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Moody’s recently reacted to the increasing risks to China’s credit rating mainly due to the coronavirus outbreak. The global rating giant cited the likely decline in consumption and its credit implications as the main catalysts.

It’s worth mentioning that the latest data from China suggests that Hubei registered the addition of 64 deaths, to total 414 in China, by the end of February 03. Also, 2,345 new cases of the coronavirus infected persons were reported from the epicenter of the contagion.

Key quotes

Coronavirus outbreak will curb consumption.

Credit implications for the government are evolving.

Both monetary and fiscal stimulus for China to help curtail the potential economic impact.

FX implications

Considering the negative signals from the key financial catalyst, the market’s risk tone should have been weighed down if it’s not the normally inactive early-Asian session. The USD/JPY and Gold both show fewer responses to the news while taking rounds to 108.70 and $1,576 by the press time.