Forex news from the European morning session - 5 March 2020
Headlines:
- EU's Barnier: Agreement with the UK is possible even if it is difficult
- EU's Barnier: Difficulties of end of transition period are being underestimated
- OPEC meeting today comes to an end, what have we learned so far?
- OPEC ministers said to have agreed on oil output cut of 1.5 mil bpd
- BOJ may take steps this month to ease financial strain on virus-hit firms - report
- Japan to suspend visas for Chinese, Korean visitors
- Switzerland reports first new coronavirus death
- Italy Cabinet to discuss stimulus package today - report
- Germany February construction PMI 55.8 vs 54.9 prior
- China says that most regions are seeing over 50% of exporters resume operations
- China says will ensure funding needs for Hubei province
Markets:
- JPY leads, CAD lags on the day
- European equities lower; E-minis down 1.9%
- US 10-year yields down 9 bps to 0.961%
- Gold up 0.8% to $1,650.50
- WTI up 0.3% to $46.95
- Bitcoin up 4.2% to $9,105
After the turnaround in the market yesterday, the old habits from the past week started to resurface as virus fears continue to eat away at optimism in trading today.
European equities began with modest gains but that quickly dissipated in early trades with US futures also sinking further after falling in Asia Pacific trading.
That saw USD/JPY ease from 107.30-40 to 107.00 before the risk aversion deepened and the pair fell towards 106.80 - fresh lows since October last year.
The meltdown in Treasury yields didn't help the dollar, with the market also seeing >70% odds of the Fed cutting rates by 50 bps in its 18 March meeting now.
EUR/USD climbed from 1.1130 to 1.1200 while cable also pushed higher from 1.2880 to 1.2937 before giving some gains back on post-Brexit trade talk headlines.
The other big story in the market today is the OPEC meeting, whereby we see the bloc agree to a 1.5 mil bpd output cut proposal that will begin in Q2. However, this is still conditional on Russia's agreement and so far Moscow is said to be disapproving on the numbers.
Oil got a brief jolt from $46.55 to $47.40 before easing back towards $46.95 currently.
Looking ahead, it is still all about the market trying to digest global central bank easing, how effective all that will be, and how the coronavirus situation will continue to develop in the coming weeks/months.
If rate cuts can't help to keep the market afloat for even a while, the ongoing economic fallout from the virus outbreak is more than likely to lead to another heftier fall sooner rather than later - should the outbreak become more widespread in time.
