1.0569 (monthly low Apr.10 2017).

European banks are still suffering the cost of having reserves despite the tiering imposed by the European Central Bank at the end of last year, Laure

European banks are still suffering the cost of having reserves despite the tiering imposed by the European Central Bank at the end of last year, Laure Baquero from BNP Paribas reports.  Key quotes “Tiering partially exempts excess reserves of the euro area banks from the negative deposit facility rate (-0.5%). It applies within the limit of an amount equal to six times their minimum reserves. Banks whose excess reserves do not exceed this multiple may, in addition, convert all or part of their deposit facility into excess reserves.”  “The amount of the deposit facility of the 19 banking systems in the euro zone decreased by 59% between September and December 2019, falling back to its spring 2016 level.” “We estimate that tiering reduces the cost of negative interests by EUR 4.0 bn in the euro area and EUR 825 m in France. The annual cost of negative interest amounts to EUR 4.7 bn for the euro area banks, including EUR 3.5 bn attributable only to excess reserves and EUR 1.1 bn to the deposit facility.”  

Italy Industrial Orders n.s.a (YoY) came in at 6%, above expectations (-2%) in December

Italy Industrial Sales s.a. (MoM) came in at -3%, below expectations (0.6%) in December

Italy Industrial Orders s.a (MoM) above forecasts (-0.6%) in December: Actual (1.4%)

Italy Industrial Sales n.s.a. (YoY) below expectations (-0.6%) in December: Actual (-1.4%)

European Monetary Union Markit PMI Composite above expectations (51) in February: Actual (51.6)

European Monetary Union Markit Services PMI above forecasts (52.2) in February: Actual (52.8)

European Monetary Union Markit Manufacturing PMI above expectations (47.5) in February: Actual (49.1)

Analysts at Nordea have changed their forecast. They still expect the Fed to cut, but in June, as March is probably too early given the lack of FOMC s

Analysts at Nordea have changed their forecast. They still expect the Fed to cut, but in June, as March is probably too early given the lack of FOMC speak on the subject and the generally positive key figure surprises during the first week of February.  Key quotes “Growth is likely to slow below its potential in the first half of the year. So far, the labour market has held up despite the slowing economy, but we believe it will be a matter of time before the labour market weakens to reflect the slowdown.” “Tapering of the short-term liquidity provisions is planned for the coming months and, in turn, the balance-sheet expansion will be much more moderate.” “Market expectations have moved in favour of rate cuts. Minutes from the January FOMC meeting showed that the Fed attributed the 30bp implied drop in policy rates by year-end at that time as a combination of market participants expecting unchanged rates and seeing risks tilted heavily towards cuts rather than hikes.” “While not in itself an argument for a rate cut, we do believe the market consensus is wrong to believe monetary policy inaction during an election year. The Fed changes policy when policy changes are necessary.”  

The EUR/JPY cross rallied over 50 pips in the last hour and jumped to the top end of its daily trading range, closer to the 121.00 post-German PMIs, a

EUR/JPY found some support near 200-day SMA and reversed an early dip.Stronger German Manufacturing PMI print provided a minor boost to the Euro.The risk-on mood amid coronavirus concerns kept a lid on any further gains.The EUR/JPY cross rallied over 50 pips in the last hour and jumped to the top end of its daily trading range, closer to the 121.00 post-German PMIs, albeit lacked follow-through A fresh wave of the global risk-aversion trade – amid fears a global outbreak of the deadly coronavirus – underpinned the Japanese yen's perceived safe-haven demand and led to the pair's initial downtick to a session low level of 120.36. Bulls still seemed reluctant The cross, however, managed to attract some dip-buying near the very important 200-day SMA and got an additional boost following the release of better-than-expected German Manufacturing PMI, which unexpectedly rose to 47.8 for February. The reading was much better than consensus estimates pointing to a dip to 44.8, from 45.3, and largely offset a slight disappointment from the Services PMI, which fell to 53.3 during the reported month as compared to 53.8 expected and 54.2 previous. Despite the goodish bounce, concerns over deepening economic fallout from the coronavirus outbreak – in particular the export-driven German economy – held investors from placing any aggressive bets and kept a lid on any additional gains. Moving ahead, market participants now look forward to the broader Eurozone Manufacturing and Services PMI prints for a fresh impetus. Apart from this, the broader risk sentiment might further contribute towards producing some short-term trading opportunities. Technical levels to watch  

PGMs prices have been resilient to the impacts of the coronavirus epidemic in China. The slowdown in auto sales due to disruption and shutdowns in Chi

PGMs prices have been resilient to the impacts of the coronavirus epidemic in China. The slowdown in auto sales due to disruption and shutdowns in China have not arrested palladium’s price rally, economists at ANZ Research apprise. Key quotes “China consumes nearly 25% (2,650koz) of total palladium demand, and 80% of this goes to the auto sector.”  “The exposure of PGMs to the auto sector means prices should be vulnerable to auto production disruptions in China and globally. The COVID-19 epidemic and its consequent factory shutdowns have had an impact on the auto sector, globally. A manufacturing hub and major supplier of parts, disruptions in China affect the global supply chain.”   “We don't expect auto manufacturers’ demand for palladium to be dampened as they race to meet tighter emission regulations in Europe and China. This should ultimately see overall demand remain robust as non-Chinese factories boost output.”  

FX Strategists at UOB Group stays constructive on USD/JPY and forecast extra gains on a move above the 122.40 region in the near-term. Key Quotes 24-h

FX Strategists at UOB Group stays constructive on USD/JPY and forecast extra gains on a move above the 122.40 region in the near-term. Key Quotes 24-hour view: “USD surged past 112.00 and hit 112.21 before closing at its highest level since April last year (NY close of 112.11). After the supersized surge over the past couple of days, it is too early to expect a pull-back. From here, USD could move above the 112.21 but there is a solid resistance at 112.40 and this level may not yield so easily. That said, a breach of this major level could lead further rapid rise as the next resistance of note is at 113.00. On the downside, 111.40 is expected to be strong enough to hold any intraday weakness (111.70 is already quite a strong support).” Next 1-3 weeks: “While we indicated yesterday (20 Feb, spot at 111.25) that the “abrupt and powerful rally in USD could extend to 112.00”, the speeded up price action wherein USD rocketed to a high of 112.21 was not exactly expected (USD gained a whopping +2.05% over the past two days, the largest 2-day gain since Sep 2017). From here, all eyes are on the solid mid-term resistance at 112.40. A break of this critical level could spur further USD gains towards 113.30 in the coming days. Only a move below 111.20 (‘strong support’ level was at 110.30 yesterday) would indicate that the current rally has run out of gas.”  

Germany Markit Services PMI below forecasts (53.8) in February: Actual (53.3)

Germany Markit Manufacturing PMI came in at 47.8, above forecasts (44.8) in February

Sweden Capacity Utilization down to -2.1% in 4Q from previous 0.5%

Downside growth risks have risen materially following the COVID-19 outbreak (and spike in domestic cases). Coordinated monetary and fiscal stimulus lo

Downside growth risks have risen materially following the COVID-19 outbreak (and spike in domestic cases). Coordinated monetary and fiscal stimulus looks to be on the cards as analysts at ANZ Research predicts a pre-emptive rate cut.  Key quotes “We now expect the Bank of Korea (BoK) to cut its policy rate to a new record low of 1.00% next week.” “The COVID-19 outbreak has since introduced significant downside risks to South Korea’s growth outlook and a hit to Q1 GDP growth is on the cards. For a start, a drop in Chinese industrial activity will have spillover effects on South Korea’s economic activity via reduced import demand and supply chain disruptions. The tourism sector will also take a significant hit as visitor numbers plummet.” “Monetary policy easing is likely to complement the fiscal push. The spike in local transmission cases this week and the government’s announcement yesterday of tougher lending rules to stabilise the housing market may convince the BoK to pull the trigger sooner rather than later.”  

-- more to come Markit's preliminary Manufacturing Purchasing Managers' for February was expected to drop from 45.3 to 44.8 points – below the 50-poi

Markit's German Manufacturing PMI for February beat estimates with a score of 47.8 points, far above 44.8 expected and 45.3 recorded in January. The score remains below 50 – reflecting ongoing albeit slower contraction in the eurozone's largest economy's industrial sector.  The services PMI dropped to 53.3 points, below 53.8 estimated by economists.  EUR/USD has jumped to 1.0818, advancing from a daily low of 1.0783.  -- more to come Markit's preliminary Manufacturing Purchasing Managers' for February was expected to drop from 45.3 to 44.8 points – below the 50-point threshold separating expansion and contraction. The Services PMI was projected to slide from 54.2 to 53.8 points. Earlier, the French Manufacturing PMI dropped to 49.7, worse than 50.7 expected. The Services PMI in the euro area's largest economy jumped to 52.6 against 51.3 expected.  EUR/USD has been consolidating its losses around 1.08 ahead of the publication. The US dollar has been storming the board amid coronavirus fears, upbeat American economic performance, and the Federal Reserve's reluctance to cut rates.

Germany Markit PMI Composite above expectations (50.8) in February: Actual (51.1)

According to CME Group’s preliminary prints for Copper futures markets, open interest resumed the upside on Thursday, increasing by around 1.6K contra

According to CME Group’s preliminary prints for Copper futures markets, open interest resumed the upside on Thursday, increasing by around 1.6K contracts following Wednesday’s pullback. Volume, instead, decreased for the second session in a row, this time by around 8.3K contracts. Copper does not rule out a move lower Negative price action in the base metal on Thursday plus rising open interest advocate for the continuation of the corrective downside in the short-term horizon. That said, another visit to 2020 lows in the 2.48 region should not be discarded just yet.

South Korea has updated its count of coronavirus cases with 48 new infections. The total has now reached 204 in the Asian nation. Seoul previously rep

South Korea has updated its count of coronavirus cases with 48 new infections. The total has now reached 204 in the Asian nation. Seoul previously reported two deaths from the respiratory disease and has also said that the illness reached military bases. Authorities have designated two cities, Daegu and Cheongdo, as special care zones due to a high number of cases. Korean airlines have announced further reductions in flights to China and to other Asian destinations. Markets are growingly concerned with the spread of the coronavirus to South Korea and Japan, countries which have close trade links to China.  Concerns about the human and economic impact of the outbreak are weighing on sentiment. S&P futures are down and gold – a safe-haven – has been extending its gains, reaching a peak above $1,636 at the time of writing. The precious metal trades at the highest since 2013.

The unemployment rate lifted to 5.3% in January paving the way for a rate cut by the Reserve Bank of Australia (RBA) in the second quarter of the year

The unemployment rate lifted to 5.3% in January paving the way for a rate cut by the Reserve Bank of Australia (RBA) in the second quarter of the year, according to strategists at ANZ. AUD/USD trades at 0.659 after falling in recent days. Key quotes “In his speech on 5 February, the RBA Governor said that, ‘the balance of arguments would change’ in favour of a rate cut, if ‘the unemployment rate were to be trending in the wrong direction and there was no further progress being made towards the inflation target.’  We are closer to the first condition being met after the unemployment rate jumped to 5.3% in January.”  “ANZ data suggest the drop in international travel is bigger than can be explained simply by the ban on travellers from China. What’s more, the ANZ Stateometer points to a loss of momentum in some states in late 2019. The ANZ Labour Market Indicator tells a similar story about a loss of momentum.”  “Weakness in the AUD may provide some offsetting stimulus, but we think an RBA rate cut in Q2 remains more likely than not.”  

