Canadian Prime Minister (PM) Justin Trudeau took out to Twitter on Thursday, making some comments on the new US-Mexico-Canada trade agreement (USMCA).

Key quotes

We are one step closer to ratifying the new NAFTA.

In Quebec, this agreement preserves more than $50 billion in exports to the United States, protects the cultural exemption, and is a net gain for our aluminum industry.

It's good news for Quebecers and for all Canadians.

USD/CAD tests five-week highs

The above upbeat remarks on trade failed to move the Canadian dollar, as it remains in five-week lows against the greenback on Thursday. At the press time, USD/CAD trades 0.08% higher at 1.3340, having tested the five-day high of 1.3348 reached on Wednesday.

Canadian Prime Minister (PM) Justin Trudeau took out to Twitter on Thursday, making some comments on the new US-Mexico-Canada trade agreement (USMCA).

Key quotes

We are one step closer to ratifying the new NAFTA.

In Quebec, this agreement preserves more than $50 billion in exports to the United States, protects the cultural exemption, and is a net gain for our aluminum industry.

It's good news for Quebecers and for all Canadians.

USD/CAD tests five-week highs

The above upbeat remarks on trade failed to move the Canadian dollar, as it remains in five-week lows against the greenback on Thursday. At the press time, USD/CAD trades 0.08% higher at 1.3340, having tested the five-day high of 1.3348 reached on Wednesday.

  • USD/JPY printed a bullish inside day candlestick pattern on Wednesday.
  • The pair could find bids and challenge resistance at 110.70-111.00.

USD/JPY is currently flashing red near 110.30, having hit a low of 110.19 a few minutes ago. The recovery could be extended further, as Wednesday's inside day candlestick pattern indicates the path of least resistance is to the higher side.

The currency pair eked out moderate gains on Wednesday, snapping the three-day losing streak. More importantly, the pair traded well within Tuesday's range, forming an inside day candle, a sign of indecision or consolidation in the market place.

A green inside day candle following a notable price drop often foretells a bullish move. In USD/JPY's case, the candle has appeared following a three-day drop.

As a result, a move higher toward Wednesday's high of 110.70 and possibly to 111.00 cannot be ruled out.

The bullish case would weaken if the spot finds acceptance 110.13, which marks the low of the inside day candle.

Daily chart

Trend: Bullish

Technical levels

  • USD/JPY printed a bullish inside day candlestick pattern on Wednesday.
  • The pair could find bids and challenge resistance at 110.70-111.00.

USD/JPY is currently flashing red near 110.30, having hit a low of 110.19 a few minutes ago. The recovery could be extended further, as Wednesday's inside day candlestick pattern indicates the path of least resistance is to the higher side.

The currency pair eked out moderate gains on Wednesday, snapping the three-day losing streak. More importantly, the pair traded well within Tuesday's range, forming an inside day candle, a sign of indecision or consolidation in the market place.

A green inside day candle following a notable price drop often foretells a bullish move. In USD/JPY's case, the candle has appeared following a three-day drop.

As a result, a move higher toward Wednesday's high of 110.70 and possibly to 111.00 cannot be ruled out.

The bullish case would weaken if the spot finds acceptance 110.13, which marks the low of the inside day candle.

Daily chart

Trend: Bullish

Technical levels

  • NZD/USD drops for the third day in a row, tests the lowest since October 16, 2019.
  • NZ trade balance and ANZ stats register down results.
  • US President Trump, coronavirus updates from South Korea/China favor the risk-off.

NZD/USD declines to 0.6288, -0.12%, by the press time of early Thursday. The pair recently dropped to the fresh low since the mid-October 2019 as downbeat New Zealand (NZ) data at home as well as coronavirus (COVID-19) fears continue the bearish momentum.

The early-day release of January month Trade Balance was the trigger to the day’s fresh selling followed by US President Donald Trump’s coronavirus speech. Extending the fall off-late were the Business Confidence and Activity outlook numbers for January from the Australia and New Zealand Banking Group (ANZ).

Even so, the main catalyst for the pair’s downpour could be the COVID-19 as increasing cases from South Korea and the run of first cases among many destinations weigh on the risk-tone.

That said, the US 10-year treasury yields recover one basis point to 1.319% from the record low flashed Wednesday while S&P 500 Futures drops 0.80% to 3,084 by the press time.

Moving on, a heavy economic calendar in the US will join coronavirus updates to offer another busy day to the kiwi traders. However, the bearish momentum is likely to prevail.

