Standard Chartered Research discusses 3 scenarios for Coronavirus and its FX implications.
"Coronavirus was unknown to asset markets two months ago, may disappear as a factor within a few months, but may also evolve into a major global supply shock if it spreads and intensifies. We lay out the alternative scenarios on how the disease could evolve and what the short-medium term FX responses might be. Our subjective assessment is that current asset market pricing probably lies somewhat closer to the static than good scenarios," SC notes.
"FX winners (W) and losers (L) under our good scenario where the disease abates:
• W: CAD, CNY, MXN, KRW, IDR, RUB
• L: USD, CHF, JPY
FX winners (W) and losers (L) under our static scenario of neither major intensification nor elimination:
• W: USD, JPY, CHF, MXN
• L: KRW, TWD, THB, SGD, MYR, AUD, NZD, EUR, CNY, CAD
FX winners (W) and losers (L) under our bad scenario where the disease intensifies and spreads:
• W: JPY, USD
• L: KRW, TWD, THB, SGD, MYR, IDR, INR, AUD, NZD, EUR, CNY, CAD," SC adds.