In light of the recent price action, the next move in NZD/USD could be a test of the 0.6270 region, suggested FX Strategists at UOB Group. Key Quotes

In light of the recent price action, the next move in NZD/USD could be a test of the 0.6270 region, suggested FX Strategists at UOB Group. Key Quotes “We expected NZD to ‘edge downward towards 0.6365’ yesterday but it sliced through the support and plummeted to a low of 0.6325. While severely oversold, the decline in NZD has scope to probe the 0.6300 first before stabilization can be expected. Resistance is at 0.6350 but only a move above 0.6365 would indicate the current downward pressure has eased.” Next 1-3 weeks; “Our view from Wednesday (19 Feb, spot at 0.6390) wherein NZD ‘has to close below the solid 0.6375 support or the next level at 0.6325 may not come into the picture’ became outdated quickly as NZD plunged and touched 0.6325 yesterday (20 Feb). The outsized drop of - 0.83% (NY close of 0.6332) suggests further NZD weakness is likely. The next support is at 0.6270. On the upside, the ‘strong resistance’ at 0.6380 is unlikely to come under threat, at least for the next few days.”

The GBP/JPY cross edged lower on Friday and dropped to fresh session lows, below the 144.00 mark, erasing the previous session's gains to YTD tops. Ha

GBP/JPY retreats from YTD tops amid reviving safe-haven demand for the JPY.No-deal Brexit fears weighed on the GBP and prompted some long-unwinding.Investors now look forward to the flash UK PMI prints for some trading impetus.The GBP/JPY cross edged lower on Friday and dropped to fresh session lows, below the 144.00 mark, erasing the previous session's gains to YTD tops. Having witnessed some heavy selling over the past two trading sessions, the Japanese yen (JPY) found some respite on the last trading day of the week amid the prevailing risk-off mood. The World Health Organization warned that a global outbreak of the deadly coronavirus could happen at any time. GBP/JPY weighed down by a combination of factors The latest warning by the 
fueled pessimism about the global growth outlook. Adding to the market concerns was the rise in the number of newly infected cases outside mainland China – South Korea and Japan. This eventually weighed on investors' sentiment and benefitted the JPY's perceived safe-haven status. Apart from the global flight to safety, persistent worries that Britain might crash out of the European Union at the end of the transition period continued undermining the British pound and further prompted some long-unwinding trade on the last day of the week. Moving ahead, market participants now look forward to Friday's important UK macro data, the flash version of manufacturing and services PMI, which should play a key role in driving the sentiment surrounding the sterling and produce some meaningful intraday trading opportunities. Technical levels to watch  

France Markit PMI Composite came in at 51.9, above expectations (51) in February

France Markit Services PMI came in at 52.6, above forecasts (51.3) in February

France Markit Manufacturing PMI below forecasts (50.7) in February: Actual (49.7)

The NZD/USD pair continued struggling as the US dollar is not losing strength. Analysts at ANZ Research comment on the situation of the cross. Key quo

The NZD/USD pair continued struggling as the US dollar is not losing strength. Analysts at ANZ Research comment on the situation of the cross. Key quotes “USD strength continued overnight and a test of key NZD support around 0.63 is in sight.”  “A combination of strong US data and anxiety over COVID-19 are supporting this purple patch for the USD. Whilst we are cognisant of market positioning, there seems little that can turn the USD’s trend around just now.” “Support 0.6300 Resistance 0.6425”  

EUR/JPY has shot aggressively higher and has eroded the mid-October high at 121.47. Analysts at Commerzbank set the next resistances to watch in the p

EUR/JPY has shot aggressively higher and has eroded the mid-October high at 121.47. Analysts at Commerzbank set the next resistances to watch in the pair.  Key quotes “We await a close above 121.47 to confirm the break higher. But for now, our attention is on the 122.63/88 the recent high, it is possible that this will hold the initial test. Above here will target 123.68, the 2018-2020 downtrend.” “Raise the stop to 120.00. Exit 122.50.”  

The spreading coronavirus and its consequences have brought new uncertainty to a global economy that was already showing some signs of improving momen

The spreading coronavirus and its consequences have brought new uncertainty to a global economy that was already showing some signs of improving momentum. In this environment, the USD will remain supported, according to analysts at Nordea.  Key quotes “The Corona virus and continued weak Chinese figures will likely keep USD/CNY elevated until sometime during Q2. This is generally good news for long USD positions against EUR, AUD, GBP (etc) as well.”  “We see a strong USD against most currencies in our forecast until at least mid-year. The Corona virus is more of an issue for the EUR than the USD given that the EUR is closer linked to world trade.” “The Wuhan virus also increases the risk of a trade war 2.0 (since China simply cannot comply with the deal due to current shutdown), which we decide to reflect in 2021 forecasts through a lower EUR/USD forecast than seen earlier.” “Our main market take away is that the US outperformance narrative will likely stay intact, since e.g. Germany is relatively worse off than US due to the Chinese close-down. This also leaves us in the upper part of the USD smile during Q1 and into Q2. USD stronger for longer.”  

Austria HICP (YoY): 2.2% (January) vs 1.8%

Austria HICP (MoM) fell from previous 0.7% to -0.7% in January

Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, cannot assure if the cable is marking a top or not. Failure at the 55 day ma h

Karen Jones,  Team Head FICC Technical Analysis Research at Commerzbank, cannot assure if the cable is marking a top or not. Failure at the 55 day ma has moved to the downside. Key quotes “Having failed at the 55 day moving average at 1.3055 and the short term downtrend at 1.3075, the risk has shifted to the downside.” “The intraday Elliott wave is implying that this is the end of the move, the RSI has not confirmed the new low and we have not closed below the 1.2872 low.”  “For today we suspect a bounce higher, beyond that we are neutral.”  

The EUR/USD pair consolidated its recent losses to multi-month lows and remained confined in a narrow trading band, around the 1.0800 mark for the sec

The EUR/USD pair consolidated its recent losses to multi-month lows and remained confined in a narrow trading band, around the 1.0800 mark for the second consecutive session on Thursday. Haresh Menghani, an analyst at FXStreet, analyzes EUR/USD from a technical perspective.  Key quotes “Nothing seems to have changed and EUR/USD is unable to register any meaningful recovery suggesting that the near-term bearish pressure might still be far from being over.” “Some follow-through weakness below a one-year-old ascending trend-channel support, currently near the 1.0775-70 region, will reinforce the negative outlook and turn the pair vulnerable to accelerate the fall further towards the 1.0700 round-figure mark.” “Some follow-through buying might trigger some near-term short-covering move and assist the pair to aim back towards reclaiming the 1.0900 mark with some intermediate resistance near the 1.0870-75 region.

USD/JPY has eroded the 2015-2020 downtrend and the move has been pretty dynamic. Karen Jones from Commerzbank takes a look at the main levels to watch

USD/JPY has eroded the 2015-2020 downtrend and the move has been pretty dynamic. Karen Jones from Commerzbank takes a look at the main levels to watch in the USD/JPY pair.  Key quotes “We ideally will need to see a weekly close above 110.31 to confirm the break, but for now while dips hold above 109.66 an immediate upside bias is maintained and only below the 108.70 uptrend would upside pressure abate.” “Key resistance eroded, initial target 112.43/50.”  “The move higher targets 114.55, the 2018 high.”  

Gold continued scaling higher through the early European session on Friday and jumped to fresh seven-year tops, around the $1635 region in the last ho

Gold extended its recent bullish run and climbed to fresh seven-year tops on Friday.Concerns over the spread of coronavirus benefitted the commodity's safe-haven status.Sliding US bond yields kept the USD bulls on the defensive and remained supportive.Gold continued scaling higher through the early European session on Friday and jumped to fresh seven-year tops, around the $1635 region in the last hour. The latest warning by the World Health Organization warned that a global outbreak of the deadly coronavirus could happen at any time further fueled pessimism about the global growth outlook. The bullish run remains uninterrupted Adding to the concerns was the rise in the number of newly infected cases outside mainland China – South Korea and Japan. This weighed heavily on investors' sentiment and triggered a fresh wave of risk-aversion trade. The same was evident from a sea of red across global equity markets, which eventually provided a strong boost to traditional safe-haven assets and assisted the precious metal to add to its recent strong gains. The global flight to safety was further reinforced by a sharp fall in the US Treasury bond yields, which provided an additional boost to the non-yielding metal and contributed to the prevailing bullish tone. Meanwhile, a subdued US dollar price action, which tends to influence demand for the dollar-denominated commodity, did little to hinder the ongoing momentum to the highest level since February 2013. Given this week's strong rally of around 3.5%, extremely overbought conditions might turn out to be the only factor that might keep a lid on any further gains, or prompt some profit-taking on the last day of the week. Technical levels to watch  

EUR/GBP has seen an aggressive rally higher, which has so far been contained by the 20 day ma at .8411. Karen Jones, Team Head FICC Technical Analysis

EUR/GBP has seen an aggressive rally higher, which has so far been contained by the 20 day ma at .8411. Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, advises the next movements in the pair. Key quotes “It has once again focussed our attention onto the downtrend at .8457. Rallies will need to overcome the downtrend for attention to revert to the .8606/10 nearby resistance. A close above .8610 is needed to negate downside pressure and re-target the .8754 200 day ma.” “Reinstate tiny shorts on rallies to .8450, stop .8463.”  

Friday’s focus will be on the flash PMI prints from the Eurozone and the US after the EUR/USD pair continued with its struggle to register any meaning

Friday’s focus will be on the flash PMI prints from the Eurozone and the US after the EUR/USD pair continued with its struggle to register any meaningful recovery, Haresh Menghani from FXStreet reports. Key quotes “The Philly Fed Manufacturing index surpassed even the most optimistic estimates and surged to 36.7 in February from 17 previous – marking the highest reading since February 2017.”  “The shared currency remained depressed amid pessimism about the Eurozone economic fallout from the coronavirus outbreak – in particular the export-driven German economy.” “Weaker incoming economic data seemed to have fueled speculations for further policy easing by the European Central Bank.” “The market focus will be on the flash version of the Eurozone PMI prints. Softer readings might be enough to dent the already weaker sentiment surrounding the shared currency and prompt some fresh selling.  “Later during the early North-American session, the US flash Manufacturing PMI will influence the USD price dynamics and further contribute towards producing some meaningful trading opportunities on the last day of the week.”  

According to flash figures from CME Group for Crude Oil futures markets, traders trimmed their open interest positions for yet another session on Thur

According to flash figures from CME Group for Crude Oil futures markets, traders trimmed their open interest positions for yet another session on Thursday, this time by around 15.5K contracts. Volume, instead, rose by around 14.7K contracts, reversing the previous drop. WTI seen struggling around $56.40 Prices of the WTI charted a ‘doji-like’ day on Thursday, fading the uptick to fresh tops above the $54.00 mark per barrel. The continuation of the downtrend in open interest amidst the current recovery notes that the upside momentum could run out of steam in the near-term. That said, rallies should find solid resistance in the $56.40 region, where sits the 200-day SMA.

Open interest and volume in Gold futures markets rose on Thursday by around 8.6K contracts and nearly 104.7K contracts according to preliminary data f

Open interest and volume in Gold futures markets rose on Thursday by around 8.6K contracts and nearly 104.7K contracts according to preliminary data from CME Group. Gold points to extra gains Prices of the ounce troy of Gold managed to clear the key barrier T $1,600 and are edging higher amidst new 2020 highs. Rising open interest and volume coupled with positive price action in the precious metal favour the continuation of the move up to, initially $1,685/oz, February 2013 highs.