Technical Analysis

November 2019 bottom close to 0.6315 acts as the immediate resistance for the pair while lows marked during October 2019 around 0.6240 and 0.6200 can lure the sellers during the quote’s further weakness.

According to the latest data published by the Korea Center for Disease Control and Prevention (KCDC) on Thursday, the number of coronavirus cases in the country has risen to 1595, with 334 more cases confirmed.

Meanwhile, Yonhap reported that the US and South have decided to postpone the joint drills. Also, the US urged reconsidering travel to South Korea due to the coronavirus risks.

Separately, the US Centers for Disease Control and Prevention (CDC) confirmed the first US coronavirus case of unknown origin. The new coronavirus case does not have ties to a known outbreak. The case is 15th in the US and was picked up by doctors.

Risk-off remains in vogue

With the coronavirus fears prevalent across the financial markets so far this Thursday, investors remain cautious and keep the demand for the safe-havens such as the yen and gold intact at the expense of the riskier assets, namely, Asian equities and S&P 500 futures.

USD/JPY is off the lows but still weaker around 110.35, having found some support from gains in the US Treasury yields.

Meanwhile, the Korean won (KRW) witnessed wild moves on a surprise rates on-hold decision by the Bank of Korea (BOK) earlier today. The USD/KRW pair fell to 1,210.08 lows in a knee-jerk reaction to the policy decision before quickly reversing sharply to 1,217.09 highs.

At the press time, the cross trades +0.32% at 1,216.20.

  • Bank of Korea defies expectations of 0.25% rate cut
  • Mainland China 433 new coronavirus cases and 29 new deaths
  • GBP/USD keeps it under 50-day SMA, near to a bullish chart formation’s support.
  • 61.8% of Fibonacci retracement can offer intermediate resistance.
  • November 2019 lows on the bears’ radar.

GBP/USD stays mostly unchanged while taking rounds to 1.2910 during early Thursday. In doing so, the pair remains inside falling wedge formation, below 50-day SMA, while targeting the support line of the pattern.

Considering the bearish MACD and the pairs’ sustained weakness, the Cable is likely to defy the bullish formation by a decline below the 1.2870 immediate support.

Following that, lows marked during November 2019 around 1.2820 and 1.2770 will gain the market’s attention.

On the upside, 50-day SMA offers the immediate resistance near 1.3030 whereas 61.8% Fibonacci retracement of the pair’s November-December 2019 upside, at 1.3055, can please bulls afterward.

In a case where GBP/USD prices manage to rise past-1.3055, a confluence of 50% Fibonacci retracement and the pattern’s resistance near 1.3140/45 will be the key as an upside break of which can propel the quote towards 1.3300 area.

GBP/USD daily chart

Trend: Bearish

The probability that the US Federal Reserve (Fed) would cut rates three times this year has risen to 80%, according to Wall Street Journal's Daily Shot Newsletter.

The odds have risen sharply over the last two weeks, possibly in response to fears the coronavirus is spreading outside China and could cause a marked slowdown in the global economy.

The markets have turned risk averse this week with the Dow Jones Industrial Average losing more than 2,000 points in the last three days and gold, a classic haven asset, rising to seven-year highs near $1,690 on Monday.

While investors are eyeing rate cuts, the Fed minutes of the Jan. 28-29 meeting released earlier this month said the interest rates likely would remain unchanged for a while.

The probability that the US Federal Reserve (Fed) would cut rates three times this year has risen to 80%, according to Wall Street Journal's Daily Shot Newsletter.

The odds have risen sharply over the last two weeks, possibly in response to fears the coronavirus is spreading outside China and could cause a marked slowdown in the global economy.

The markets have turned risk averse this week with the Dow Jones Industrial Average losing more than 2,000 points in the last three days and gold, a classic haven asset, rising to seven-year highs near $1,690 on Monday.

While investors are eyeing rate cuts, the Fed minutes of the Jan. 28-29 meeting released earlier this month said the interest rates likely would remain unchanged for a while.

The Bank of Japan board member, Kataoka who is a know dovish dissenter, has said that the central bank is ready to ease without hesitation if needed. JGBs haven't moved though as we expect to hear this from the member.

Key comments

  • Stimulus effect on economy will be maximized if flexible fiscal policy is accompanied by bold, further monetary easing.
  • My belief is that it is very important for govt, BoJ to coordinate on policy in sustained manner to end low growth, low inflation.
  • BoJ must deepen negative rate to make shape of yield curve more accommodative.
  • One idea is for BoJ to promise to act if underlying inflation deviates from a certain range from its 2% target.