Aussie dollar rallies, Asian currencies lift as China heads back to work

Asian currencies lifted a little on Monday amid some early signs that the spread of the coronavirus epidemic could be slowing down and as some big businesses resumed work in China after the Lunar New Year holiday. The Australian dollar rose 0.5% to as high as $0.6706, pulling away from a decade-low touched earlier in the session. It has lost 4.5% this year. The New Zealand dollar bounced 0.1% from a two-month low to $0.6405. The safe-haven yen softened slightly to 109.75 yen per dollar, while bonds dipped and stock markets pared early losses with the broad appetite for risk. We’ve seen positive headlines about a few large companies all reporting that they were going to be resuming and reopening facilities in China. In further news over the weekend, the official daily update on the number of new infections in China reported fewer than 3,000 new cases for the first time since Feb. 2. That was tempered a little on Monday when the latest daily number of reported new cases again topped that benchmark at 3,062, but Franulovich said that markets were for now focused on the positive. 

The Chinese yuan rose 0.2% to 6.9891 and pulled beaten-up Asian currencies with it. The Korean won, Thai baht and Singapore dollar, which have all been heavily sold on virus fears, traded firmer by mid-session. Though plenty of caution remained, as the return to work was subdued elsewhere and the scale supply-chain disruption only beginning to become clear. A large number of workplaces remain closed and many white-collar workers continue to work from home. On one of the usually busiest subway lines in Beijing, trains were largely empty. We’re seeing some buying of AUD today, in line with some confidence coming back as the market rolls into latter Asia trade, but rallies are to be sold in my opinion.Any hints of weakness in the local labour market, or a change of heart globally, could ramp up the chances of a rate cut by May, currently rated at about 40%, Weston. If I were trading this from the short side, I would be adding to short positions on a close through 0.6656.