The AUD/USD pair dropped to fresh 11-year lows in the last hour, with bears now looking to extend the downfall further below the 0.6600 round-figure m

AUD/USD added to its recent losses and remained depressed on Friday.The coronavirus scare continues to weigh on the China-proxy aussie.Subdued USD demand, amid sliding US bond yields, fails to lend support.The AUD/USD pair dropped to fresh 11-year lows in the last hour, with bears now looking to extend the downfall further below the 0.6600 round-figure mark. The pair extended its recent bearish trajectory and continued losing ground on the last trading day of the week. A fresh wave of the global risk-aversion trade – amid persistent worries over the deadly coronavirus – was seen as one of the key factors driving flows away from perceived riskier currencies, including the Australian dollar. Bears remain in control Concerns over deepening economic fallout from the coronavirus outbreak resurfaced on Friday after the World Health Organization (WHO) officials warned the novel coronavirus could break out globally. This eventually fueled pessimism about the Chinese growth outlook and further undermined the China-proxy aussie. On the other hand, the US dollar consolidated its recent strong gains to multi-year tops and remained well supported by the incoming stronger-than-expected US economic data. Meanwhile, the increased haven demand for the US Treasuries held the USD bulls on the defensive, albeit failed to lend any support to the pair. The ongoing downward momentum also seemed rather unaffected by extremely oversold conditions, suggesting that the near-term bearish pressure might still be far from being over. Hence, some follow-through weakness, led by some fresh technical selling below the 0.6600 mark, now looks a distinct possibility. Later during the early North-American session, the US economic docket – highlighting the release of flash Manufacturing PMI – might influence the USD price dynamics and produce some meaningful trading opportunities or provide some immediate respite to the bulls. Technical levels to watch  

In opinion of FX Strategists at UOB Group, Cable could extend the leg lower to the 1.2800 zone if 1.2840 is cleared. Key Quotes 24-hour view: “We high

In opinion of FX Strategists at UOB Group, Cable could extend the leg lower to the 1.2800 zone if 1.2840 is cleared. Key Quotes 24-hour view: “We highlighted yesterday the weakness in GBP ‘is likely aiming for the month-to-date low of 1.2873’ but held the view that the ‘next support at 1.2840 is unlikely to come into the picture’. Our expectation was not wrong as GBP dropped to an overnight low of 1.2849 before staging a mild recovery to end the day at 1.2879. While downward momentum has eased somewhat, there is room for GBP to test 1.2840 before a more sustained recovery can be expected (next support at 1.2800 is not likely to come into the picture). On the upside, a break of 1.2925 would indicate the current downward pressure has eased (minor resistance is at 1.2905).” Next 1-3 weeks: “As highlighted, GBP is under mild downward pressure and could edge lower to 1.2840. GBP subsequently dropped to a low of 1.2849. The pace of the decline is faster than anticipated and from here, a break of 1.2840 would lead to further weakness to 1.2800 (we held the view yesterday that 1.2800 is likely out of reach). All in, GBP is expected to trade on the back foot unless it can move above 1.2960 (‘strong resistance’ level was at 1.3020 yesterday).”

Egypt CBE Interest Rate Decision in line with forecasts (12.25%)

The USD/JPY pair edged lower on the last trading day of the week and eroded a part of the previous day's strong gains to near 10-month tops. The globa

USD/JPY witnesses some long-unwinding following the two days of upsurge.A turnaround in the risk sentiment underpinned the JPY’s safe-haven status.Sliding US bond yields led to a subdued USD demand and did little to support.The USD/JPY pair edged lower on the last trading day of the week and eroded a part of the previous day's strong gains to near 10-month tops. The global risk sentiment was knocked down on Friday after the World Health Organization (WHO) officials warned the new coronavirus could break out globally at any time. Following two days of heavy selling, the Japanese yen found some respite from the prevailing risk-off mood. The downside seems limited The global flight to safety was further reinforced by a sharp fall in the US Treasury bond yields, which forced the US dollar to consolidate its recent strong gains to multi-year tops and eventually prompted some long-unwinding trade during the Asian session on Friday. The pair has now retreated back below the 112.00 round-figure mark, albeit the downside is likely to remain cushioned, all against the backdrop of the recent weakness in the Japanese macro data and mounting concerns over deepening economic fallout from the coronavirus outbreak. Hence, it will be prudent to wait for some strong follow-through selling before confirming that the recent strong positive move might have already run out of the steam and positioning for any meaningful corrective slide ahead of the flash version of the US Manufacturing PMI for February. Technical levels to watch  

In light of advanced data for JPY futures markets from CME Group, open interest rose for the third session in a row on Thursday, this time by around 3

In light of advanced data for JPY futures markets from CME Group, open interest rose for the third session in a row on Thursday, this time by around 3.2K contracts. In the same line, volume extended the uptrend and increased by around 20.7K contracts. USD/JPY a move above 112.00 is on the cardsUSD/JPY saw its upside quickly accelerated in the last couple of sessions. The backdrop of rising open interest and volume favours extra retracements in the Japanese safe haven, thus opening the door for the pair’s move further north of the 112.00 mark in a more sustainable fashion.

According to FX Strategists at UOB Group, there is still scope for EUR/USD to grind lower to the 1.0770 region ahead of 1.0740. Key Quotes 24-hour vie

According to FX Strategists at UOB Group, there is still scope for EUR/USD to grind lower to the 1.0770 region ahead of 1.0740. Key Quotes 24-hour view: “EUR edged below the bottom of our expected sideway-trading range of 1.0785/1.0830 (low of 1.0775) before settling at 1.0783 (- 0.19%). While it is too early to expect a bottom, the combination of waning momentum and oversold conditions suggest EUR is likely to struggle to extend its decline. From here, there is chance for EUR to dip below the major 1.0770 support but a sustained drop below this level is not expected (next support is at 1.0740). Resistance is at 1.0805 followed by 1.0820.” Next 1-3 weeks: “EUR registered the thirteen straight days of ‘lower low’ yesterday (albeit marginally) as it touched 1.0775. Our latest narrative from Wednesday (19 Feb, spot at 1.0795) still stands. As highlighted, the weak phase that started earlier this month has not stabilized. That said, downward momentum appears to be struggling and EUR has to break the major 1.0770 support before a move to 1.0740 can be expected. On the upside, the ‘strong resistance’ level has moved lower to 1.0845 from 1.0860. A breach of the ‘strong resistance’ would indicate the current weakness in EUR has run its course.”

CME Group’s preliminary readings for GBP futures markets noted investors added just 172 contracts to their open interest positions on Thursday. On the

CME Group’s preliminary readings for GBP futures markets noted investors added just 172 contracts to their open interest positions on Thursday. On the flip side, volume dropped for the second session in a row, this time by nearly 5.5K contracts. GBP/USD looks cautiousCable’s daily pullback on Thursday was accompanied by a marginal uptick in open interest while volume descended for yet another session. That said, the likeliness of extra losses looks thin, while the recent area of YTD lows in the mid-1.2800s emerges as a solid support for the time being.

The Bank of Japan (BoJ) Governor Haruhiko Kuroda was out with some comments in the last hour saying that the Government and central bank economic fore

The Bank of Japan (BoJ) Governor Haruhiko Kuroda was out with some comments in the last hour saying that the Government and central bank economic forecasts are based on different assumptions. Additional quotes: Generally, the BoJ CPI view ends up being higher than the government. Believe that the BoJ shouldn't have exactly the same view as the government. Commenting on the monetary policy, Kuroda further added: Don't think another comprehensive review of monetary policy is needed after the BoJ conducted in 2016. Not considering carrying out IMF's proposals such as re-defining 2% inflation target at the moment.

Economist Ho Woei Chen, CFA, at UOB Group, reviewed the recent decision by the PBoC to cut interest rates. Key Quotes “The People’s Bank of China (PBo

Economist Ho Woei Chen, CFA, at UOB Group, reviewed the recent decision by the PBoC to cut interest rates. Key Quotes “The People’s Bank of China (PBoC) cut the Loan Prime Rate (LPR) … after keeping it steady in the last two months… This follows the 10 bps cut to the 1Y Medium-term Lending Facility (MLF) rate to 3.15% on Monday (17 February) and similar moves on the 7-day reverse repo and 14-day reverse repo rates on 3 February, to 2.40% and 2.55% respectively.” “As the LPR is pegged to the MLF, a direct cut to the MLF rate clearly signals the PBoC’s intention to lower domestic funding costs including for longer tenor loans (i.e. 5Y & above LPR).” “After the cut, we still anticipate further lowering of the LPR to cushion the economy from the novel coronavirus (COVID-19) outbreak. For now, we expect the 1Y LPR to fall to 3.95% by end-1Q20 which factors in another 10bps cut in March. Consistent with our view of a peaking of COVID-19 cases by end-April, we expect a further 15bps cut to the 1Y LPR in 2Q20 (-10bps in April and -5bps in May) to bring the rate to 3.80% by 2Q20.”  

AUD/USD has been extending its decline to the lowest levels since 2009 amid the coronavirus scare and disappointing Australian jobs figures. After dip

AUD/USD has been extending its decline to the lowest levels since 2009 amid the coronavirus scare and disappointing Australian jobs figures. After dipping below 0.66, where next for the Aussie? The Technical Confluences Indicator is showing that the A$ is struggling around 0.6598, which is the convergence of the Bollinger Band 1h-Lower and the BB 4h-Lower.  The most significant support line awaits at 0.6572, which is the meeting point of the Pivot Point one-week Support 3 and the PP one-month S1. Robust resistance awaits at 0.6609, which is a dense cluster of lines including the Fibonacci 161.8% one-week, the Simple Moving Average 5-1h, the SMA 10-1h, and the previous daily low.  Further up, 0.6642 is the upside target, a point where the Fibonacci 38.2% one-day, the SMA 10-4h, the BB one-day Lower, and the BB 1h-Upper all meet.  Here is how it looks on the tool:   Confluence Detector The Confluence Detector finds exciting opportunities using Technical Confluences. The TC is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies. This tool assigns a certain amount of “weight” to each indicator, and this “weight” can influence adjacents price levels. These weightings mean that one price level without any indicator or moving average but under the influence of two “strongly weighted” levels accumulate more resistance than their neighbors. In these cases, the tool signals resistance in apparently empty areas. Learn more about Technical Confluence

Open interest in EUR futures markets shrunk by around 1.6K contracts on Thursday, reversing the previous day’s build according to flash data from CME

Open interest in EUR futures markets shrunk by around 1.6K contracts on Thursday, reversing the previous day’s build according to flash data from CME Group. On the other hand, volume rose by around 55.6K contracts, extending the erratic performance seen as of late. EUR/USD looks (well?) supported around 1.0780 A deeper pullback in EUR/USD has started to lose traction on the back of declining open interest, leaving the current YTD low near 1.0780 as quite a decent contention zone. Choppy activity in volume, could also add some consolidation at current levels.

With the coronavirus spreading outside China, global risk-tone turned heavier during the Asian session on Friday. Among the latest major victims outsi

Coronavirus continues to dent the global trade sentiment following the surge in numbers from the ex-China Asian economies.MSCI’s index of Asia-Pacific shares outside Japan drops 0.60%.Global PMIs are in focus while updates concerning the epidemic will the key to follow.With the coronavirus spreading outside China, global risk-tone turned heavier during the Asian session on Friday. Among the latest major victims outside Bejing are Japan, South Korea and Singapore that threatened trade sentiment off-late. While portraying the same, the MSCI index of Asia-Pacific shares outside Japan rise drop 0.60% whereas Japan’s NIKKEI lose 0.12% by the press time. Further, Malaysia’s Jakarta Composite declines 0.60% with South Korea’s KOSPI losing more than 1.12% to 2,170 by the time of writing. Moving on, the Indian markets are off but Chinese benchmarks register mixed moves as Commerce Ministry of the dragon nation reiterated the readiness to counter the epidemic. Global Times cited the US military’s step-back from South Korea whereas Reuters said, “the International Air Transport Association (IATA) estimated losses for Asian airlines alone could amount to almost $28 billion this year, with most of that in China.” The risk-off pushed gold further upwards to refresh seven-year highs whereas USD/JPY stepped back from further advances despite mixed figures from Japanese PMI and inflation data. The US 10-year treasury yields slip below 1.50% while that of 30-year revisited September 2019 low. The same also negatively affected Crude that was previously questioning the four-week top. It’s worth mentioning that Wall Street benchmarks registered noticeable losses by the end of their Thursday's trading session. Looking forward, the preliminary activity numbers from the Eurozone and the US will be observed to gauge the impact of the deadly coronavirus on the global powerhouses.

