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Coronavirus Worries Intensify; Stocks, Oil & Yuan Fall; Yen, Swiss & Gold Jump

The holiday market in Asia is in deep risk aversion as worries on China’s coronavirus intensified, after surge in confirmed cases and death tolls. Yen and Swiss Franc jump notably while New Zealand and Australian Dollars weaken. Risk aversion is also clearly seen as gold gaps up, oil price gaps down, and Chinese Yuan is in free fall.

Technically, EUR/JPY’s break of 120.17 support is seen as a strong sign of near term reversal. That is, whole corrective rise from 115.86 has completed at 122.87 already. A question now is whether USD/JPY (currently at 109.03), would break 107.65 support to align the outlook with EUR/JPY.

In Asia, Nikkei is currently down -1.91%. Japan 10-year JGB yield is down -0.022 at -0.042. China, Hong Kong and Singapore are on lunar new year holiday.

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Coronavirus death toll surges, spreads globally

Confirmed cases of coronavirus in China jumped to 2744 as of Monday, up from 1975 yesterday, and 1287 on Saturday. Death tolls also hit 80. The virus has now spread to countries including the US, France, Australia, Taiwan Japan, South Korea, Singapore, Thailand, Malaysia, Vietnam and Nepal.

The Chinese government extends the annual lunar new year break until February 2, from January 30 originally. The US is planning to evacuate some Americans from Wuhan on Tuesday. France is preparing to do the same by mid-week. Japan is also planning to evacuate its nationals.

Chinese Yuan in free fall on coronavirus outbreak

USD/CNH surges sharply as offshore Yuan is in suffering heavy selloff on China’s coronavirus outbreak. Rebound from 6.8452 is now targeting channel resistance (7.0135). Decline from 7.1953 high is seen as a corrective move, which might has completed at 6.8452 already. Sustained break of the channel resistance should confirm this case and bring retest of 7.1953 high. Nevertheless, rejection by the channel resistance will retain near term bearishness. Break of 6.9209 will target a test on 6.8452 low instead.

Gold gaps up, heading to retest 1611 high

Gold starts the week with a gap up and hits as high as 1588.51 so far. Further rise is in favor for the near term to retest 1611.37 high. At this point, we don’t rule out that case that 1611.37 is a medium term top. It could be formed after rise from 1160.17 completed a five-wave sequence on bearish divergence condition in daily MACD. Hence, we’d be cautious on topping signal below 1611.37. Break of 1556.52 support will extend the correction from 1611.37 with another leg down. However, decisive break of 1611.37 will resume the medium term up trend instead.