A double whammy
My go to risk pair is the AUDJPY and right now the pressure is on for more AUDJPY downside. The close connection of Australia's economy with China, making up around 30% of Australia's GDP, means that the pair is being hit twice. Firstly, the AUD is weak due to its close connection with China and secondly the AUD is weak due to a slowing of the global economy. The JPY is strong on the risk off flows which typically see JPY strength.
So, there is most likely going to be a scary session ahead as fear starts to grip the markets. The contagious nature of the coronavirus is self evident given how widely the virus has already spread. It will soon get to a stage where the virus can't be easily tracked. So, how far these markets can fall is not yet known, but there almost certainly looks like more falls today after a heavy night of losses across the Asia-Pac indices: Nikkei -3.67%, Hang Seng -2.63%, Shanghai Comp -3.71%.
Any retracements in the AUDJPY pair should find sellers and traders could scale in to shorts.