Senior Economist Alvin Liew at UOB Group assessed the recently published FOMC minutes for the January 28-29 meeting. Key Quotes “In the January 2020 F

Senior Economist Alvin Liew at UOB Group assessed the recently published FOMC minutes for the January 28-29 meeting. Key Quotes “In the January 2020 FOMC minutes release (19 Feb), the Federal Reserve officials ‘concurred that maintaining the current stance of policy would give the Committee time for a fuller assessment of the ongoing effects on economic activity of last year's shift to a more accommodative policy stance’ and viewed current stance of monetary policy as likely to remain appropriate 'for a time', indicating they could leave interest rates unchanged for a few months.” “That said, the discussion inside the minutes mentioned the coronavirus (COVID-19) eight times, with the virus outbreak warranting ‘close watching’, and therefore in our view, prominently outlining the risk as the latest threat to global and US growth (even though the Fed only had a week to assess the COVID-19 risk in the 28/29 Jan FOMC after the coronavirus news hit the wires).” “Besides the COVID-19 virus risk, Fed policy makers continued to hold a positive growth outlook… The FOMC participants cited easing of trade tensions, receding risks from Brexit and stabilizing global growth as reducing downside risks but generally expected trade uncertainty to remain somewhat.” “The minutes also indicated support for a mild overshoot of the 2% inflation target… This suggests that the Fed have not seen the need to pre-empt rising prices. Recall during FOMC Chair Powell’s post-FOMC press conference, he emphasized the Fed’s dissatisfaction with inflation running below 2%.” “The Fed officials also discussed substantively about the possibility of transforming their inflation target into a range within their ongoing framework review which began early last year (2019), a review meant to assess whether the Fed has the right tools and strategies to deal with persistently low interest rates and low inflation." “In contrast to the market view of a more prolonged Fed pause… we still expect the Fed to implement the next 25bps rate cut in 1Q 2020 at the March FOMC as another insurance cut in view of the potential risks of US trade policy uncertainties, Middle East geopolitical tensions and the latest being the coronavirus outbreak in China. Conversely, if all these risk factors do not materialize, then the “insurance” cut will be unnecessary. The view remains for the Federal Reserve to keep policy rates low or even lower in 2020.”

Here is what you need to know on Friday, February 21: The coronavirus continues taking its human and economic toll. China has reported a plunge of 92%

Here is what you need to know on Friday, February 21: The coronavirus continues taking its human and economic toll. China has reported a plunge of 92% in car sales in the first half of February and it halted most freight trains heading to Europe while it urges companies to return to normal and promises support. Japan will cancel or postpone any outdoor events in the next three weeks. The US has issued a travel warning to the country. South Korea has confirmed infections among the military and its airlines will suspend more flights. The nation also designated two cities as "special care zones." The market mood is mildly adverse as the weekend draws near, with the US dollar holding onto most of its gains. Gold prices continue soaring above $1,620, the highest in seven years. The Japanese yen has found its feet after the massive sell-off. See US Dollar Strength: About more than the coronavirus' contagionJapanese inflation has risen, but when stripping the effect of the sales tax hike, it remains barely above 0%. Preliminary Purchasing Managers' Indexes in Japan have dropped below 50, indicating ongoing contraction after the country reported a plunge in fourth-quarter growth. Eurozone PMs and especially the German Manufacturing PMI stand out in the European morning. Economists expect a slide in almost all the forward-looking measures amid the coronavirus outbreak. The European Central Bank's meeting minutes published on Thursday reflected the cautious optimism previously conveyed by policymakers. Germany's finance ministry said that the outlook for trade remains weak. EUR/USD has filled the 2017 "Macron Gap by hitting 1.0777 and has since stabilized.  See Eurozone PMI Preview: Triggering the next EUR/USD fall? Low expectations may be too highUK PMIs are set to decline in the initial read for February after enjoying a "Boris Bounce" in January – businesses responded positively to Prime Minister Boris Johnson's victory. Thursday's publication of better than expected retail sales for January failed to trigger a meaningful rally. GBP/USD succumbed to dollar strength and hit the lowest since November before stabilizing.AUD/USD has fallen below 0.66, reaching the lowest since 2009. Coronavirus fears, dollar strength, a rise in Australia's jobless rate and finally the slide in its preliminary PMIs below 50 points – implying contraction – have been weighing on the Aussie. Canadain retail sales figures for December are set to show modest increases. The loonie has stabilized above 1.32. Oil prices are off their highs triggered by a smaller than expected increase in crude oil inventories. WTI is below $54 after topping that level.Cryptocurrencies have recovered from a sell-off earlier this week, with Bitcoin trading near $9,700. 

The greenback, when measured by the US Dollar Index (DXY), is trading on the defensive near 99.80 following three consecutive daily advances. US Dolla

DXY gives away some gains and stabilizes around 99.80.Coronavirus fears re-emerged and dragged US yields lower.Advanced PMIs, Existing Home Sales, Fedspeak next on tap.The greenback, when measured by the US Dollar Index (DXY), is trading on the defensive near 99.80 following three consecutive daily advances. US Dollar Index upside stalled just ahead of 100.00 The index is shedding part of the strong gains posted recently and is returning to the 99.80 region at the end of the week, all following Thursday’s new yearly highs just below the psychological 100.00 mark. In the meantime, fears around the Chinese coronavirus have re-emerged on Thursday, putting US yields under extra downside pressure and keeping the buck well bid in the upper end of the multi-month range. The offered bias in the dollar is also following a knee-jerk in USD/JPY after speculations that the Japanese economy con slip into recession (in the short-term) sponsored a sharp sell-off in the currency to fresh 10-month lows vs. the greenback. In the US data space, flash manufacturing and services PMIs are due along with Existing Home Sales. In addition, Dallas Fed R.Kaplan will speak in Dallas, FOMC’s L.Brainard (permanent voter, dovish) and Atlanta Fed R.Bostic (2021 voter, centrist) will participate in a Panel Policy Forum and FOMC’s R.Clarida (permanent voter, dovish) and Cleveland Fed L.Mester (voter, hawkish) will discuss Monetary Policy in a Panel. What to look for around USD The index has extended the march north to new 2020 highs just below 100.00 the figure on Thursday, keeping the bid bias well in place for the time being. Investors are expected to keep looking to the performance of US fundamentals and the broader risk appetite trends for direction as well as any fresh developments from the COVID-19. In the meantime, the outlook on the dollar remains constructive and bolstered by the current “appropriate” monetary stance from the Fed (once again confirmed at the FOMC minutes on Wednesday) vs. the broad-based dovish view from its G10 peers, the “good shape” of the domestic economy, the buck’s safe haven appeal and its status of “global reserve currency”. US Dollar Index relevant levels At the moment, the index is retreating 0.08% at 99.80 and faces the next support at 98.94 (23.6% Fibo retracement of the 2020 rally) seconded by 98.54 (monthly high Nov.29 2019) and then 98.46 (38.2% Fibo retracement of the 2020 rally). On the other hand, a break above 99.91 (2020 high Feb.20) would aim for 100.00 (psychological barrier) and finally 101.34 (monthly high Apr.10 2017).

Friday’s Asian session continues to follow the previous day’s coronavirus-led risk-off as numbers outside China pose a serious challenge to the global

Friday’s Asian session continues to follow the previous day’s coronavirus-led risk-off as numbers outside China pose a serious challenge to the global economies. Also increasing the risk-off could be travel warnings from the US as well as China’s dislike of the Trump administration’s latest push towards trade/tech measures. Furthermore, Japanese policymakers and the German Finance Ministry also crossed wires to convey fears of the Chinese contagion whereas China’s Commerce Ministry stood ready to counter the contagion with measures required. While seeing it from the market’s perspective, Asian equities followed the footsteps of Wall Street but off in India and a lack of major data during the early day seem to have restricted the reaction. The US 30-year treasury yields revisited September 2019 low while the 10-year coupon dropped below 1.5%. Gold refreshes the seven-year top to near $1,630 whereas AUD/USD struggles around 0.6600. However, USD/JPY refrained to extend the previous day’s run-up despite mixed economic outcomes from inflation and activity measures. The US Dollar Index awaits fresh moves to rise beyond 99.91 whereas Crude prices also step back from the four-week top. Additionally, EUR/USD remained mildly positive around 1.0800 while NZD/USD extended losses to 0.6300 as RBNZ’s Orr spread worries despite terming the present policy as favorable. Main topics in AsiaUS wields trade stick on China amid epidemic – Global TimesChina’s CommerceMin: Accelerating plans for further measures to support firms and economyGerman FinMin: Coronavirus poses risk for German trade in coming monthsSafe haven flows to continue until coronavirus contained – ReutersUS-India trade deal unlikely before Trump's India visit - ReutersReuters poll: Chances of disorderly UK exit from European union at 25% (20% in Jan poll)US 30-year Treasury yield drops to lowest since SeptemberJapan Economy Minister, Nishimura: Think the weak yen is a reflection of a strong US economyBoJ governor Kuroda: We are ready to act, but do not believe it is needed nowJapan Finance Minister Aso: Won't comment on forex levels – ReutersJapan's core consumer prices rose 0.8 percent in January from a year earlier - ReutersChina's Hubei province confirms 411 new cases of coronavirus, and 115 new deaths as of Feb 20RBNZ Orr: In favourable position with OCR at 1%Ireland Taoiseach Leo Varadkar resigns after inconclusive election result – Sky NewsUS State Department: Reconsider travel by cruise ship to or within East Asia and the Asia-Pacific regionKey focus ahead Markets are gearing for the preliminary activity numbers for February and Germany will be the first one to cross the wires. While the recent confidence index from the Euro area has been positive, overall stats from the region keep flashing worries concerning the region’s economic strength. Following that, activity numbers from the Eurozone and the UK will be the keys to watch while Canadian Retail Sales, the US Existing Home Sales and the US PMIs will entertain the market players. It should, however, be noted that updates concerning the coronavirus will keep the driver’s seat. When are the German/ Eurozone flash PMIs and how could they affect EUR/USD? Expectations regarding the growth of Germany’s export-oriented sectors of the economy have dropped sharply amid coronavirus outbreak, a recently released Zew survey of the financial market experts showed. The recession fears would be bolstered if the German data prints below estimates. That will likely accelerate the ongoing sell-off in the single currency and push EUR/USD down to 1.0750. GBP/USD closes below 100-day MA for first since Oct. 9, eyes UK PMI GBP/USD registers first daily close under the 100-day MA since October. Chances of disorderly UK exit from the EU are rising. Risk reversals are reporting bearish bias with a negative print. A big beat on the UK PMI is needed to weaken bearish pressures. 

Global Times recently released news that the US military in South Korea took action due to the latest coronavirus spread.

Global Times recently released news that the US military in South Korea took action due to the latest coronavirus spread. Key quotes The US  military in South Korea has raised its danger level and urgently blocked all bases and facilities in Daegu due to the Coronavirus spread. A large-scale cluster of infections was found in Daegu, with 78 confirmed cases reported in a local church. Fx implications The news exerts additional pressure on the trade sentiment. As a result, Gold prices are taking their up-moves towards $1,630 while heading into Friday’s European session.

