At the start of the week, global financial markets were hit by the renewed concerns over the coronavirus spreading outside of China after the news that a fourth person infected with the virus died in Italy on Monday and nearly 150 cases since Friday. Iran and South Korea have also seen a sharp rise in cases of the disease. Against this backdrop, the Italy’s FTSE MIB plunged over 5%. Other regional indexed suffered decent losses as well. The pan-European Stoxx 600 was down 3.5%. US stock index futures point to a lower open, with Dow futures losing nearly 700 points as investors rushed for safety.
A massive risk aversion triggered a rally in gold prices. The precious metal jumped to fresh multi-year highs around $1,690 but has retreated partially since then. The bullion remains elevated amid the rising demand for safe-haven assets. Following the initial jump, the prices have settled around $1,675 and remain bullish. In the near term, the futures need to hold above $1,650 in order not to lose the upside momentum.
The Japanese yen has also capitalized on risk-off sentiment. After a massive two-day rally witnessed last week, the USDJPY pair was rejected from highs around 111.60. Still, the prices remain above the 111.00 handle suggesting the downside risks are limited for now. Of note, there are some signs that the yen has been gradually losing its safe-haven status amid negative economic signals out of Japan. In the short-term, pair will likely remain above 111.00 and may even turn positive in the daily charts.
Elsewhere, EURUSD is flat marginally above 1.08 following a solid recovery on Friday. The tone in the pair looks neutral at this stage. Still, the fact that the common currency managed to rebound from the recent lows below 1.0780 suggests the pair may have already formed a bottom. On the data front, German IFO survey exceeded analyst expectations and thus helped the euro to stay afloat despite risk aversion. On Tuesday, German GDP data may affect the pair’s short-term dynamics.