Reuters is out with the latest headlines, citing that South Korea will draw up to 7.1 trln won second supplementary budget, as announced by the government on Monday.

The government also stated that it will also spend 9.1 trln won for emergency cash payment to tackle coronavirus impact.

This follows President Moon Jae-in comments that the government will offer emergency cash handouts to many families and unveil a second supplementary budget soon to cushion the economic blow from the coronavirus outbreak.

USD/KRW off the highs

USD/KRW is off the highs on the S. Korean government’s additional relief measures, although trades with 1% gains near 1,225 region amid broad-based US dollar rebound on mounting coronavirus pandemic fears.

  • South Korea reports 78 new coronavirus cases and six more deaths
  • USD/IDR remains on the front foot above 23.6% Fibonacci retracement of its rise from late-January.
  • The monthly top, also the record high, on the bulls’ radar.
  • Sellers will look for a clear break below 50% Fibonacci retracement.

While portraying its bounce off 10-day SMA, USD/IDR takes the bids to 16,390, up 1.27%, by the press time of the pre-Europe session on Monday.

In addition to its sustained U-turn from the short-term key SMA, bullish MACD and a break of 23.6% Fibonacci retracement level also favor the bulls.

Buyers are now targeting Thursday’s top near 16,590 ahead of challenging 17,000 and the record top near 17,150. Though, the pair’s further upside could be questioned by the oversold RSI conditions.

Alternatively, a daily closing below 10-day SMA level of 15,990 could drag prices to March 17 top surrounding 15,400 whereas 50% Fibonacci retracement level near 15,170 could please the bears next.

USD/IDR daily chart

Trend: Bullish

 

The Korea Centers for Disease Control and Prevention said on Monday, South Korea confirmed 78 new coronavirus cases, with the total count now at 9,661.

The South reported six new deaths, bringing up the death toll to 158 vs. 152 a day earlier.

  • S. Korean Pres. Moon: Will draw up second extra budget, give cash handouts as coronavirus relief
  • China reports 31 new coronavirus cases in Mainland as of end-March 29 vs 45 a day earlier
  • US Pres. Trump: Working to speed up FDA approval on sterilizing medical masks for reuse
  • GBP/USD remains on the back foot.
  • UK GDP to drop by 15%, coronavirus restrictions could last six months.
  • Intensive care limited to those almost certain to survive, the EU citizens in the UK are at the risk of being illegal.
  • UK’s death toll rises to 1,228 with 19,522 cases of infections including British PM Boris Johnson.

With the dire warnings on the UK’s economic growth crossing wires amid expectations of a longer lockdown, GBP/USD drops to 1.2375, down 0.60%, ahead of the London open on Monday. The surge in the virus figures and inclusion of the PM Boris Johnson recently weighed on the pair.

The Guardian relies on the Centre for Economics and Business Research (CEBR) report while conveying that the UK’s economic output can plunge by an unprecedented 15% in the second quarter of the year. The news also cites an increase in the death toll to 1,228 and 19,522 as positive cases including the national leader.

Elsewhere, the UK Telegraph came out with the news that the intensive care for coronavirus patients now limited to those ‘reasonably certain’ to survive, as per the sources from the National Health Services (NHS) London Trust.

Furthermore, The Guardian cites the risk for the EU citizens who have made their homes in the UK to be illegal as the government diverts resources to fight coronavirus. Additionally, Dr. Jenny Harries, deputy chief medical officer for England, said during her daily press conference on Sunday that the current restrictions in the UK could last for six months.

On the contrary, US President Donald Trump anticipates the virus numbers to peak in the next two weeks while avoiding lockdowns in New York, New Jersey and Connecticut.

Amid all this, the market’s risk-tone remains heavy with the US 10-year treasury yields declining below 0.70% and most Asian stocks marking losses by the press time.

While the US Dallas Fed Manufacturing and Pending Home Sales are the only ones to decorate the economic calendar, virus headlines will be the key driver to follow.

Technical analysis

A daily closing below 21-day SMA level of 1.2350 could drag the quote to 38.2% Fibonacci retracement level of the pair’s declines from December 12, 2019, at 1.2217. On the upside, 50% Fibonacci retracement near 1.2470 acts as the immediate upside barrier.

 

  • EUR/USD has fallen back below 1.11 amid risk aversion in stocks. 
  • Investors fear deeper economic slowdown as Trump extends social distancing to counter coronavirus outbreak. 
  • Goldman Sachs believes the economic fallout has only just begun. 

The US response to curb the coronavirus outbreak seems to be causing renewed stress in the equity markets and pushing the EUR/USD pair lower.

Rejected at 1.1145

Having turned lower from 1.1145 in early Asia, the pair is now trading in the red near 1.1080 and threatening to snap the six-day winning streak.

The dollar is again rising amid the risk-off tone in the Asian stocks and the US equity index futures. Investors are shunning risk despite China’s rate cut, possibly due to the worsening situation in the US and President Trump’s decision to extend social distancing through April, which could force large parts of the economy to shut down.

