China is currently facing an outbreak of a pneumonia-like virus which has started to have an effect on its currencies and their performance in the markets. 

On Wednesday, Adarsh Sinha stated “It is starting to have an impact … on financial markets over the past 24 to 48 hours.” The Chinese yuan was pushed lower whilst the Japanese yen started being traded below 109.8. 

The onshore and offshore Chinese yuan against the USD also declined being traded last at 6.902 and 6.9036 respectively. Sinha continued, “The key thing here is just the uncertainty and also the uncertainty heading into the holiday period. From an investor point of view, people are just reducing risk and I think that’s what we’re seeing particularly in the exchange rate markets in the region.”

“I think people are looking at that as a case study, if you will, but the fact is 2003 was 17 years ago and I think especially in terms of Asia spillovers to the rest of the world, it is a very different time.”

The EUR/USD pair trades close to the 1.1080 with the single currency putting a halt to its incline over the 1.11 handle. The pair did not manage to increase its intraday gains due to weak bullish conviction. Furthermore, the Cable trades around the 1.3050 mark with investors growing concerns about the Brexit deal.