German/ Eurozone flash PMIs Overview Amongst the Euro area economies, the German and the composite Eurozone PMI reports hold more relevance, in terms

 German/ Eurozone flash PMIs Overview Amongst the Euro area economies, the German and the composite Eurozone PMI reports hold more relevance, in terms of its impact on the European Central Bank’s monetary policy stance,  the common currency and bond yields. Germany’s flash manufacturing PMI for February, due at 0830 GMT, is seen arriving at 44.8, down from January’s final print of 45.3 while the index for the services sector is seen falling to 53.8 this month versus 54.2 last. The forecast for the Eurozone flash manufacturing PMI (due at 0900 GMT) shows 47.5 for February versus 47.9 seen in the previous month. The Eurozone services sector PMI is seen printing a tad weaker at 52.2 in February compared to January’s 52.5 reading.  Impact on EUR/USD Expectations regarding the growth of Germany’s export-oriented sectors of the economy have dropped sharply amid coronavirus outbreak, a recently released Zew survey of the financial market experts showed.  The recession fears would be bolstered if the German data prints below estimates. That will likely accelerate the ongoing sell-off in the single currency and push EUR/USD down to 1.0750. EUR/USD fell to 1.0778 on Thursday to print the lowest level since April 2017 and was last seen trading at 1.0794.  If the German PMI betters estimates by a big margin, the EUR may find bids, although the immediate technical bias will remain bearish as long as the pair is holding under the descending 10-day average, currently at 1.0837. About German/ Eurozone flash PMIs The Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the Euro Zone. Usually, a result above 50 signals is bullish for the EUR, whereas a result below 50 is seen as bearish.

Japan All Industry Activity Index (MoM) dipped from previous 0.9% to 0% in December

GBP/USD closed below the 100-day moving average (MA) on Thursday, its first daily close below the widely-tracked major average support in 4.5 months.

GBP/USD registers first daily close under the 100-day MA since October. Chances of disorderly UK exit from the EU are rising. Risk reversals are reporting bearish bias with a negative print. A big beat on the UK PMI is needed to weaken bearish pressures. GBP/USD closed below the 100-day moving average (MA) on Thursday, its first daily close below the widely-tracked major average support in 4.5 months.  So far, however, the violation of the long-term MA support has failed to draw strong offers. The GBP/USD pair is currently trading at 1.2892, representing marginal gains on the day, having hit a three-month low of 1.2849 on Thursday. Focus on UK PMI The preliminary Markit Manufacturing PMI (Feb) is forecasted to print at 49.7, indicating a contraction in the activity following January's neutral reading of 50.00. The selling interest around the British Pound will likely gather steam if the PMI number prints below estimates.  Note that the chances of disorderly UK exit from the European Union have increased to 25% from 20% seen in January, according to Reuters poll. As a result, Pound is unlikely to find takers, unless the PMI betters expectations by a big margin and the broader market sentiment improves, weakening the haven demand for the US treasuries. The US 30-year yield fell to 1.95% on Thursday, the lowest level since September.  Risk reversals show put bias One-month risk reversals, a gauge of calls to puts on the British Pound, fell to -0.225 on Thursday, having topped out at 0.00 recently. The slide represents the rise in the premium claimed by the put options, a sign the investors have added bets to position for losses in Sterling.  Technical levels
 

The US is picking up the stick against China over trade and the tech even amid coronavirus and the same could lead to tough phase-two talks said China

The US is picking up the stick against China over trade and the tech even amid coronavirus and the same could lead to tough phase-two talks said China’s Global Times during early Friday. Key quotes Washington's threatening of more restrictions on trade in technologies with China and more tariffs on Chinese products might have been a familiar gambit it has deployed before extracting more concessions from Beijing in phase two trade talks, but, in a broader sense, they are part of certain US elements' ideologically-driven attempt to contain China, Chinese analysts said on Thursday.  Nonetheless, such ill attempts while escalating tensions would not force China to give any ground on core issues, let alone to a downfall, analysts noted. Since the epidemic in China gained national attention in mid-January, the US has moved to ban foreign nationals with travel history to the Chinese mainland in the past 14 days, charged Chinese telecom firm Huawei with racketeering, finalized a new rule that allows tariffs on products from China and other countries that it deems to have undervalued their currencies, and removed China from its list of "developing" nations that paves the way for more duties on Chinese goods.  FX implications Such news provides an additional boost to the broad risk-off. As a result, Gold prices rally to a fresh seven-year high of $1,626.53 before pulling back to $1,626 by the press time.

USD/INR weakens to 71.84 ahead of the European session on Friday. The cross recently surged to the fresh six-week high on news that the US-India deal

USD/INR pulls back from a six-week high.News of no immediate US-India trade deal fails to get much attention amid coronavirus fears.US PMIs will be the key while headlines concerning the epidemic can keep the driver’s seat.USD/INR weakens to 71.84 ahead of the European session on Friday. The cross recently surged to the fresh six-week high on news that the US-India deal is unclear. However, off at the Indian burses due to Maha Shivratri as well as a pullback in the US dollar seems to favor the pair’s latest weakness. Even so, coronavirus continues to dampen the broad trade sentiment as not only a rise in cases outside Chinese borders but warnings from Japan and Germany threaten the market players. The BOJ Governor and Japanese Finance Minister both sounded a bit worried due to the coronavirus after Japan’s downbeat economic performance off-late. On the other hand, Germany’s monthly Finance Ministry report also cited coronavirus as the risk to global trade. Furthermore, the US issued travel warnings whereas South Korea and Singapore have also shown readiness to counter the contagion after fearsome numbers. Additionally, China’s Commerce Ministry was not behind while staying ready to take measures needed to counter the impact of the coronavirus. That said, the US 10-year treasury yields lose nearly three basis points to revisit the early-month low surrounding 1.50%. Investors will now focus on the coronavirus headlines ahead of the US activity numbers and Existing Home Sales. Concerning this, TD Securities said, “The preliminary Markit PMIs for Feb will lead the US data calendar on Friday, as market participants continue to look for any signs of concern related to the novel coronavirus. The surveys released so far have not only failed to flag any issues but have also surprised to the upside. Separately, we look for existing home sales to decline 2.3% m/m in Jan following the firm 3.6% rise registered in Dec. Lastly, a number of Fed officials will be participating in the Chicago Booth's Monetary Policy Forum that is scheduled to start at 10:15 am NY time. Key participants include Fed voters Clarida, Brainard and Mester, and the ECB's Philip Lane.” Technical Analysis January 05 top near 72.20 is likely an immediate upside barrier whereas a downside break of 50% Fibonacci retracement level of December 2019 to January 2020 upside, at 71.42, can limit immediate declines.  

The dollar index, which tracks the value of the greenback against majors, could be nearing an interim top, as a big-time lagging indicator has turned

Dollar index's daily chart shows a golden crossover. The bullish cross is a lagging indicator and often marks temporary tops. The dollar index, which tracks the value of the greenback against majors, could be nearing an interim top, as a big-time lagging indicator has turned bullish for the first time since June 2018.  The 50-day and 200-day averages have produced a golden cross, an indicator of the long-term bull market. The averages, however, are based on past data. Hence, crossovers tend to lag price, especially the longer duration ones.  Put simply, a golden cross is the result of a strong rally and has limited predictive powers at best. More often than not, an asset is overbought by the time the crossover happens and witnesses correction post-crossover confirmation.  The 14-day relative strength index of the dollar index is reporting overbought conditions with an above-70 print. A a result, the DXY may struggle to hold onto gains above 100, if any. On the downside, the 200-hour average, currently at 99.19, could work as strong support.  At press time, the DXY is seen at 99.84.  Daily chartTrend: Neutral Technical levels  

USD/JPY steps back to 112.00, down 0.07%, during the pre-European session on Friday. Even so, the pair stays above the multi-month-old falling trend l

USD/JPY struggles to rise beyond a 10-month high.The quote pierces a downward sloping trend line from January 2017, sustained break on a weekly basis can confirm further upside.200-week SMA acts as key support.USD/JPY steps back to 112.00, down 0.07%, during the pre-European session on Friday. Even so, the pair stays above the multi-month-old falling trend line on a weekly basis. Should the pair closes the week beyond 111.40 resistance-turned-support, its run-up to 112.40 and November 2018 high near 114.20 can be expected. During the pair’s extended rise past-114.20, October 2018 top surrounding 114.55 will be on the bulls’ radar. Meanwhile, a downside break of 111.40 on the weekly closing basis can recall a 200-week SMA level of 109.70. However, 111.00 and January 2020 peak close to 110.30 may offer intermediate halts to the declines. USD/JPY weekly chart Trend: Bullish  

Gold is flashing green for the fourth straight day and is currently trading at $1,624, the highest level February 2013. The anti-risk yellow metal con

Gold trades at the highest level since February 2013. Yellow metal draws bids despite the strength in the US dollar. The dollar is finding love, possibly due to increased haven demand for the US government paper.Gold is flashing green for the fourth straight day and is currently trading at $1,624, the highest level February 2013. The anti-risk yellow metal continues to draw bids from retail investors and hedge funds despite the headwinds from other markets.  Gold ignores dollar rally Gold is currently reporting 7% gains on a year-to-date basis. Meanwhile, the dollar index, which tracks the value of the greenback against majors, has gained 3.5% so far this year.  Dollar strength usually hurts gold. This time, however, the rally in the greenback has failed to deter investors from pouring money into the yellow metal, possibly because the strength in the US dollar is likely a result of increased demand for US treasuries.  The classic haven assets like gold and treasuries have found love amid the coronavirus outbreak in China and the fears of the virus spreading to other parts of the world, leading to a sharp slowdown in global growth.  Gold's bullish momentum will likely strengthen further if the preliminary German PMIs for February, due at 08:30 GMT, miss expectations by a big margin, bolstering recession fears.  Technical levels  

The selling interest around New Zealand dollar remains strong amid risk-off action in the financial markets. The NZD/USD pair fell below 0.6317 soon b

NZD/USD has breached Fibonacci support at 0.6317 amid losses in the US index futures. The daily chart RSI is reporting oversold conditions. The selling interest around New Zealand dollar remains strong amid risk-off action in the financial markets. The NZD/USD pair fell below 0.6317 soon before press time. That level marks the 78.6% Fibonacci retracement of the rally from 0.6204 to 0.6733.  The pair faced rejection near 0.6344 earlier today and is currently reporting a 0.32% on the day. Meanwhile, the futures on the S&P 500 are down more than 0.30% at press time.  While the 14-day relative strength index is reporting oversold conditions with a below-50 print, the price chart is showing no signs of seller exhaustion. Additionally, the 5- and 10-day averages are trending south.  The path of least resistance remains to the downside. Acceptance under support at 0.6317 would expose the Oct. 16 low of 0.6241. On the higher side, a move above the descending 10-day average at 0.6397 may cause sellers to rethink their bias.  Daily chartTrend: Bearish Technical levels  

WTI declines to $53.60 during the early trading hours on Friday. The energy benchmark flashed the monthly high on Thursday but coronavirus fears fail

WTI snaps two-day winning streak.Headlines from Saudi Arabia, EIA data failed to sustain the upside.Coronavirus keeps global policymakers on the edge.WTI declines to $53.60 during the early trading hours on Friday. The energy benchmark flashed the monthly high on Thursday but coronavirus fears fail to please the energy buyers afterward. In addition to the increasing cases from China, the rising impact of coronavirus in other Asian nations, namely Japan, Singapore and South Korea, is also questioning the market’s future energy demand. Even so, the Chinese Commerce Ministry stays ready to take further measures to counter the economic impact of coronavirus. Also distantly weighing on the oil prices could be Russian refrain to be clear about future production cuts. The US State Department recently renewed its travel warnings whereas Japanese diplomats and German Finance Ministry reports also showed concerns about the contagion’s negative impact. In doing so, the energy benchmark ignores the weaker than expected inventory build as well as headlines from Saudi Arabia. As per Saudi state news agency, Saudi Air Defence intercepts and destroys several ballistic missiles fired from Yemen's Sanaa. On Thursday, the US Secretary of State Mike Pompeo ran a show power while touring Saudi Arabia and indirectly challenged Iran. Also supporting the energy prices were upbeat activity numbers from the US. Looking forward, coronavirus headlines will be the key to watch for fresh direction. Technical Analysis The mid-month tops nearing $52.50 and February 06 high close to $52.30 are on the sellers’ radar whereas 200-bar SMA and 50% Fibonacci retracement act as the tough resistance around $54.55.  

