Fear of the new coronavirus outbreak to blame?
The Japanese yen is keeping a little higher as we're seeing some mild risk aversion in markets so far today. Bonds are keeping higher while equities in Asia - as well as US futures - are seeing red amid the new coronavirus scare that is taking place in China.
I warned yesterday that while this may not be an issue that has a direct influence on markets, it tends to manifest itself in fear and that can take shape in many different forms - as we have seen during the Ebola virus outbreak back in October 2014.
Ultimately, unless this transforms into a real pandemic, the trade is always to keep calm and fade the move once you get a sense that the fear is overblown.
It is the same thing with geopolitics and it is also the same thing when it came to how markets reacted to the Ebola virus outbreak many years ago.
For now, the focus remains on that and that is keeping markets in a softer spot. Gold is trading higher by 0.3% at $1,565 as bonds are keeping higher to start European trading.
As for USD/JPY, downside support is seen at the 200-hour MA (blue line) @ 109.90 with key support is seen closer to 109.60-70. That will help to keep the pair afloat ahead of BOJ governor Kuroda's press conference later at around 0630 GMT.
