Forex news for North American trade on February 24, 2020:
- Italy reports seventh coronavirus death
- Fed's Mester: US monetary policy is 'well calibrated'
- More from Mester: She's not using inverted yield 'as a signal'
- Kuwait suspends flights to and from Iraq over coronavirus fears
- Italy finance minister suspends tax payments in virus zone
- BOE's Haldane: Balance sheets in better shape than 10 years ago
- Goldman cuts 1Q GDP to 1.2% on coronavirus
- February Dallas Fed manufacturing index +1.2 vs 0.0 expected
- WHO's Tedros says coronavirus has pandemic potential but it's not a pandemic yet
- Canada December wholesale trade sales +0.9% vs +0.4% expected
- January Chicago Fed national activity index -0.25 vs -0.16 expected
- Buffett: It makes no sense to lend money to the US government at 1.4%
Markets:
- S&P 500 down 112 points to 3226 -- largest one day decline in 2 years
- Gold up $16 to $1660
- US 10-year yields down 10 bps to 1.37%
- WTI crude down $2.13 to $51.24
- JPY leads, CAD lags
The market has been curiously ignorant to the coronavirus risks in the past three weeks but it all broke open on signs of cases spreading in Italy, Iran and South Korea with the first confirmed cases in six other countries as well.
There is no easy way to price the risk of a global pandemic but stocks hitting a record last week probably wasn't the way to go about it. Yields continued to signal trouble with 30-year Treasury rates hitting another record at 1.82%.
Economic news was nil aside from a few meaningful (but ultimately unsubstantiated) rumors about gold and the virus.
The yen held a big bid as it wiped out more than 61.8% of the squeeze higher in USD/JPY last week. The low as 110.33 but the market found some life late in a 40 pip bounce to close out the day.
The euro finished slightly higher despite the Italy-centric risks. That underscores its status as a carry-funder and what looks to be an unwind of some of those trades. The cross currents along those lines in EUR will continue to be a tricky trade.
More straightforward is the commodity bloc. It held up well early but selling kicked in later with AUD, CAD and NZD struggling.
