- Market remains cautious as millions travel for Chinese New Year
- WHO provides some positivity with a recent public announcement
- Forex markets across Asia remain tentative
As hundreds of millions of people traveled across China on Friday to mark the Chinese New Year and the beginning of the year of the rat, fears remained high across the nation that has been gripped by coronavirus in recent weeks. This has taken its toll on the forex market with the majority of trade remaining stagnant at best. Moving into the weekend will bring a clear chance for reflection in the markets across Asia. A keen eye will be on virus progression over these days. A further spread sure to indicate a negative for the market reopening on Monday.
Holiday travel stokes fear of further spread
The death toll rose to 41 on the day of the Lunar New Year with millions set to travel to home towns across the country. The city at the epicenter of the crisis, Wuhan, still remain on lockdown also, with travel both in and out completely restricted. At the time of writing, Chinese President Xi has also commented on the crisis for the first time, saying that China faced a “grave time” in fighting the virus. This will most certainly impact market sentiment on reopening.
The next several days will be crucial for both the forex market and the country in general as the spread of the virus will remain closely monitored over this holiday period. How much it spreads during this time could really impact the market sentiment coming into next week.
WHO positivity abates some concerns
A statement from the World Health Organization at their Thursday press conference did work to calm the market before the weekend break somewhat. Their statement that the virus does not yet constitute a global health risk, although being high-risk in China certainly injected some positivity into the markets across Asia. This has contributed to balancing many markets to a neutral stance.
Positive steps taken in containment across China including a $145 million investment in the Hubei province to help support containment and recovery efforts have also worked to manage fears in the market. This has included the immediate, and expedited construction of 2 hospitals, expected to be complete within 7-days to help manage the patient flow in Hubei province.
Domino effect across Asia
Other forex markets and currencies across Asia and globally have reacted defensively through the end of the week with both the USD/EUR, and the USD/JPY staying in a neutral position. This lack of strength from the US Dollar could also be factoring in the ongoing impeachment process. Many traders may be holding back on taking a strong position as US President Trump begins to mount his defense. Either way, the next week provides for several geopolitical tests of the forex market.[table “14” not found /]