German investor morale worsens on coronavirus fears - ZEW

Daniel Fowler
February 20, 2020

China's ofshore-traded yuan fell 0.3% to an eight-day low of 7.0110 against the dollar.

In late NY trading, the euro was down to $1.0792 from $1.0833 in the previous session, and the British pound was down to $1.2999 from $1.3000 in the previous session.

The ZEW research institute said in its monthly survey that investors' mood deteriorated far more than expected in February on worries over the coronavirus' effect on world trade. The latest survey by the Leipzins Center for European Economic Research (ZEW) reported that the largest economy in Europe is suffering from the ongoing Corona virus crisis in China, where the virus led to a slowdown in the current situation in addition to future components for the next six months.

The ZEW survey comes just days after German statistics office Destatis showed that the German economy had stopped growing in the last quarter, before markets were exposed to the threat of the Coruna virus.

Most market players expect stronger growth in the United States although data published on Friday provided a mixed picture.

The yen JPY=EBS , which initially gained on safe-haven flows as the outbreak unfolded last month, nudged higher to 109.73 per dollar but remained in a narrow range.

The euro was down 0.2% to $1.0812, while the dollar index rose 0.3%. The currency has partly been supported by expectations of stimulus from Beijing.

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Some economists fear the coronavirus, which started in China and is impacting both the global supply chain and Chinese demand, could result in weaker German growth in the first quarter.

At (GMT 12:38), UK's benchmark FTSE 100 was last trading higher at 0.70 percent, Germany's Dax was up by 0.48 percent, France's CAC was last up by 0.63 percent.

Among Asian currencies, the Australian dollar slipped below the 67 USA cent level after minutes from the central bank's last meeting revived the prospect of policy easing, while the Chinese yuan was weighed by worries about the economic fallout from the coronavirus epidemic.

Oil prices rose on Wednesday, with Brent gaining for a seventh straight day, after a slowing of new coronavirus cases in China eased demand worries and supply was curtailed by a USA move to cut more Venezuelan crude from the market.

The New Zealand dollar NZD=D3 also fell 0.28% to $0.6419.

Brent crude fell 74 cents to $56.93 a barrel after rallying in the previous five sessions. The benchmark 10-year note rose 8/32 in price, pushing its yield down to 1.5627%. The German 10-year bond yield, which moves inversely to its price, dipped 1 basis point to -0.420 percent, the long-term 30-year yield also plunged about 1 basis point to 0.101 percent and the yield on short-term 2-year remained 1 basis point down at -0.653 percent by 10:30 GMT.

The Federal Open Market Committee is expected to issue minutes from its January 28-29 meeting today. In addition, market watchers will also monitor speeches from FOMC members Kashkari, Kaplan and Barkin to gauge direction of future monetary policy. Other 10-year bond yields in Europe fell similarly.

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