US futures reverses gains as OECD warns of impact of Covid-19

US futures turned lower today as worries of COVID-19 continued. The futures had attempted to recover during the Asian session. In a gloomy statement, the OECD warned that the disease will see global economic growth drastically drop. It now expects the global economy to grow by 2.4% from the previous 2.9%. The organization warned that a longer lasting and more intensive disease would slash growth to 1.5% this year. Traders also reacted to the weak manufacturing data from China. On Saturday, data from China Logistics showed that the PMI declined to 35.2 in February. Today, Caixin released a slightly better PMI reading of 40.3. According to OECD, weak manufacturing data from China would affect global growth by about 0.4%. 

The euro rose against the US dollar as traders received some positive data from Europe. In Germany, the manufacturing PMI rose to 48.0 in February. This was better than the previous 45.3 and its highest it has been since February last year. In Spain, the PMI rose to 50.4, which is the highest it has been since May last year. In Sweden, the PMI rose to 53.2 from the previous 52.0. These numbers imply that the manufacturing sector in Europe is doing better than what traders were expecting. It also implies that the ECB could buy some more time before acting on interest rates. 

The Japanese yen rose by 50 basis points as the market received some positive data from the country. In the fourth quarter, the country’s job advertisements rose by 0.7%, which was better than the expected decline of 6.6%. Business inventories rose by 0.3% after declining by -0.2% in the previous quarter. These numbers came as the Reserve Bank of Australia (RBA) started its two-day meeting to set interest rates. The members are expected to leave interest rates unchanged at 0.75%. They could also pledge to take further actions to support the economy as the country’s biggest customer slows down.

EUR/USD

The EUR/USD pair soared to an intraday high of 1.1127, which is the highest it has been since January 20. The price is along the upper line of the Bollinger Bands and above the short, medium, and long-term moving averages. The momentum indicator has continued to rise while the William Percentage Range is above the overbought level of 20. The pair may continue moving higher as traders anticipate a rate cut from the Federal Reserve.

USD/CHF

The USD/CHF pair declined to an intraday low of 0.9560, which is the lowest it has been since September 2018. It has been dropping since February 21, when it was trading at 0.9847. The price is below the 14-day and 28-day exponential moving average on the four-hour chart. It is also along the lower line of the Bollinger Bands while the RSI has moved to the oversold level of 30. The moving average of oscillator (OSMA) has also remained below the centreline since February last year. The pair may continue moving lower as global risks rise because the Swiss franc is often viewed as a safe-haven.

AUD/NZD

The AUD/NZD pair declined to an intraday low of 1.0426 from Friday’s high of 1.0483. The price is slightly above the 50% Fibonacci Retracement level. The signal line of the MACD moved below the centreline while the signal and main line of Stochastic has moved to the oversold level. The pair may remain in a holding pattern ahead of the RBA decision tomorrow.