Analysts at Goldman Sachs are of the opinion that the economic fallout in the West has only just begun and another sell-off in the stock markets could be seen. As a result, the US treasuries (and the US dollar) could continue to draw haven demand in the near-term.

The offered tone may further strengthen if there is a delay in the unified fiscal response from the European Union, according to ANZ research.

The data docket is heavy on Monday with the  Eurozone consumer and business sentiment indices scheduled for release along with the preliminary German Consumer Price index for March. Across the pond, the focus will be on the Pending Home Sales and the Dallas Fed Manufacturing Index.

Global equities rallied last week, weakening the bid tone around the US dollar and helping EUR/USD rise from 1.0636 to 1.1148, as the US Federal Reserve announced an open-ended asset purchase program and the US Senate passed an unprecedented $2 trillion fiscal stimulus package. 

Technical levels

 

  • Gold faces selling pressure as dollar draws bid amid risk-off. 
  • China’s reverse repo rate cut fails to restore risk sentiment and put a bid under the shiny metal. 

Gold is entrenched in the negative territory in Asia as the US dollar, the shiny metal’s biggest nemesis, is benefitting from the renewed risk aversion in the equity markets. 

Rejected at $1,638

The yellow metal turned lower from $1,638 in early Asia and is hovering at session lows near $1,614 per ounce at press time, representing a 0.75% decline on the day. 

Meanwhile, the futures tied to the S&P 500 are down 0.75% and stocks in Asia are also flashing red. The equities have come under pressure as the coronavirus outbreak gathered pace in the US over the weekend. Stocks put on a good show last week, possibly on the back of the fiscal and monetary stimulus lifelines provided by the US and other nations across the globe. 

While the renewed risk-off tone is boding well for the traditional safe-haven currencies like the Japanese yen, gold is struggling, possibly due to the strength in the greenback. The dollar index, which tracks the value of the greenback against majors, is currently seen at 98.73, up 0.42% on the day. 

The American dollar is again pushing higher against risk currencies amid anti-risk action in the equity markets and could continue to gain altitude in the near-term, according to Goldman Sachs. 

In the West, the economic fallout from the virus outbreak has just begun and a decline in the equities looks inevitable, said Goldman Sachs analysts. 

It’s worth noting that China cut reverse repo rates by 20 basis points early Monday and infused $7 billion liquidity into the banking system. That too has so far failed to put a bid under gold and risky assets. 

Technical levels

 

  • WTI remains on the back foot below the short-term falling resistance line.
  • $20.00 becomes the key for sellers ahead of targeting the three-week-old descending trend line.

While following a short-term falling trend line resistance, WTI drops to $22.000 amid the early Monday. In doing so, the energy benchmark remains near multi-year low amid the bearish MACD.

That said, oil prices are currently declining towards $20.00 round-figure ahead of taking rest on the downward sloping trend line since March 09, at $16.32.

Alternatively, an upside clearance of the immediate resistance line, at $23.50 now, can aim for $28.60 and $30.00 during the further advances.

However, the bulls are less likely to be convinced unless providing a clear run-up beyond March 11 top surrounding $36.65/70.

WTI four-hour chart

Trend: Bearish

 

New Zealand (NZ) Prime Minister Jacinda Ardern announced on Monday, NZ borders and world borders will probably remain closed until a vaccine is available and herd immunity is reached.

The countries that tried the herd immunity approach have shown the approach was too high a price to pay, she added.

NZD/USD reaction

NZD/USD consolidates last week’s solid recovery above 0.6000, reporting minor losses so far.

The spot has entered a side-way trading phase following a volatile start at the open but manages to defend the 0.60 handle amid PBOC’s surprise rate cut and risk-off markets.

At the press time, the Kiwi trades at 0.6020, down 0.18% on a daily basis.

  • RBNZ: Says have other tools at ready to keep cost of borrowing low for as long as needed

The People’s Bank of China unexpectedly cut the interest rate on reverse repurchase agreements by 20 basis points from 2.4% to 2.2%. 

Ma Jun, an external adviser to the People’s Bank of China’s (PBOC) monetary policy committee (MPC), said the central bank cut rates in consideration of the resumption of work across China. 

The economic activity had slowed down sharply in February amid the coronavirus outbreak in Wuhan. 

The UK Prime Minister Boris Johnson has been warned by scientific advisors that China is understating the coronavirus deal toll by a factor of 15-40 times is seeking to build economic power during the pandemic with ‘predatory offers of help’ countries around the world, according to Daily Mail Online. 

A senior Cabinet Minister said: 

We can’t stand by and allow the Chinese state’s desire for secrecy to ruin the world’s economy and then come back like nothing has happened.

We have always known their wildlife markets are a recipe for a pandemic. China needs to close these down immediately. If they don’t, they will rightly become a pariah state.