Virus Reports Increase Safe Haven Demand
Safe haven demand has increased significantly after a sharp increase in Coronavirus cases was reported. A new diagnostic methodology indicated that there are nearly 15,000 new cases reported today, up from the 1,638 reported on Tuesday. Higher risk assets, especially those tied to the fortunes of the Chinese economy, namely the Australian and New Zealand Dollars, were especially hard hit. The Euro, as well, came under sell pressure and hit a 4½ year trough versus the safe haven Swiss Franc. Policymakers in China have set up a number of measures in an effort to stabilize the Chinese economy in the wake of the virus.
The EUR/CHF was trading at 1.0626 Swiss Francs, a loss of 0.0686% and off the earlier low of 1.06207 Swiss Francs. The AUD/JPY was trading at 73.78 Yen, down 0.4869%; the pair has ranged from a low of 73.639 Yen to a peak of 74.208 Yen. The NZD/JPY was lower, trading at 70.799 Yen, a loss of 0.4415% and off the earlier low of 70.644 Yen.
Markets Eye Friday EU GDP
The Euro was struggling for traction after an unexpected decline in manufacturing output was reported yesterday. Eurostat reported a seasonally adjusted monthly reading of -2.1%, well below the -1.6% that had been predicted; the previous reading of 0.2% was revised to 0%. On an annualized basis, industrial production fell to -4.1%, against a predicted -2.3%, with a revision of the previous numbers to -1.7% from -1.5%. Analysts say that that does not bode well for tomorrow's release of preliminary 4th quarter GDP figures. Currently, analysts are predicting that annualized growth will be at 1% (unchanged), while quarterly growth will be at 0.1% (unchanged). The EUR/USD was trading at $1.0882, up 0.1058%.