Home Forex Japanese Yen firm over China virus concern, while Australian dollar jumps on jobs data

Japanese Yen firm over China virus concern, while Australian dollar jumps on jobs data

by Paul
Yen

The safe-haven Japanese yen was firm and the Chinese yuan fragile over concerns on the spread of the coronavirus in China, while the Australian dollar jumped after a drop in unemployment

The safe-haven Japanese yen was firm and the Chinese yuan fragile on Thursday as traders kept a wary eye on the spread of a virus in China, while the ailing Australian dollar jumped after a surprise drop in unemployment.

The World Health Organisation will decide later on Thursday whether to declare the spread of coronavirus in China a global health emergency.

We’ll be taking our leads from China and sentiment on the ground, said Chris Weston, Head of Research at Melbourne brokerage Pepperstone.

USD/CNH remains a solid guide, and I see risks if we see the cross push into 6.9150 … with a belief that the Chinese authorities will stimulate should economics be threatened, he said.

The yuan held around 6.9110 per dollar in morning offshore trade CNH=, not far above a two-week low hit on Wednesday.

The Japanese yen JPY=, seen as a haven by virtue of Japan’s position as the world’s largest creditor, rose 0.1% to a two week high of 109.65 per dollar as investors sought safety.

The U.S. dollar was otherwise steady, holding at about $1.1093 per euro EUR= and at 97.527 against a basket of currencies.

A major concern is that the virus could spread quickly as millions of people travel across China, and the world, to celebrate the Lunar New Year at their hometowns.

China’s efforts to be transparent is a reprieve for markets, but our suspicion is that cautiousness is likely to remain a near-term theme nonetheless, said Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney.

He said that for now it remains to be seen if China has managed to contain the outbreak, particularly given the upcoming holidays.

Elsewhere the Australian dollar AUD=D3, which has shed more than a cent this year as the domestic economy stalls, rose 0.5% to $0.6877 after jobs data showed an unexpected drop in unemployment.

The figures showed 28,900 jobs created in December, nearly double market expectations, prompting a rapid unwinding of bets that the central bank will cut rates next month.

Futures pricing shifted quickly from an even probability of a rate cut to only about a 1/4 chance.

The British pound GBP= sat a fraction below a three-week high at $1.3147, after an overnight rebound in manufacturing sentiment prompted investors to trim rate cut bets.

Factories’ optimism about the outlook rose to its highest since August 2014, according to a quarterly survey from the Confederation of British Industry. The focus now turns to broader business surveys due on Friday.

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