 China's new coronavirus overshadowed central bank activities last week and prompted global risk aversion. At the timing of writing, death toll jumped to 41 while more than 1300 people have been infected globally. The virus has already spread from Wuhan to other major cities in China, and globally to Asia, US, Australian and France. China's massive quarantine of 40m people in the Hubei region is questioned. Though for now, WHO just declare that it's an emergency in China, not globally. The development will be the most important market moving factor in the coming days, and even weeks. In the currency markets, Yen ended the week as the strongest one on risk aversion, as well as falling yields. Sterling was the second strongest as traders pare back bet on BoE rate cut after improving business optimism and PMIs. Australian Dollar was the weakest one on risk aversion. Canadian Dollar suffered double-whammy from falling oil price as well as dovish BoC, which kept rate cut open. Dollar was generally strong with upside prospect for the near term. Yet, upside could be capped by falling yield and weakness in USD/JPY. |
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