The dollar index (DXY), which tracks the value of the greenback against majors, is approaching the psychological hurdle at 100, which if breached, cou

The dollar index (DXY), which tracks the value of the greenback against majors, is approaching the psychological hurdle at 100, which if breached, could bring in stronger buying pressure, according to said Neil Jones, head of foreign-exchange sales to financial institutions at Mizuho Bank Ltd. Key quotes The 100 level is a big deal. A number of buy signals will kick into play, it will set the alarm bells off. It’s the level that capped the dollar twice in 2015 and effectively offered support during the first quarter of 2017 before finally giving in.  The DXY is currently trading at 99.85, the highest level since May 2017, having started the year at lows near 96.50.
 

A spokesman from China Commerce Ministry said on Friday that the government is accelerating plans for further measures to support firms and the econom

A spokesman from China Commerce Ministry said on Friday that the government is accelerating plans for further measures to support firms and the economy. Further comments: January - February trade hurt by work delay, lockdown, holiday. Hit on Q1 trade is large but bearable. 2020 trade expected to be in a reasonable range.

AUD/USD drops below 0.6600, low of 0.6596, during early Friday. In doing so the pair refreshes the 11-year low with the bearish MACD indicating furthe

AUD/USD drops to the fresh low since February 2009.A six-week-old downward sloping trend line may offer a bounce below 0.6600.Bearish MACD continues to counter oversold RSI conditions.AUD/USD drops below 0.6600, low of 0.6596, during early Friday. In doing so the pair refreshes the 11-year low with the bearish MACD indicating further declines. With that mind, highs marked during late-February 2009, near 0.6550/45 are likely nearby support ahead of highlighting a downward sloping trend line since January 07, at 0.6540. Should there be a further weakness below 0.6540, 0.6500 round figure could flash on the chart. Alternatively, if oversold RSI conditions could trigger a pullback, buyers will target February 07 low near 0.6660. AUD/USD daily chart Trend: Bearish  

AUD/USD pair dropped to 0.6598, the lowest level since 2009, soon before press time, taking the weekly loss to over 1.4%. The selling interest around

AUD/USD pair dropped to 0.6598, the lowest level since 2009, soon before press time, taking the weekly loss to over 1.4%.  The selling interest around the Aussie dollar, a China-sensitive currency, remains strong with the coronavirus scare dominating the market sentiment. Additionally, the American dollar is benefiting from the increased haven demand for the US Treasuries. 

Will respond to FX moves according to G20 and G7 agreements. FX stability is important.

Will respond to FX moves according to G20 and G7 agreements. FX stability is important.

Societe Generale SA has lowered expectations for euro strength, revising its year-end forecast for EUR/USD down to 1.16 from the previous prediction o

Societe Generale SA has lowered expectations for euro strength, revising its year-end forecast for EUR/USD down to 1.16 from the previous prediction of 1.20, according to Bloomberg.  Key quotes Growth expectations have weighed on the shared currency, and the “coronavirus crisis isn’t helping with the euro either, with Europe more sensitive than the US to global trade fears. We misjudged the resilience of US expectations about the economy. The bank still expects a US economic slowdown, which will eventually weigh over the American dollar.  EUR/USD fell to 1.0778 on Thursday to print its lowest level since April 2017. The currency pair has witnessed a near 90-degree sell-off from 1.1095 over the last 3.5 weeks. 

On Friday, the German Finance Ministry, in its monthly report, raised concerns over the German trade outlook, in light of weaker global demand and the

On Friday, the German Finance Ministry, in its monthly report, raised concerns over the German trade outlook, in light of weaker global demand and the coronavirus epidemic, per Reuters. Key quotes: Weak demand from abroad as a reason for the muted trade outlook. Possible economic effects of the coronavirus also pose a risk to foreign trade developments in the coming months. EUR/USD Price Analysis: Bull divergence of RSI seen on 4H chart

Gold prices stay mildly positive around $1,621 during early Friday. The yellow metal has been flashing a lower high formation since its pullback from

Gold buyers catch a breath after rising heavily to the fresh 11-year top during the last two days.MACD and RSI both favor a pullback while the latest lower highs on the hourly chart support the argument.An upward sloping trend channel from Tuesday keeps pleasing the bulls.Gold prices stay mildly positive around $1,621 during early Friday. The yellow metal has been flashing a lower high formation since its pullback from $1,623.80 while MACD is also likely turning negative. Further to support the odds of a pullback are RSI conditions that signal a halt to the additional upside. As a result, the bullion may decline to Wednesday’s high of $1,613 while the support line of a short-term rising channel, at $1,611 can question extra downside. If at all the quote dips below $1,611, $1,605 and $1,600 can entertain the bears ahead of recalling the early-week levels surrounding $1,584/83. Meanwhile, an upside break of $1,623 can trigger fresh run-up towards the channel resistance of $1,627. During the precious metal’s additional rise past-$1,627, the rising trendline connecting highs marked during September 20119 and January 2020, close to $1630/31, will be in the spotlight. Read: Gold Price Analysis: Path of least resistance is up, $1,626 next target – Confluence Detector Gold hourly chart Trend: Pullback expected  

The US is currently flat, after closing up 0.3% for a 13th straight higher daily high while the coronavirus hits Asian growth, safe-haven flows flock

Little reason to call a top on the USD at present - trend is strong – ReutersSafe haven flows to continue, until the coronavirus comes under control – ReutersCharts are bullish, momentum studies, 5, 10 & 21 DMAs trend north – ReutersThe US is currently flat, after closing up 0.3% for a 13th straight higher daily high while the coronavirus hits Asian growth, safe-haven flows flock to USD, Reuters reports.  "The dollar was sucking up funds across Asia on Thursday after a steep and sudden slide in the Japanese yen called into question its safe haven status and spooked investors out of local assets. Everything from the Australian dollar to the Indian rupee were under fire as concerns about the impact of the coronavirus drove money to the U.S. currency. China reported a drop in new infections on Thursday, but scientists warned the pathogen may spread more easily than previously believed as two elderly passengers from a ship quarantined in Tokyo became the latest to die." Meanwhile the People's Bank of China cur rates, but that did little to "steady the skittish mood", Reuters reports.  More on that here:  The FXStreet Senior Analysts have been discussing the state of play and the events which have propelled the greenback trough critical resistance levels at the start of this year. Follow the discussing here: US Dollar Strength: About more than the coronavirus' contagionKey notes Little reason to call a top on the USD at present - trend is strong. Safe haven flows to continue, until the coronavirus comes under control. DXY monthly chart Charts are bullish, momentum studies, 5, 10 & 21 DMAs trend north. 99.67 NY low and 99.91 London high are initial support-resistance.    

Nisha Biswal, president of the US-India Business Council told Reuters late Thursday that the US and India are unlikely to reach a limited trade deal i

Nisha Biswal, president of the US-India Business Council told Reuters late Thursday that the US and India are unlikely to reach a limited trade deal in time ahead of a scheduled visit of US President Trump to India on February 24-25. Key quotes: “We’re still hopeful that some kind of agreement could be reached, but we do recognize and acknowledge that both governments have been indicating that is unlikely at this juncture.”  “We know that American companies see India as a priority market for exports, but also see India as a priority destination for investment and locating sourcing and manufacturing. We would like to see steps that can facilitate that.” 

AUD/USD has bounced up slightly from decade lows but remains on track to end the week on a negative note. The currency pair is trading at 0.6619 at pr

AUD/USD recovered roughly by 10 pips from decade lows seen on Thursday. The currency pair is still on track to report one of its biggest weekly loss since September. Dovish RBA expectations are likely to keep the AUD on the defensive.AUD/USD has bounced up slightly from decade lows but remains on track to end the week on a negative note.  The currency pair is trading at 0.6619 at press time, having hit a low of 0.6624 an hour ago. The pair fell to 0.6610 on Thursday to print the lowest level since 2009.  The minor bounce is nothing to write home about, as the pair is still down nearly 1.4% on a weekly basis. If the pair holds near current levels through Friday's GMT close, the resulting weekly loss would be the second-biggest since September.  That looks likely, as the futures on the S&P 500 are reporting a 0.17% drop at press time. The risk-off tone will likely keep the AUD bulls at the bay and keep the haven assets like the US Treasuries better bid.  Further, the odds of the Reserve Bank of Australia (RBA) cutting rates by 25 basis points to 0.5% in April have improved, courtesy of the dismal jobs data released Thursday. While the economy created 13,500 more net jobs in January, the unemployment rate jumped from 5.1% to 5.3%, forcing reinforcing expectations for a rate cut in April.  As a result, corrective bounces in the AUD are likely to be met with offers, unless numbers out of China indicate the coronavirus is peaking, in which case, China-sensitive currencies like the Aussie dollar are likely to find strong hands.  Technical levels  

AUD/JPY stays mildly positive, 0.04%, to 74.18, by the press time of early Friday in Asia. The risk barometer recently lost its allure considering the

AUD/JPY stays mostly directionless after the previous day's losses.Japanese yen remains on the back foot following downbeat data, comments from policymakers.Coronavirus updates continue to keep the risk-tone heavy.AUD/JPY stays mildly positive, 0.04%, to 74.18, by the press time of early Friday in Asia. The risk barometer recently lost its allure considering the Japanese yen’s broad weakness. Recently contributing to the yen’s declines could be soft data and statements from the Japanese diplomats. Even so, markets remain worried as the latest developments concerning coronavirus have been serious. Following soft readings of Japan Consumer Price Index and Jibun Bank Manufacturing PMI, the BOJ Governor Haruhiko Kuroda and Japan’s Economy Minister Nishimura have been speaking frequently. The BOJ leader cited coronavirus concerns as the biggest issue to be discussed at this weekend’s G20 while showing readiness to act, likely not needed now. On the other hand, the economy minister directly talked about the yen weakness and said it’s because of the US economy’s strength. On the other hand, coronavirus updates have been worrisome as Hubei registered an increase in infections and deaths while numbers from mainland China were also increased by the end of February 20. Elsewhere, developments concerning the disease from South Korea, Japan, Sydney and Singapore are also negatively affecting the risk-tone. That said, the US 10-year treasury yields remain on the back foot around 1.512% with the stocks in Japan erasing the early-day gains while those of China awaiting fresh clues. Traders will now keep eyes on the coronavirus updates as well as Japan’s All Industry Activity Data for fresh impulse. Technical Analysis Considering the pair’s another pullback from 100/200-day SMA, the quote is likely declining towards 74.00, comprising 38.2% Fibonacci retracement of its declines from December 2019 to January 2020. On the upside, Meanwhile, a 200-day SMA level of 74.25 can act as nearby resistance ahead of the confluence of 100-day SMA and 50% Fibonacci retracement close to 74.50.  

The People's Bank of China (PBOC) has set the Yuan reference rate at 7.0210 versus Thursday's fix at 7.0026.

The People's Bank of China (PBOC) has set the Yuan reference rate at 7.0210 versus Thursday's fix at 7.0026.

