China’s Hubei province, the coronavirus outbreak epicentre, reported a sharp rise in the new cases number. Investors sought safe havens and dumped risky assets.
The jump in new cases was a result of a new diagnosis approach, aimed at bringing forward the detection timeline and lowering the overall mortality rate. Using the new method, the province reported on Thursday 14,840 new cases of the virus, up from 1,638 new cases on Tuesday. The number of deaths in the province rose by 242, a daily record, to 1,310.
Despite that context, the dent to sentiment was enough to present a selling opportunity after several days of gains.
Broad risk-off sentiment was the main theme in London trading. However, traders were looking to take positions in riskier currencies as the sharp rise was a result of the new diagnosis method. The euro fell to a four-and-a-half-year low against the Swiss franc on Thursday as investors sought safe havens.
The euro dipped to 1.0622 francs, below its 2016 trough of 1.0623 and its lowest level since August 2015. The common currency last stood around 1.06235.
The franc’s gains come at a time when its correlation with risky assets has broken down in recent weeks.
Investors’ focus turns on US inflation data which are to show a slight moderation in monthly U.S. price data for January. Market watchers say a pickup in price pressures could boost the dollar and undermine risk appetite.
Further, the British Prime Minister Boris Johnson has appointed Rishi Sunak as his new finance minister. The new British finance minister who has previously served as Chief Secretary to the Treasury, succeeds Sajid Javid who has resigned.
START TRADINGForex – Sharp rise of new virus cases boosts safe havens
Fresh questions raised about the scale of the crisis as the sharp rise in the headline number of deaths and infections unnerved world markets.
The US dollar held near a four-month high against a basket of its rivals ahead of US inflation data.
After weakening to a three-and-a-half-week low a day earlier, the yen gained 0.3% against the dollar on Thursday to 109.770 yen. The Japanese currency climbed to a four-month high versus the euro.
The Australian dollar, widely used as a proxy for risk on Chinese assets, retraced its recent rally and traded 0.3% softer at $0.6716.
The New Zealand dollar slipped 0.2% to $0.6453.
The British pound extended gains on Thursday as investors bet that the appointment of a new British finance minister would pave the way for a more expansionary budget next month. The currency rose as high as $1.3045 from about $1.2988, leaving it up more than 0.6% on the day. The pound also extended its rally against the euro, rising 0.7% to 83.270 pence, its highest since Dec. 16.
In commodities, rallying oil prices paused, with Brent crude LCOc1 flat at$55.72 per barrel, 15% below where it was before the coronavirus outbreak.
Gold rose as the sharp rise in the number of new coronavirus cases in China dashed hopes the epidemic was slowing.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money