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Daily Dose

24 January 2020

Good morning,

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On the wires

  • China says 25 people have died from the coronavirus as South Korea, Japan confirm two cases
  • Scientists reveal the voice of a 3,000-year-old Egyptian mummy
  • Hand yourself over or else! Traffic authorities warn Joburg speedster who clocked 308km/h
  • Teacher stable after being shot at primary school by robbers posing as parents
  • Western Cape on high alert and ready for coronavirus
  • Nadal hits ball girl in head with shot, apologizes with kiss

Two Cents Worth...

Currency Crackdown

The rand held up relatively well yesterday despite global stocks recording their biggest losses in over eight months, with investors dropping riskier assets in favour of safe-haven assets. While the currency did lose some ground, the loss was fairly minimal – losing less than 5c from an open of 14.34/$ to close out the day at 14.38/$ where it’s currently trading. Investors have grown increasingly worried over the spread of the coronavirus in China ahead of the of the Lunar New Year starting today, with the Asian country placing two major cities under lockdown to contain the outbreak that has killed 25 people and infected more than 800.

Global currency trade for the most part has been fairly subdued with a slight bias towards safe-havens such as the Swiss franc and Japanese yen at the expense of riskier currencies, with concerns over the virus giving investors the jitters. The euro, however, is trading near a seven-week lower to the dollar after the ECB took a more dovish stance than expected as it launched a broad review of its monetary policy. The central bank is looking to redefine its main goal and how to achieve it, as it reflects on the failure of the negative interest rate experiment and quantitative easing to deliver on inflation targets. ECB President Christine Lagarde also said in a speech that the risks to growth in the euro zone remain tilted to the downside, while EU automakers traded at a three-month lower following President Trump’s tariff threat. In the UK,  the pound was relatively flat but still up almost 1% this week as solid economic data eased expectations of a rate cut by the bank of England (BoE). Data wise, we see a fairly light calendar for both the euro and the pound with the market focusing on manufacturing and services PMI releases. The UK PMI, in particular, will be closely watched for clues on the BoE’s policy decision next week

In other markets, Asian stocks were mixed yesterday as investors continue to weigh the impact of the coronavirus. Major markets across the Asian region are closed ahead of the Lunar New Year that starting today. Meanwhile, gold is slightly higher following a decision by the ECB to keep rates unchanged and on the back of subdued risk sentiment. Oil remains relatively unchanged.

On the radar…

  • EU – President Lagarde Speech
  • EU – Markit Manufacturing PMI
  • US – Markit Manufacturing PMI
  • UK – Markit Manufacturing PMI

Did you know?

One fast food burger ‘can’ contain meat from 100 different cows

Have a lovely weekend,

FXOne Team

 

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