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Friday’s Asian session continues to follow the previous day’s coronavirus-led risk-off as numbers outside China pose a serious challenge to the global economies. Also increasing the risk-off could be travel warnings from the US as well as China’s dislike of the Trump administration’s latest push towards trade/tech measures. Furthermore, Japanese policymakers and the German Finance Ministry also crossed wires to convey fears of the Chinese contagion whereas China’s Commerce Ministry stood ready to counter the contagion with measures required.

While seeing it from the market’s perspective, Asian equities followed the footsteps of Wall Street but off in India and a lack of major data during the early day seem to have restricted the reaction. The US 30-year treasury yields revisited September 2019 low while the 10-year coupon dropped below 1.5%.

Gold refreshes the seven-year top to near $1,630 whereas AUD/USD struggles around 0.6600. However, USD/JPY refrained to extend the previous day’s run-up despite mixed economic outcomes from inflation and activity measures. The US Dollar Index awaits fresh moves to rise beyond 99.91 whereas Crude prices also step back from the four-week top. Additionally, EUR/USD remained mildly positive around 1.0800 while NZD/USD extended losses to 0.6300 as RBNZ’s Orr spread worries despite terming the present policy as favorable.

Main topics in Asia

US wields trade stick on China amid epidemic – Global Times

China’s CommerceMin: Accelerating plans for further measures to support firms and economy

German FinMin: Coronavirus poses risk for German trade in coming months

Safe haven flows to continue until coronavirus contained – Reuters

US-India trade deal unlikely before Trump’s India visit – Reuters

Reuters poll: Chances of disorderly UK exit from European union at 25% (20% in Jan poll)

US 30-year Treasury yield drops to lowest since September

Japan Economy Minister, Nishimura: Think the weak yen is a reflection of a strong US economy

BoJ governor Kuroda: We are ready to act, but do not believe it is needed now

Japan Finance Minister Aso: Won’t comment on forex levels – Reuters

Japan’s core consumer prices rose 0.8 percent in January from a year earlier – Reuters

China’s Hubei province confirms 411 new cases of coronavirus, and 115 new deaths as of Feb 20

RBNZ Orr: In favourable position with OCR at 1%

Ireland Taoiseach Leo Varadkar resigns after inconclusive election result – Sky News

US State Department: Reconsider travel by cruise ship to or within East Asia and the Asia-Pacific region

Key focus ahead

Markets are gearing for the preliminary activity numbers for February and Germany will be the first one to cross the wires. While the recent confidence index from the Euro area has been positive, overall stats from the region keep flashing worries concerning the region’s economic strength.

Following that, activity numbers from the Eurozone and the UK will be the keys to watch while Canadian Retail Sales, the US Existing Home Sales and the US PMIs will entertain the market players. It should, however, be noted that updates concerning the coronavirus will keep the driver’s seat.

When are the German/ Eurozone flash PMIs and how could they affect EUR/USD?

Expectations regarding the growth of Germany’s export-oriented sectors of the economy have dropped sharply amid coronavirus outbreak, a recently released Zew survey of the financial market experts showed. The recession fears would be bolstered if the German data prints below estimates. That will likely accelerate the ongoing sell-off in the single currency and push EUR/USD down to 1.0750.

GBP/USD closes below 100-day MA for first since Oct. 9, eyes UK PMI

GBP/USD registers first daily close under the 100-day MA since October. Chances of disorderly UK exit from the EU are rising. Risk reversals are reporting bearish bias with a negative print. A big beat on the UK PMI is needed to weaken bearish pressures.