In the Asian hours on Tuesday, markets witnessed some volatility as we’re coming closer to the end of the quarter and the fiscal year in Japan. The US Dollar rallied to the mid-99.00 levels that led to some mini ‘flash-crashes’ in the majors.

USDJPY staged a solid rebound, gained nearly 70 pips and surged above the 108.00 mark amid substantial Japanese corporate buying of the major. AUD, NZD, and GBP fell sharply before rapidly recovering to the prior levels. The Cable, however, didn’t manage to get back all its gains and stayed in the red around the 1.2320 area. EUR/USD also hit lower and challenged the key 1.10 psychological mark. The sellers now aim at the mid-1.0900 region.

Earlier today, China released its March PMIs that unexpectedly bettered than expectations. Manufacturing rose to 52.0 vs. 44.8 expected and 35.7 prior and returned to the green zone. Services recovered to 52.3 from 29.6 in February while composite reading leaped to 53.0 vs. 28.9 in the previous month. Nice figures gave a boost to AUD and offset its prior plunge to lows near the 0.6070 mark.

However, China’s National Bureau of Statistics explained that strong PMIs alone didn’t mean that the economy was back to normal. The World Bank did its part as well and lowered its baseline forecast for the Chinese GDP in 2020 saying that the growth may slow to 2.3% or, in a lower case scenario, to 0.1% versus 6.1% expected in 2019.  

Meanwhile, the rising numbers of new coronavirus cases in the US (164,266 infected and 3,170 dead) still frighten investors and choke fragile risk-on on markets. Italy announced the possible extension of the lockdown till May 4 as the number of fatalities in the country surpassed 11,000. Moreover, the WHO warned that the epidemic in the Asia-Pacific region was far from being over.

Consequently, positive surprises on the macroeconomic front or moderate optimism will likely be overshadowed by fears of the rapid coronavirus spread and its severe impact on the global economy. Thus, in the near-term traders are expected to be cautious and will keep on watching the latest coronavirus headlines.


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