In a Reuters poll, it has stated that the chances of disorderly UK exit from European Union at 25% (20% in Jan poll). Key results Brexit transition pe

In a Reuters poll, it has stated that the chances of disorderly UK exit from European Union at 25% (20% in Jan poll). Key results Brexit transition period will not be extended beyond Dec 2020 -24 of 34 economists. Eexpected EU/UK trade deal will only cover goods, not services -21 of 34 economists. Bank of England to leave bank rate at 0.75% until 2022 at least. UK economy to expand 1.0% in 2020; 1.4% in 2021 (1.1%; 1.5% in Jan poll). FX implicationsEUR/GBP pressured, giving back a 61.8% retracement of the eurozone data bid: As explained in the article, "As for the play-off between the Bank of England and fiscal stimulus, which the pound got a boost from earlier this month following a surprise resignation from the Chancellor, Sajid Javid, subsequently replaced by Rishi Sunak, the UK budget now confirmed to be announced on 11 March."    

The yield on the US 30-year Treasury note fell to the lowest level in four months on Thursday as investors bought the safe-haven bonds on concerns the

The US 30-year bond yield slipped to multi-month lows on Thursday on haven demand. Coronavirus fears and stock market losses likely forced investors to put a bid under Treasuries. The yield on the US 30-year Treasury note fell to the lowest level in four months on Thursday as investors bought the safe-haven bonds on concerns the coronavirus is spreading outside China.  The yield declined from 2.02% to 1.957% – the lowest level since September – and was last seen at 1.963%. Further, the spread between the 10-year and three-year yields turned negative, inverting the yield curve.  The government debt drew safe-haven bids amid reports stating the growing number of COVID-19 cases outside of China’s borders. The number of new infections in South Korea jumped to more than 100 on Thursday, according to local health officials.  Meanwhile, two passengers from a cruise ship quarantined in Japan died due to the coronavirus. As per the latest reports by Yonhap, South Korea has confirmed 52 more cases of infections, taking the total to 156. Additionally, the US stocks turned red on Thursday, strengthening the bid tone around the haven assets. The Dow Jones Industrial Average fell by 0.44% despite positive macroeconomic newsflow. The Philadelphia Fed manufacturing index rose to 36.7 in February to register its highest reading in three years and the Conference Board’s January reading of the US Leading Economic Indicator index rose 0.8%.

Japan Economy Minister, Nishimura is crossing the wires and has said "Think the weak yen is a reflection of a strong US economy." More to come...

Japan Economy Minister, Nishimura is crossing the wires and has said "Think the weak yen is a reflection of a strong US economy." More to come...

Bank of Japan's governor Kuroda is crossing the wires and has stated that "we are ready to act, but do not believe it is needed now". Key comments Won

Bank of Japan's governor Kuroda is crossing the wires and has stated that "we are ready to act, but do not believe it is needed now".  Key comments Won't hesitate to take additional easing steps if necessary. More to come...

GBP/USD bears catch a breath near 1.2885, +0.02%, during Friday’s Asian session. The pair dropped to the lowest since November 27, 2019, the previous

GBP/USD stays mildly negative near a 12-week low.Bearish MACD, a sustained break of the key SMA signal further declines.A confluence of 200-day SMA, 61.8% Fibonacci retracement acts as the key support.GBP/USD bears catch a breath near 1.2885, +0.02%, during Friday’s Asian session. The pair dropped to the lowest since November 27, 2019, the previous day. However, it failed to close below 50% Fibonacci retracement of October-December 2019 upside despite extending declines below 100-day SMA. Hence, sellers will wait for entry below 50% Fibonacci retracement level of 1.2855 while taking aims at November 2019 monthly low near 1.2770. It should, however, be noted that a confluence of 200-day SMA and 61.8% Fibonacci retracement could challenge the bears around 1.2700/2695 afterward. Considering the bearish MACD signals and the pair’s sustained trading below the key SMA, GBP/USD prices are likely to remain weak for the time being. Meanwhile, a daily closing beyond 100-day SMA level of 1.2955 can recall 1.3000 mark to the charts whereas February 13 top surrounding 1.3070 and 23.6% Fibonacci retracement at 1.3206 can entertain the bulls during further upside. GBP/USD daily chart Trend: Bearish  

The key indicator has diverged in favor of the bulls, but so far, that has failed to draw bids for the EUR/USD pair. The 4-hour chart relative strengt

EUR/USD's 4-hour chart RSI is reporting early signs of bullish reversal. So far, the single currency has struggled to draw bids and has traded on the defensive below 1.08.The key indicator has diverged in favor of the bulls, but so far, that has failed to draw bids for the EUR/USD pair.  The 4-hour chart relative strength index (RSI) has produced consecutive higher lows, contradicting lower lows on price over the last ten days. The bullish divergence often marks the end of the downtrend. As a result, it is widely considered an early warning of a bearish-to-bullish trend change.  So far, however, we have not seen evidence of fresh chart-driven buying. The spot remains on the defense under 1.08 with the daily chart reporting a bearish continuation pattern – Thursday's bearish engulfing candle reinforced the downward bias.  As a result, a drop to the psychological support at 1.0750 cannot be ruled out. On the higher side, a move above Thursday's high of 1.0821 would validate the bullish RSI divergence on the 4-hour chart and could yield a stronger corrective bounce to 1.0850. 4-hour chartTrend: Neutral-to-bearish Technical levels  

USD/JPY seesaws around 112.00 amid the initial minutes of the Tokyo open on Friday. The yen pair recently surged to the highest since April 2019 follo

USD/JPY remains modestly changed following the run-up to a 10-month high.Japanese yen fails to cheer the coronavirus-led risk-off, broad US dollar strength adds strength to the pair.The latest updates concerning the Chinese epidemic suggest a downbeat scenario.USD/JPY seesaws around 112.00 amid the initial minutes of the Tokyo open on Friday. The yen pair recently surged to the highest since April 2019 following the broad US dollar rally and weakness of the Japanese fundamentals. The safe-haven isn’t risk-free… The Japanese yen is now under pressure following the downbeat fundamentals at home. Not only the Asian economy’s sustained failures to reach 2.0% target inflation but the disappointing figures of the fourth quarter (Q4) GDP also raised doubts on the JPY’s safe-haven status. While identifying this, the International Monetary Fund (IMF) recently pushed the BOJ officials towards searching for clues. Though, the Asian central bankers and diplomats kept citing coronavirus as the immediate fear. As per the latest data, Japan’s National Consumer Price Index (CPI) (YoY) for January matched 0.7% forecast whereas National CPI ex-Food, Energy (YoY) dropped below 0.9% forecast and prior to 0.8%. Further, the preliminary reading of Japan’s February month Jibun Bank Manufacturing PMI dropped below 49.00 forecasts and 48.8 prior to 47.6. Traders will now await All Industry Activity Index (MoM) data for December, prior 0.9%, for further direction. Coronavirus keeps haunting the market’s risk-tone with the latest updates suggesting increasing infections and deaths in the epicenter Hubei. The talks of cancellation of Japan’s annual wage negotiations due to the Chinese epidemic, fears cited by Germany and increasing worries of the contagion in South Korea have recently weighed on the trade sentiment. While portraying the same, the US 10-year treasury yields stay on the back foot around 1.52% whereas Japan’s NIKKEI marks 0.25% gains to 23,535 by the press time. Technical Analysis The overbought RSI conditions signal the pullback to 110.80 while fresh buying is likely to take place beyond April 2019 top surrounding 112.40.  

Japan Jibun Bank Manufacturing PMI below expectations (49) in February: Actual (47.6)

The G20 finance ministers and central bankers meet in Saudi Arabia over the weekend and Japan Finance Minister Aso is expecting the G20 to discuss the

The G20 finance ministers and central bankers meet in Saudi Arabia over the weekend and Japan Finance Minister Aso is expecting the G20 to discuss the impact of new coronavirus outbreak. Key comments G20 will discuss wide range of topics including digital tax. Won't comment on forex levels. The G20 finance ministers and central bankers meet in Saudi Arabia over the weekend amid continued uncertainty about the impact of the coronavirus, known as COVID-19. The IMF on Wednesday said, in a note prepared for G20 finance ministers and central bankers, where it mapped out a plethora of risks facing the global economy, that it was sticking to its January forecast for 3.3% growth in the global economy this year, up from 2.9% in 2019, already a downward revision of 0.1 percentage points from its forecast in October.

WTI steps back from the four-week high to $53.58 during Friday’s Asian session. In doing so, 38.2% Fibonacci retracement level of its January-February

WTI declines from the key upside barrier, snaps two-day winning streak.38.2% Fibonacci retracement holds the gate for mid-February tops.January 24 high can lure the bulls during further upside.WTI steps back from the four-week high to $53.58 during Friday’s Asian session. In doing so, 38.2% Fibonacci retracement level of its January-February downside grabs the market attention. Should oil prices remain weak below $53.35 immediate support, the mid-month tops nearing $52.50 and February 06 high close to $52.30 can entertain the sellers. During additional south-run past-$52.30, 23.6% Fibonacci retracement and an ascending trend line from February 10, near $51.80, will be important to watch. On the upside, 200-bar SMA and 50% Fibonacci retracement act as the tough resistance around $54.55. In a case the black gold manages to cross $54.55, January 24 high close to $56.00 can return to the charts. WTI four-hour chart Trend: Pullback expected  

NZD/USD has moved back into an area of support for which bulls will be looking for a test of the supply commitments from the bears, with a target of t

NZD/USD consolidates in Asia as traders await the outcome of this weekend's G20. Global PMIs will be in focus, first evidence of how COVID-19 has impacted manufacturing and services.NZD/USD has moved back into an area of support for which bulls will be looking for a test of the supply commitments from the bears, with a target of the 0.65 handle should the US dollar finally give back some ground. Asia's mixed equity mood turned to notable losses in Europe and the US, despite the lengths at which the People's Bank of China have gone to try and stem risks to the economy – Asian currencies fell across the board and the bird was caught in the cross-fire of stubbornly firm US flows. The price of NZD/USD has moved into a phase of consolidation around 0.6330 and within a narrow Asian range of between 0.6329 and 0.6334 as traders awaited to hear from Reserve Bank of New Zealand's Governor Orr who is currently speaking at a lunch in Christchurch about last week’s Monetary Policy Statement.RBNZ Orr: In favourable position with OCR at 1%There has not been a reaction to the speech with the divergence between the Federal Reserve and RBNZ priced in following plenty of attention to the antipodes this month following their recent interest rate decisions. Despite the upgrade to Gross Domestic Product and other central forecasts in light of the current risks were initially seen as bullish for NZD, however, with coronavirus risks lurking and the scope for forecasts to become redundant fairly quickly, bars have pounded in the vulnerability of the bird. The relentless bid in the US dollar has been an additional factor weighing in on the price.  Another day, another dollar. USD strength continued overnight and a test of key NZD support around 0.63 is in sight. A combination of strong US data and anxiety over COVID-19 are supporting this purple patch for the USD. Whilst we are cognisant of market positioning, there seems little that can turn the USD’s trend around just now.  Greenback eyes the 100 handle up and down Its been quite the run for DXY bulls of late, with the price bursting through levels on the 99 handle to ts the bear commitments around the April 2017. The FXStreet Senior Analysts have been discussing the state of play and the events which have propelled the greenback trough critical resistance levels at the start of this year. Follow the discussing here: US Dollar Strength: About more than the coronavirus' contagionIn the US session, the US dollar got a boost with the Philadelphia Fed business survey surged from 17.0 in Jan to 36.7 in Feb (vs 11.0 expected). "Producer sentiment has been boosted by the US trade deals and reduced Brexit uncertainty, though it seems strange that February was the second-strongest month since 2014," noted analysts at Westpac. Fed Vice Chair Clarida said in a CNBC interview that it's a "good picture" for the economy, with strong economic fundamentals and accommodative monetary policy. He noted the strength in the regional surveys, including the Philly Fed, and said a rebound in business investment is possible. The Fed is closely monitoring the coronavirus which is expected to have a noticeable impact on the Chinese economy, but it's too soon to say what it will mean for the US. End of the week, what to expect?  For the close to the week, we have an insight from futures pointing to a little changed open for Japanese stocks, while shares in Australia slipped in early trade. The Nikkei futures contract in Chicago was at 23,485 while its counterpart in Osaka was at 23,500. That compared against the Nikkei 225′s last close at 23,479.15. Meanwhile, shares in Australia were lower in early trade, with the S&P/ASX 200 down 0.14%. There are key data risks yet still to come ahead of the G20 finance ministers and central bankers meet in Saudi Arabia over the weekend amid continued uncertainty about the impact of the coronavirus, known as COVID-19. We will have Markit February PMIs will be released for Japan, the Euro Area, the UK and the US as the first evidence of how COVID-19 has impacted manufacturing and services. "The outbreak is likely to affect Asia’s economy immediately but will take time to pass to Europe and the US. The Eurozone PMIs are most market-sensitive. The Jan Germany manufacturing PMI as a dismal 45.3 but services a strong 54.2," the analysts at Westpac noted.  Meanwhile, we will have the G20 finance ministers and central bankers meet in Saudi Arabia over the weekend amid continued uncertainty about the impact of the coronavirus, known as COVID-19. This follows the IMF saying on Wednesday, in a note prepared for G20 finance ministers and central bankers, where it mapped out a plethora of risks facing the global economy, that it was sticking to its January forecast for 3.3% growth in the global economy this year, up from 2.9% in 2019, already a downward revision of 0.1 percentage points from its forecast in October. NZD/USD levels  

