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Forex Today: Risk-off grips Asia on China virus scare; focus on UK jobs, German ZEW

Forex today in Asia saw a strong risk-off wave this Thursday, as investors flocked to safe harbors, namely, the yen and gold amid rising concerns over the economic impact of a Chinese coronavirus outbreak, which led to four deaths in China and appeared to have spread into Australia.

The US dollar extended its broad-based correction after the anti-risk yen picked up bids against the greenback. USD/JPY dropped to lows of 109.90 before recovering some ground around the 110 handle. Bank of Japan’s (BOJ) status-quo and upgradation to its growth forecasts failed to impress the JPY bulls.

Another safe-haven, gold, hit a nine-day high near $1568, as risk-off remained at full steam. Asian stocks were a sea of red while S&P 500 futures and the US Treasury yields incurred heavy losses, reflective of the jittery market mood.

Across the fx space, the Chinese yuan slumped to weekly lows on China virus outbreak news while the Antipodeans also fell alongside amid reduced demand for higher-yielding currencies. The Aussie tested the 0.6850 support once again while NZD/USD battled the 0.6600 level. Meanwhile, the USD/CAD pair regained the 1.3050 barrier amid extension of the weakness in oil prices. Oil prices extended losses after the International Monetary Fund (IMF) cut global growth forecasts.

Among the European currencies, EUR/USD bulls struggled to extend the recovery above the 1.11 handle while GBP/USD held steady above 1.3000 ahead of the key UK labor market report.  

Main Topics in Asia

US Agriculture Sec. Perdue: No need for more farm aid after China trade deal

Sources: Three rockets fall inside Baghdad's Green Zone, no casualties – Reuters

India's Gold imports may rebound from a three-year low - All India Gem & Jewellery Domestic Council.

Pompeo says more US action coming to support Venezuelan opposition leader - Reuters

Trump: Heading to Davos and additional hundreds of billions of dollars back to USA

Wuhan-Pneumonia pandemic control centre set up to prevent spread of virus

China shows highest levels of confidence among major economies for 2020 - PwC survey

China’s CommerceMin: China welcomes competitive US products to enter China's markets

Coronavirus spreading into Australia, a Brisbane man undergoes tests - Australian press

BOJ leaves monetary policy unchanged, as widely expected

BOJ Quarterly Outlook: Japan’s GDP forecasts revised up, CPI projections lowered

Key Focus Ahead       

Markets stay focussed on the UK Employment and Wage growth data, due for release at 0930 GMT, which will be closely eyed ahead of Thursday’s Bank of England (BOE) monetary policy decision. Also, of relevance remains the German ZEW Survey for January that is usually considered as a lead indicator. The ZEW Survey for Eurozone is also up for grabs at the same time, 1000 GMT.

All eyes will also remain on US President Trump’s speech at the World Economic Forum (WEF) in Davos that commences at 1030GMT until 1100GMT. The speech is titled 'Beyond Geopolitics'.

Moving on, the NA docket is a relatively lighter one, with the only Canadian Manufacturing Sales data of note. However, New Zealand’s GDT Price Index could also garner some attention around 1500 GMT, as the risk sentiment will continue to remain the main market motor amid concerns over the new virus outbreak and US political woes.

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