Forex news from the European morning session - 6 February 2020
Headlines:
- Chinese government calls for other regions to resume normal production in an orderly manner
- OPEC+ recommendation reportedly said to await Russia's final position
- OPEC+ joint technical committee said to recommend 600k bpd output cuts
- Honda to keep Wuhan auto plants closed for an extended period - report
- ECB's Lagarde: Low rates, low inflation has significantly reduced scope to ease policy
- China's CNOOC reportedly declares force majeure on some prompt LNG deliveries
- Germany December factory orders -2.1% vs +0.6% m/m expected
- China considers using a term in trade deal to launch consultation with US over virus impact - Global Times
- China may suspend the annual meeting of parliament due to coronavirus
Markets:
- AUD leads, GBP lags on the day
- European equities higher; E-minis up 0.4%
- US 10-year yields down 0.5 bps to 1.645%
- Gold up 0.5% to $1,564.12
- WTI up 1.0% to $51.25
- Bitcoin up 0.3% to $9,718
Risk is the key driver in the market today but this time around the mood is more mixed as we see the more upbeat tone to start the day ease up in the European morning.
Sentiment was boosted by earlier news that China will reduce tariffs on US goods starting from 14 February next week. Risk trades extended gains with US 10-year yields rising to 1.682% while European stocks started the day with solid gains.
But as the session moved along, bond yields fell back off while equities nudged slightly lower - resulting in a more mixed risk tone ahead of North American trading.
Of note, US 10-year yields are now down by 0.5 bps to 1.645% and that saw USD/JPY push back to 108.80-90 while the aussie also fell from 0.6760 to 0.6738 against the dollar before recovering some poise during the last hour.
EUR/USD continues to sit in a narrow range - 10 pips only - around the 1.1000 level as the pair remains vulnerable to a potential downside break under key support at 1.0990-00.
Meanwhile, the pound continues to stay pressured under 1.3000 as Brexit concerns serve to dampen the mood in trading this week. Cable fell to a low of 1.2953 and is holding just above that for now, testing key resistance around 1.2950-60 still.
Looking ahead, the market will have to try and grapple with the ramifications of the coronavirus outbreak still, after having seen China's CNOOC declare a force majeure and Honda extending its production shutdown in Wuhan earlier today.
Just take note that the Chinese government has already called for other regions besides the Hubei province to resume work next week, so let's see whether or not there will be any more twists to the coronavirus saga in the coming weeks.
