The Asian equities tracked the Wall Street rally on Friday, induced by the US $2 trillion stimulus package. The market mood, however, remained cautious amid no stopping in the coronavirus spread globally. The US outstripped China with the most infections while there is no signs of a slowdown in the number of cases across Europe.
Most major Asian markets rallied over 1%, barring the Australian stocks, which sank over 5% amid rising concerns over the virus impact on the economy following stricter measures announced by the Australian PM Scott Morrison. The tepid risk tone was well reflected by the losses in the US equity futures while broad US dollar sell-off extended on the US fiscal stimulus-led easing funding pressures.
Amongst the G10 fx space, USD/JPY lost over 1% and fell back on the 108 handle while the Aussie rallied to a nine-day high above 0.6100, as markets cheered the upbeat telephonic conversation between US President Donald Trump and his Chinese counterpart Xi Jinping about the virus.
EUR/USD tested the 200-DMA hurdle on its corrective advance from sub-1.07 levels while the cable briefly regained the 1.2300 level before reverting to 1.2250-70 region amid concerns over the EU-UK post-Brexit trade talks.
Oil prices kept its recovery mode intact above $23 mark and added to the gains in the Canadian dollar, as USD/CAD breached the key 1.4000 level. Meanwhile, gold prices trimmed losses and regain $1640 amid persistent dollar weakness.
Main topics in Asia
Key focus ahead
There is nothing of relevance due on the cards from the European session, in terms of the economic data releases. Therefore, the fx markets will continue to remain at the mercy of the US dollar dynamics and broad risk trends amid heavy news flow, as coronavirus-related updates dominate.
The Bank of England (BOE) quarterly bulletin will be eyed ahead of the US data flow, due at 1230 GMT, including the Core Personal Consumption Expenditure (PCE) – Price Index and Personal Spending figures. Next in focus remains the UoM Consumer Sentiment data for March due at 1500 GMT.
The House of Representatives vote on the US Coronavirus Bill will grab some attention later in the American morning, with a two-hour debate set up ahead of the voice voting.
Next of note remains Baker Hughes US Oil Rigs Count data due at 1700 GMT, which will wrap an eventful and hectic week.
Dollar sell-off is again fuelling gains in EUR/USD, pushing the pair higher to key average hurdle. Downside risks persist as the virus outbreak is showing no signs of slowing down in the Eurozone.
GBP/USD remains well bid above 1.2200, having pulled back from the highest levels in nine days reached above 1.23. Coronavirus cases in the UK surge. The EU-UK Brexit talks stalled, UK PM Johnson accused to put Brexit over breathing.
March sentiment expected to fall upon revision. Widespread job losses will drive overall sentiment down. Weaker consumer sentiment will likely mean lower consumer spending.
Gold calls are claiming higher implied volatility premium than puts for the third straight day, indicating investors are adding bets to position for strength in the yellow metal.