Gold stays positive around $1,622 ahead of the Tokyo open during Friday’s Asian session. While coronavirus has been the key to the bullion’s run-up, d

Gold prices remain positive for the fourth day in a row.Headlines that coronavirus will weigh on global top-tiers, central bank decisions recently reiterated the fears of the epidemic.Coronavirus updates from China and abroad will be the key.Gold stays positive around $1,622 ahead of the Tokyo open during Friday’s Asian session. While coronavirus has been the key to the bullion’s run-up, downbeat fundamentals from major economies also please the bulls. Coronavirus updates… The latest numbers from Hubei, as of February 20, suggest there are 411 new cases and 115 new deaths versus 349 new cases of infection and 108 deaths by the end of February 19. Despite the second change in the methodology to count, there have been more than 2,144 deaths and 62,442 infections in the region so far due to the epidemic. Also to note is the pace of contagion surrounding Japan and Singapore. While identifying the fears of the disease, the Japanese Trade Union Confederation (Rengo) recently called off its rally that was earlier scheduled for March 03 whereas the pacesetter in the annual shunto wage negotiations, Toyota’s union, also canceled its convention. Further, Germany’s monthly report from the Finance Ministry also cited fears while anticipating weaker global demand. As portraying the broad risk-off, the US 10-year treasury yields extend Thursday’s declines to near 1.51% whereas S&P 500 Futures also lose 0.20% to 3,360 by the press time. Central banks are also worried… In addition to the recent statements citing fears of the Chinese epidemic, global central banks ranging from the RBA to the PBOC have shown worries as the latest numbers, except the US, are downbeat. While identifying this, the RBNZ Governor Adrian Orr said that the bank needs to be prepared for the unanticipated. Investors will now keep eyes on coronavirus news as well as the macros for fresh impulse. The latest data concerning Australia’s activity and Japanese inflation didn’t offer any surprises. Technical Analysis FXStreet’s Yohay Elam relies on the Technical Confluence Indicator to suggest $1,626 as the next upside target: The Technical Confluences Indicator is showing that support lines are stronger than resistance, implying that the rally still has room to run. XAU/USD is benefiting from two substantial clusters of support. The first is at $1,613 – above the January low – and it consists of the previous daily high and the Pivot Point one-week Resistance 3. The upside target is $1,626 where XAU/USD faces fiercer resistance – the long-term Pivot Point one-month Resistance 1 awaits it there.   

Reuters notes that Japan's core consumer prices rose 0.8% in January from a year earlier, government data showed on Friday with the core consumer pric

Reuters notes that Japan's core consumer prices rose 0.8% in January from a year earlier, government data showed on Friday with the core consumer price index, which includes oil products but excludes fresh food prices, compared with economists' median estimate for a 0.8% annual gain. Stripping away the effect of fresh food and energy, consumer prices rose 0.8% in January from a year ago. Key notesJapan CPI (Y/Y) Jan 0.7% (est 0.7%; prev 0.8%).Japan CPI Ex. Fresh Food (Y/Y) Jan 0.8% (est 0.8%; prev 0.7%).Japan CPI Ex. Fresh Food & Energy (Y/Y) Jan 0.8% (est 0.8%; prev 0.9%).Full report The consumer price index for Japan in January 2020 was 102.2 (2015=100), up 0.7% over the year before seasonal adjustment, and the same level as the previous month on a seasonally adjusted basis. Source More to come...

Japan National CPI ex-Fresh Food (YoY) meets forecasts (0.8%) in January

Japan National CPI ex Food, Energy (YoY) registered at 0.8%, below expectations (0.9%) in January

Japan National Consumer Price Index (YoY) meets expectations (0.7%) in January

China's Hubei province confirms 411 new cases of coronavirus, and 115 new deaths as of Feb 20 More to come...

China's Hubei province confirms 411 new cases of coronavirus, and 115 new deaths as of Feb 20 More to come...

The Reserve Bank of New Zealand's governor, Adrian Orr has said that record-low international interest rates are a new challenge facing the Bank. RBNZ

The Reserve Bank of New Zealand's governor, Adrian Orr has said that record-low international interest rates are a new challenge facing the Bank.  RBNZ in favourable position with OCR at 1%. Bank needs to be prepared for the unanticipated. Orr was speaking in a speech at Canterbury employers' Chamber of Commerce in Christchurch. Full speech here.   More to come...  

Having registered one more failure to cross 144.60 the previous day, GBP/JPY pulls back to 144.35 amid the Asian session on Friday.

GBP/JPY steps back from the monthly high.50% Fibonacci retracement back in focus.Mid-December 2019 lows will be on buyers’ radars during further upside.Having registered one more failure to cross 144.60 the previous day, GBP/JPY pulls back to 144.35 amid the Asian session on Friday. While considering the upbeat signals from MACD and RSI, GBP/JPY prices are likely to keep the strength. However, a sustained break of 144.60 will need to be validated by a daily closing beyond 144.66 comprising 38.2% Fibonacci retracement of November-December 2019 upside. Should that happen, the quote can quickly rise towards December 13 low near 145.46 and 23.6% Fibonacci retracement level of 145.92 ahead of challenging the year top near 148.00. Alternatively, 50% Fibonacci retracement, at 143.65, gains the counter-trend traders’ attention. However, an upward sloping trend line from February 10, at 142.84 now, can question the sellers afterward. GBP/JPY daily chart Trend: Bullish  

As per the latest updates from the Sky News, the Irish Prime Minister Leo Varadkar has tendered his resignation to the Irish president following the i

As per the latest updates from the Sky News, the Irish Prime Minister Leo Varadkar has tendered his resignation to the Irish president following the inconclusive result of the recent general election. However, he will remain as the acting PM while attempts to form a new coalition government continue. FX implications Although this could be seen as the risk-negative headline, no major reaction to the news has been noticed by the press time. The reason could be the market’s wait for the UK open.

Considering the risk of spreading coronavirus, the US State Department issued a fresh warning to its citizens traveling to or within East Asia and the

Considering the risk of spreading coronavirus, the US State Department issued a fresh warning to its citizens traveling to or within East Asia and the Asia-Pacific region during the early Friday morning in Asia. Key quotes US citizens should reconsider travel by cruise ship to/in East Asia and the Asia-Pacific region. To prevent the spread of the novel coronavirus that causes many countries are implementing strict screening procedures. FX implications The news weighs on the market’s risk-tone with the S&P 500 Futures down 0.60% to 3,367 by the press time.

AUD/JPY declines to 71.14 during the Asian session on Friday. The pair recently reversed from 100-day and 200-day SMA while also taking a U-turn from

AUD/JPY remains on the back foot after failing to cross important resistances.38.2% Fibonacci retracement acts as the immediate support, the monthly rising trend line is the key.61.8% Fibonacci retracement can please the bulls during an upside break.AUD/JPY declines to 71.14 during the Asian session on Friday. The pair recently reversed from 100-day and 200-day SMA while also taking a U-turn from 50% Fibonacci retracement of its declines from December 2019 to January 2020. Given the repetition of the early-month pattern, AUD/JPY prices are likely to drop further towards 38.2% Fibonacci retracement level of 74.00 and then to 73.60 immediate rest-points. However, an upward sloping trend line since January 31, as well as 23.6% Fibonacci retracement, around 73.40/35, will be the key support to watch. Meanwhile, a 200-day SMA level of 74.25 can act as nearby resistance ahead of the confluence of 100-day SMA and 50% Fibonacci retracement close to 74.50. If at all the quote manages to remain strong beyond 74.50, 61.8% Fibonacci retracement near 75.00 will be on the bulls’ radars. AUD/JPY daily chart Trend: Bearish  

Following its rally to the highest levels since April 2019, USD/JPY steps back to 112.10 amid the initial trading hours of Friday’s Asian session.

USD/JPY stay modestly changed following its run-up to multi-week high.Downbeat fundamentals at Japan seems to dim its safe-haven appeal, broad US dollar strength adds to the pair’s fuel.Japan’s inflation/activity numbers can offer immediate direction.Following its rally to the highest levels since April 2019, USD/JPY steps back to 112.10 amid the initial trading hours of Friday’s Asian session. With the deteriorating economics from Japan, the Japanese yen seems to lose its allure as a risk-free currency and loses heavily against the US dollar despite rising coronavirus fears. Is the safe-haven in danger? With the disappointing Japanese growth numbers for the fourth quarter (Q4) 2019, the BOJ’s age-old status-quo is in question while some in the market, including the International Monetary Fund (IMF), doubting the central bank’s inflation expectations. As a result, the safe-haven currency seems to have lost its allure off-late. However, traders will still look for more inflation as policymakers from Japan are keeping the doors open for further expansionary/fiscal measures to cope-up with the problems. Risk-tone remains weak and the US fundamentals are strong… China’s coronavirus is spreading heavily into the neighbor nations and the frequent changes to count the numbers at home have also contributed to the market’s risk-off. As a result, the US 10-year treasury yields trim five basis points (bps) to 1.59% while the US dollar remains as the market favorite. In addition to the risk aversion, strong reading of the US Philadelphia Fed Manufacturing Survey signals that the world’s largest economy is still unaffected due to the coronavirus. Markets are now awaiting Japan’s National Consumer Price Index, Jibun Bank Manufacturing PMI and All Industry Activity Index for the immediate direction while the US data can entertain momentum traders during the rest of the day. However, updates from China will keep the driver’s seat. Technical Analysis A sustained break of April 2019 top surrounding 112.40 becomes necessary for the bulls to take aim at 112.80 and 113.00. In the absence of which, overbought RSI could keep flashing the warning of a pullback to 110.80.  

Australia Commonwealth Bank Services PMI came in at 48.4, below expectations (52.4) in February

Australia Commonwealth Bank Composite PMI down to 48.3 in February from previous 50.2

Australia Commonwealth Bank Manufacturing PMI above forecasts (48.9) in February: Actual (49.8)

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