US dollarForex today saw a strong risk-off wave this Tuesday, as investors flocked to safe harbours, namely, the yen and gold amid rising concerns over the economic impact of a Chinese coronavirus outbreak, which led to four deaths in China and appeared to have spread into Australia.
The US dollar extended its broad-based correction after the anti-risk yen picked up bids against the greenback. USD/JPY dropped to lows of 109.90 before recovering some ground around the 110.00 handle. Bank of Japan’s (BOJ) status-quo and upgradation to its growth forecasts failed to impress the JPY bulls. Among the European currencies, EUR/USD bulls struggled to extend the recovery above the 1.11 handle while GBP/USD held steady above 1.3000 ahead of the key UK labour market report.
Another safe-haven, gold, hit a nine-day high near $1568, as risk-off remained at full steam, however since then it dropped at $1,560. Oil prices extended losses after the International Monetary Fund (IMF) cut global growth forecasts.
Markets stay focussed on the UK Employment and Wage growth data, due for release at 09:30 GMT, which will be closely eyed ahead of Thursday’s Bank of England (BOE) monetary policy decision. Also, of relevance remains the German ZEW Survey for January that is usually considered as a lead indicator. The ZEW Survey for Eurozone is also up for grabs at the same time, 10:00 GMT.
All eyes will also remain on US President Trump’s speech at the World Economic Forum (WEF) in Davos that commences at 10:30GMT until 11:00GMT. The speech is titled ‘Beyond Geopolitics’.
Moving on, the NA docket is a relatively lighter one, with the risk sentiment to continue to remain the main market motor amid concerns over the new virus outbreak and US political woes.