Chinese Yuan hard hit Monday after the reopening of the country’s financial markets, with traders use this opportunity to register their concerns over the outbreak of the deadly coronavirus and this could impact on growth in this country.

At 03:10 ET (0810 GMT), the USD / CNY trading at 7.0209, up 1.2%, hitting a 7.0 for the first time this year.

The US Dollar Index Futures, which tracks the greenback against a basket of other currencies, pushing up 0.2% to 97.36.

Efforts to prevent the spread of the virus, which has so far claimed 305 lives, have caused major disruption and look set to deal a big blow to growth in China and globally.

Ahead of the resumption of China’s central bank decided to lower the reverse repo rate by 10 basis points and inject 1.2 trillion yuan ($ 173.8 billion) of liquidity to the market on Monday.

The net injection was much smaller, such as about 1 trillion yuan loan was set to mature.

There has been concern that the re-opening of financial markets in mainland China for the first time since the beginning of the Lunar New Year holiday will result in volatile trading.

“Space EM currencies have stumbled badly at the outbreak of coronavirus in China, which has impacted risk appetite,” said John Hardy, head of FX strategy at Saxo Bank Group, in a research note.

“Coming to the outbreak of this virus, EM complex and financial conditions could not have been more satisfied, indicate the risk of a more significant were significantly more among volatility if the fears and the impact of the deteriorating problem,” he added, urging “so defensive risk of EM-related.”

Elsewhere, the euro has strengthened against the sterling ahead of the speech of Prime Minister U.K. Boris Johnson in London, on Monday in the trade negotiations with the EU.

Johnson was quoted in the press U.K. said: “there is no need for a free trade agreement to engage accept EU rules.”

While the U.K. official leaves the EU on Friday, it will remain adhered to the rules of the European Union during the transition period which ends in December this year.

In addition, Philip Lane, chief economist of the ECB, warned against underestimating the effects of tariffs and wage increases in an interview with the Financial Times.

“There can be no permanent disconnection between labor costs and prices,” he said. “The narrative of ‘everything would have been lower for longer’ — there’s a lot of weight -. But I did not put all my probability on it you have to watch out for the other forces.”

Source: Investing.com

Credit: TopAsiaFX