Yen Surges Amid Virus Concerns
On Monday, the Japanese yen is in demand in the FX Market. It was after traders drove the safe-haven currency amid worries over the circulation of the pneumonia-like virus in China.
Since January 8, the USD/JPY slumped by 0.2% to 109.08. It has been dropping as low at 108.73 overnight, its lowest level ever.
The US Dollar Index Futures that tracks the greenback versus a basket of other currencies were mostly dull at 97.68.
At the weekend, the Chinese government stretched the week-long new year holiday by three days. It is by giving more time for the inspection and other countermeasures to take effect.
On the flip side, the matter has to signal a bigger-than-expected near-term hit to both retail sales and industrial production.
In China, nearly 2,000 individuals had been infected and 56 killed by the disease, according to Chinese authorities last Sunday.
The information was even if reports state that the death toll has since risen to 80.
At a press briefing Sunday, China’s National Health Commission Minister Ma Xiaowei stated, “According to recent clinical information, the virus’s capability to spread seems to be getting somewhat stronger.”
Additionally, the disease is infectious in its development period, i.e., before symptoms show, making it tougher to contain.
Later this week, markets are bracing for policy conferences at the Federal Reserve and the Bank of England.
Fed’s Meeting Impact on the Forex Market
In a research note, ING analysts stated, “We doubt the Fed will have too much impact on USD/JPY this week.”
He also indicated that Japanese data this week comprises updates on Tokyo CPI, Employment, Industrial Production, and Retail Sales.
Moreover, “At its recent summit, the Bank of Japan upgraded growth and reduced its inflation projections to leave its complex monetary policy unchanged. It is hard to see BoJ policy having much effect on the JPY this year,” ING added.
On the other side, Sterling, the euro, along with the dollar, was on restraint.
The Federal Reserve’s rate-setting summit ends on Wednesday while the Bank of England gathers on Thursday.
Meanwhile, the EUR/USD pair traded 0.1% higher at 1.1031 in forex trading. It is ahead of the German Ifo industry survey and French labor market data, while GBP/USD was dull at 1.3075.
Elsewhere, the Euro Pound Sterling (EUR/GBP) exchange rate persisted flat at the start of the week. It has left the pairing trading at around £0.8417.
Sterling lingered under pressure. It was as the Bank of England (BoE) is closer than any time in the last three years to cutting interest rates.
On Thursday, the bank’s monetary policy conference will happen. It may perhaps be the primary driver for the progress of the Pound over the course of the week.