European stocks fall as more companies flag coronavirus warnings
European stocks and American futures dropped today as traders continued to watch the fluid situation regarding coronavirus. In the United States, futures tied to the Dow and the S&P500 indices dropped by 400 and 50 points respectively. In Europe, the DAX and Stoxx declined by 116 and 35 points respectively. There was several big news today. Continental, the German auto supplier, made a €1.2 billion net loss in 2019. The company also warned of a difficult year ahead. In the United Kingdom, Flybe went into administration, putting more than 2,000 jobs at risk. The company attributed its collapse to the coronavirus epidemic. Another big news was that California declared a state of emergency as the number of cases rose. In total, the number of global cases has passed 95k while more than 3k have died.
The sterling continued to rally as talks between the UK and the European Union continued into the fifth day. The two sides are attempting to create a foundation of what will be discussed in a future trade deal. Still, there is a major over the UK’s lucrative financial sector. The European Union has continued to rebuff attempts by the UK to do a deal that would preserve the role the City of London plays in finance. In addition to this, traders have been watching the bank’s response to coronavirus. In a statement yesterday, Andrew Bailey, said that the bank would respond swiftly to the virus issue. Bailey has been nominated to replace Governor Mark Carney.
The US dollar index declined slightly today as traders focused on the recent rate cut and the employment data expected tomorrow. The Fed has been accused of panicking by implementing a 50 basis points rate cut on Tuesday. Tomorrow, we will receive the official jobs data for February. The data is expected to show that the economy added 175k jobs while the unemployment rate is expected to remain unchanged at 3.6%. Yesterday, data from ADP showed that private companies added more than 183k jobs in February.
The GBP/USD pair rose to an intraday high of 1.2928, which is the highest it has been since February 27. The price is above the 61.8% Fibonacci Retracement level on the hourly chart. The price is along the upper line of the Bollinger Bands. The price is also slightly above the Ichimoku cloud. The Tenkan Sen index has continued to provide support to the pair. The momentum indicator has also continued to rise. The price may continue to rise on a weaker dollar and relatively hawkish BOE.
The USD/CHF pair declined to an intraday low of 0.9523, which is close to the lowest level since April 2018. The price is below the 14-day and 28-day exponential moving averages. The accumulation and distribution and on-balance volume indicators have continued to decline. The pair may continue to decline as risks of a global slowdown increase.
The EUR/USD pair rose by 30 basis points as traders priced-in another Fed rate cut this month. The pair is trading at 1.1165, which is slightly below the resistance level of 1.1185. The price is still between the channel of 1.1093 and 1.1185. The pair may remain within this channel ahead of the official employment data set for tomorrow.