Forex - Yen Pushes Higher; Euro in Focus as ECB Meets

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Thursday, January 23, 2020 - 12:22
Point Trader Group
Forex - Yen Pushes Higher; Euro in Focus as ECB Meets

The safe haven Japanese yen gained against the U.S. dollar Thursday on a sharp bout of risk aversion, as battles to contain the new pneumonia-like virus in China intensified, although volatility remained limited.

 

By 03:30 ET (0830 GMT), the yen had climbed 0.2% against the dollar, with USD/JPY trading at 109.56. The Chinese yuan dropped 0.4% against the greenback, with USD/CNY trading at 6.9313. The US Dollar Index Futures, which tracks the greenback against a basket of other currencies, was essentially flat at 97.30.

 

Earlier Thursday, China issued a travel suspension in Wuhan, a city of 11 million at the center of the outbreak of the coronavirus, as its latest attempt to stop the spread of the disease. The virus has killed at least 17 people so far and infected hundreds of people in China, and as far afield as the U.S., Thailand, Taiwan, Japan and the Republic of Korea.

 

Elsewhere, the EUR/USD pair inched down 0.1% to 1.1087 as traders awaited the European Central Bank (ECB) policy meeting due later in the day. The meeting will be followed by a press conference with President Christine Lagarde.

 

Economists expect no changes in any of the monetary policy instruments, and the focus will be on the central bank’s outlook and information on its the strategic review.

 

“In this environment, markets could pay most attention to the comments talking about a tentative stabilization of economic data and some removal of downside risks,” said analysts at Nordea, in a research note, “which in other words would mean less need for immediate easing.”

 

That said, Nordea doesn’t expect the euro to receive much lasting support from the central bank, “as the bar for the market to price in any notable ECB tightening remains high.”


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