Friday February 7th, 2020

The US$ remains the dominant currency of choice for investors who are finding support from strong US economic data and a safe-haven for the coronavirus fears. The coronavirus death toll reached almost 640 and confirmed cases continues to grow hitting almost 31,500. The number of cases across Asian is growing, causing several Asian currencies to sell off significantly vs US$. SGD is set for its biggest weekly fall (1.8%) since Nov2016, KRW fell almost 1% and CB of Philippines cut interest rates. The US$ appears to be over stretched and a weak US Non-Farm could see a rebound for the major currencies. Non-Farm payroll will be the markets primary focus and will dictate intraday direction.

Oil prices firmed on hopes that OPEC+ will cut supply to offset the falling oil demand due to the impact of the Coronavirus. C$ has doggedly defended the 1.3310 level (2 month low) supported by firming oil prices as it awaits the Canadian unemployment number today. A generally stronger US$ continues to dominate under the global economic slowdown scenario caused by the coronavirus. Unless we see strong Canadian jobs data today, our bias is that C$ could breach the 1.3310 level and extend towards 1.3465.

Euro breached the key 1.0980 level and extended its selloff after German Industrial output for December had its largest decline in a decade. Investors concerned about Europe’s flagging economy are switching to the resilient US economy/currency. Euro is sitting at 4 month lows and we anticipate it could extend its losses towards 1.0680 (April 2017 lows) vs US$. Intraday investors will be focusing on the US Non-Farm data for direction.

GBP hit a fresh 6 week low vs US$ as the early EU/UK trade negotiations have increased investor concerns after the EU comments regarding the UK financial sector status. The trade worries coupled with a robust US$ has put significant selling pressure on the GBP. Hard-Brexit fears will continue throughout the year as the negotiations evolve, so expect 2020 to be a volatile year for GBP. Intraday the Non-Farm and Brexit updates will dominate GBP direction.