Asian equity markets have rebounded today after yesterday’s sell-off on the Chinese coronavirus outbreak. This is despite the number of confirmed cases rising above 400.

One of the commodities likely to be struck on coronavirus concern is US Oil. Goldman Sachs suggests a potential drop of USD 3/bbl in oil prices if the virus plays out similar to SARS, which could reduce global oil demand by 260K bpd, largely due to lower demand for jet fuel. The worse the virus gets, the less likely people will want to travel and risk infection.

Alongside falling oil prices here is what to expect on risk-on and risk-off currency flows depending on the details of the market’s response to the virus today:

• Risk-on flows = AUD, NZD, CAD buying, and JPY, CHF selling
• Risk-off flows = JPY, CHF buying, and AUD, NZD, CAD selling