- Coronavirus spreads, makes markers nervous
- ECB stays put, EURUSD dives lower
- Oil prices down, recover somewhat after the inventory data
- Firday’s PMIs key for investors
Markets are down on Thursday from Asia to the US as investors become concerned with consequences of the Chinese virus that has killed at least 17 in China but has also been already detected in the US and UK. The Chinese decided to close Wuhan metropolitan area and travel limitations will deal a clear hit to the economy days before the start of the Lunar New Year. Obviously, the more the virus spreads, the broader consequences it might have globally, just when the economy looked to start stabilizing.
Wall Street and DE30 hit fresh all time highs just yesterday but today the moods are much darker. While the losses in the US are moderate (US100 is actually close to zero, US30 slides by 0.5%), Europe is deeper in the red with DE30 down 0.7% and RUS50 (due to sinking oil prices) 1.5% lower. A false breakout on DE30 yesterday might be very costly unless bulls regroup soon.
We finally see some moves on the FX market, as the Japanese yen storms higher amid risk aversion. The ECB was technically the event of the day but it didn’t offer many hints regarding the future policy other than Lagarde opening the door very very slightly to more asset purchases. That was enough to trounce euro lower and EURUSD sunk to 1.1040, the lowest level this year. EURJPY slid by 0.9% and GBPJPY as the Queen signed the Brexit bill. Ugly trade data from Japan (Japanese exports declined in y/y terms in EACH of the months in 2019) had little impact as risk aversion flows dominated the market.
Is the bullish trend over? GBPJPY has painted a full bearish reversal on the D1 chart. Source: xStation5
Oil continued to sink as the virus could hurt oil demand. Brent oil (OIL) slid below $61 for the first time since 3 December but recovered slightly after the US inventory data showed a smaller build of gasoline stocks and a draw of distillates.
Friday will be crucial from the macroeconomic perspective as we will get flash PMIs from Japan, Europe and US. We are sure that the virus will draw the most attention but unless the economy improves (as investors hope) this correction could get much uglier.
NATGAS gains 12% 🚨📈
GOLD returns to ATH levels 📈
Chart of the Day: JP225 (20.10.2025)
BREAKING: Producer Inflation in Germany lower than expected
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
