- Summary:
- Asian equities were sold off aggressively today on renewed concerns about the coronavirus. However, losses on AUDUSD and USDJPY were limited.
Asian equities markets are all trading lower today on renewed concerns about the coronavirus outbreak. The Hang Seng Index is down 1.79% or 487.9 points at 26,820.9. Meanwhile, South Korea’s KOSPI is in the red by 3.87%. As for the Shanghai Composite Index, it incurred a 0.28% loss for the day at 3,031.233. Only the Nikkei 225 was spared of losses because it was closed today in observance of the Emperor’s Birthday.
G20 Leaders Worried About the Coronavirus Outbreak
Over the weekend, G20 leaders convened in Saudi Arabia to discuss economic matters. Rightfully so, the coronavirus outbreak did not escape their attention. IMF Director Kristalina Georgieva warned that Chinese economic growth could slow to 5.6% this year because of the outbreak. This weighed heavily on sentiment because China is one of the biggest drivers of global growth.
Cases Outside of China Surge
It also did not help that the number of confirmed cases spiked outside of China. South Korea saw a 161 jump to 763 cases which prompted a promise from the government to take “extraordinary measures” to support growth. Meanwhile, Italy saw its cases jump from three to 152 on Sunday which led to a ban in public activities in the country.
Major currency pairs gapped at the start of today’s trading but most of which have recouped some (if not all) of their losses. AUDUSD which had a 40-pip gap as it opened at 0.6584 today is now trading at 0.6589. EURUSD had a 23-pip gap while USDJPY was 25 pips lower from where it opened.
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USDJPY Outlook
On the 4-hour time frame, we can see that losses on USDJPY were limited. The currency pair has retraced some of its gains back to the area around the 38.2% Fib level (when you draw the Fibonacci retracement tool from the low of February 18 to the high of February 20). If there are still sellers in the market, it could trade lower to 110.60 where the 61.8% Fib level and the rising trend line (from connecting the lows of February 3 and February 18) coincide.
Conversely, a bullish close above today’s high at 111.68 could mean that USDJPY is on its way to its previous highs at 112.20.