European session review: CNY and AUD strengthens amid reports of drug breakthroughs for coronavirus

CNY and AUD strengthened against their major counterparts on Wednesday as reports about a drug breakthrough against the coronavirus outbreak supported investors' appetite for risk. At the same time, safe havens such as JPY and CHF weakened against most major currencies. 

Media reported that researchers at Zhejiang University in China had found a drug to treat people with the coronavirus, while scientists from Imperial College London in Britain had made a “significant breakthrough” in developing a vaccine, which is able to reduce the development time from “two to three years to just 14 days”.

The Australian currency was also boosted by some hawkish remarks by the Reserve Bank of Australia's (RBA) governor Philip Lowe. 

Elsewhere, EUR fell against most of its rivals, weighted by disappointing retail sales data for Eurozone. According to the report from Eurostat, the Eurozone's seasonally adjusted volume of retail trade decreased by 1.6% m/m in December after a 0.8% m/m gain in November. Economists had expected a 0.9% drop. According to the report, the volume of retail trade fell by 1.6% m/m for non-food products and by 1.4% m/m for food, drinks and tobacco and automotive fuels. 

Investors also digested the latest comments of the ECB's representatives. ECB's president Lagarde noted that short-term uncertainties for Eurozone "are mainly related to global risks – trade, geopolitical and now the outbreak of the coronavirus and its potential effect on global growth". She also added that "in the face of these uncertainties, the ECB’s forward guidance on interest rates and asset purchases acts as an effective automatic stabiliser". 

Meanwhile, ECB's chief economist Philip Lane said he firmly believes that "the interest rate in the future will be higher" because of easy policy now, adding that "with recovery, the maximum achievable interest rate might be 2-3%."