USDJPY, H1
The Dollar and most other currencies have been stable in quiet early-week trading so far. This came with the main Chinese equity indices posting 2%-plus gains after China’s Finance Minister said on Sunday that Beijing would roll out targeted and phased tax and fee cuts and with the PBoC lowering one of its interest rates and making another liquidity injection. Other stock markets in Asia were mixed. The number of new cases in the coronavirus continued to increase, though the consensus view seems to remain that peak contagion will likely be seen in March.
Japan’s Nikkei 225 underperformed, closing with a 0.7% loss following weaker than expected Q4 GDP data, which showed a 1.6% q/q contraction versus the median forecast for -0.9%. Q3 data were also revised down, and the data come amid expectations for a dismal current quarter performance given the impact of measures to contain the virus outbreak in China and Japan, and elsewhere.
Among the main currencies, EURUSD had been plying a narrow range just above the 34-month seen on Friday at 1.08265, but gained some momentum to 1.08500 in early European trading. EURJPY and EURCHF have also been in narrow ranges about their respective four-month and five-year lows of Friday.
USDJPY moved up following the weak Japanese data but is capped by R1 at 109.870 and Friday’s high at 109.910. Cable has continued to consolidate gains seen mid last week following signs that the government is gearing up a fiscally expansive policy. The pair has been holding with about 1.3030-50, off from the two-week high of last Thursday at 1.3069. AUDUSD has traded slightly firmer, managing to lift just above its Friday high in making a peak at 0.6733. USDCAD edged out a two-week low, at 1.3233. A big focus will be on flash manufacturing PMI surveys for February, due at the end of the week out of Eurozone, UK and US.
US and Canadian markets are both closed today.
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Stuart Cowell
Head Market Analyst
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