Equities Keep Gains Despite Virus Risks
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Quiet Week Ahead of USD
The US dollar has started the week on a softer footing. The USD index trades 98.98 last, pulling back slightly from last week’s highs. It’s a quiet data week for the US with only the FOMC meeting minutes to note. Recent strength in USD data has helped keep the dollar supported and the minutes pose little risk of derailing this strength.
EUR Still Bearish
EURUSD has had a muted start to the week with price posting a mild recovery over the European session so far on Monday. However, with the pair still sitting at the bottom of the recent sell-off, which has taken price down to levels not seen since 2017, the near-term view remains bearish. EURUSD trades 1.0845 last.
GBP Risks Ahead
GBPUSD is sitting just off recent highs, trading 1.3035 last. It’s a busy data week for the UK with CPI, retail sales and manufacturing all due. Given the recent trend of weaker data in the UK, there is plenty of downside risk this week for GBP.
Risk assets Hold At Highs
Risk assets continue to defy the widespread panic around the ongoing coronavirus outbreak. Despite the spread of the virus continuing, with cases now confirmed in Singapore and Japan, equities are holding at highs. The SPX500 trades 3389.48 last, a few ticks below the recent all-time highs.
Safe havens have had a mixed start to the week with gold prices rising against USD while JPY has weakened. The ongoing rally in both equities and the US dollar is capping upside, though the uncertainty around coronavirus means that we are still seeing safe-haven support. USDJPY trades 109.86 last. XAUSD trades 1580.47 last, down off the recent 1582.58 highs.
Crude Holds Near Highs
Oil prices have had a quiet start to the week also. With the US and Canada out today, the US session will see reduced volatility and flows are expected to remain quiet. Crude has benefitted recently from the pick up in risk assets along with increased expectations that OPEC will increase production cuts further when it meets next month. Crude trades 52.38 last.
CAD Helped By Crude
USDCAD has been under pressure today. The recent rally in crude, along with the broader pick up in commodities, has helped CAD recover some ground. USDCAD has fallen back below the 1.33 level and now trades 1.3229, heading back towards 1.3207 support.
Aussie Starts Softly
AUDUSD has been on a softer footing today with price trading .6724 last. For now, AUD remains supported by the recent pick-up in risk appetite. However, incoming China data poses downside risks for AUD as the forecasted drop in activity there will likely hit the Australian economy also. The unemployment rate, released on Thursday, will be the key domestic data focus this week.