Friday February 28th, 2020

Fears of a coronavirus pandemic and the potential ensuing impact on the global economy saw investors dump risker assets, causing equity markets to tumble. Asian & trade-related currencies sold off, as well as US$, with investors switching to JPY, CHF and Euro. Concern that the FED will cut rates in a response to the Coronavirus triggered investors to unwind US$, which had been the safe-haven currency. New Coronavirus cases continue to grow to almost 84k with deaths rising to almost 2,900 across 40+ countries. Intraday the Coronavirus developments remains the primary focus, but US data may provide additional volatility.

Oil prices are on track for its biggest weekly fall in 4 years, with oil expected to post its 6th straight loosing session. OPEC+ is set to meet next week to discuss deeper supply cuts. C$ responded negatively from the weakening oil prices, selling off by 1% to hit 1.3450. Canadian Q4 GDP will be watched closely for intraday direction. C$ has the potential to weaken of towards 1.3560, the low in May2019.

Euro surged to a 1 year high vs US$ on a combination of speculation of a Fed easing and the prospect of EU stimulus. Technically a break of 1.11 could see a move to 1.1240 next. The underlying concern that Europe could easily switch from a stagnant economy into recession will remains an underlying concern for investors. Expect Euro to remain volatile and current levels should provide selling opportunities. The focus remains on Coronavirus developments and US data for direction today.

GBP remains under pressure from negative Brexit trade rhetoric and concerns that the UK/EU talks could fail. GBP weakened against US$ and Euro overnight, with investor focus remaining on the trade talks. Expect the trade rhetoric to soften as the trade negotiations begin, with the potential that GBP will strengthen into March.