Another wave of virus concern washed over the markets early Thursday, lifting the yen broadly, after more robust diagnostic methods in China sharply raised the number of reported cases.
The risk-off response diminished during NY trading as markets took some solace from the notion that new methodologies resulting in higher case count might benefit containment, thereby limiting the ultimate market and economic effects.
The EUR was the weakest of the majors on dimming euro zone growth expectations.
EUR/USD plumbed its lowest low since April 2017 as the global demand for safe yield still favored Treasuries, with little Fed policy outlook changes derived from the U.S. CPI and claims data, or a Senate confirmation hearing for new Fed board members.
The pound was again the best performer after strong UK house prices data and a shake-up in PM Boris Johnson’s leadership team that sent Gilt yields higher and the FTSE 1% lower on the notion Johnson will push hard for fiscal stimulus.
USD/JPY fell back toward Friday’s pullback low before bouncing with Treasury yields and S&Ps.
Most commodity-linked currencies swooned on the virus spike news, but also recovered from the worst of those losses.
Oil more than recouped overnight virus-related losses, partly on hopes OPEC+ would eventually agree to more production cuts in the face of the IEA’s forecast for the first fall in oil demand in a decade.
Copper, silver and gold all gained ground in an odd risk-on/off mix.
German and euro zone Q4 GDP data kick off Friday’s data, with concern about possible negative q/q prints after dire industrial production reports.
U.S. retail sales, IP, CU and Michigan sentiment will give a sense of how 2020 is kicking off beyond the known tightness in the labor market.