Monday February 24th, 2020

Safe-haven US$ remains the currency of choice as Coronavirus cases continue to rise outside of China. South Korea reporting over +600 cases and Italy at +150, with both countries adopting similar lock-down strategies. Current virus cases reach almost 79k with almost 2,500 deaths, with 4 reported in Italy. CNY, AUD, NZD & the Asian currencies remain under pressure vs US$ on global growth worries. Intraday Coronavirus updates remain the primary focus for investors with currencies continuing to hit fresh lows vs US$.

Oil prices fell over 3% on demand worries as the virus spreads in Korea, Japan and Italy. Weaker oil prices and the flight to US$ is putting pressure on the C$. C$ is trading back at the higher end of its range and could retest 1.3310 vs US$. No key Canadian data out today, but BOC speech tomorrow will be watched closely for possible rate impacts from the Coronavirus. C$ is almost a cent weaker from last weeks highs and could provide a short term selling US$ opportunity ahead of 1.3310 key resistance.

Euro firms after holding above the key 1.0780 level, rebounding amid upbeat IFO data which beat expectations. “The German economy is not affected by Coronavirus” says the IFO, Germany’s leading think tank. The comment is perhaps a little outdated with four deaths reported in Italy, Germany is unlikely to be immune. The small rally in Euro may provide a selling opportunity with our bias remaining for a test of 1.0680. Coronavirus updates and US data will be watched closely for intraday direction.

GBP continues on the back-foot amid a stronger US$ and concerning Coronavirus headlines. EU/UK prepare for formal post-Brexit talks next week, with both sides exchanging heated rhetoric. Once negotiations begin behind closed doors expect both sides to focus on developing a working trade settlement. Coronavirus developments and the related US$ strength will have the greater impact on GBP for the short-term.