Collinsonfx Daily Market Commentary

US Equities continued to surge into unprecedented and record territory. The 'stand down' from Iran and the US, has reduced tensions in the Middle East and brought the two nations back from the brink of war. This was reflected in oil prices, which fell below $60/barrel, while gold prices continued to tumble. US markets extended gains with renewed confidence, as equities broke new ground, while the Dollar continued to surge. The Fed has indicated that interest rates may remain steady throughout 2020, giving the USD a premium over most Western currencies, thus driving a strong Dollar.

The World Bank released latest Global Economic Report (GEP) and has dire warnings about the looming global debt crises. This is the biggest crises since the 1970's and is only mitigated by the global record low interest rates that prevail. This will become an issue but is a macro and a longer term one. The UK Parliament passed the 'Brexit Bill' and this confirmed their departure from the EU on 31^st of January. The rising 'Big Dollar' forced the GBP back to 1.3065, while the EUR looks set to fall below 1.1100, troubled by the weak German trade and industrial production data released overnight.

Commodity currencies suffered the rising reserve, with the AUD falling back to 0.6850, while the NZD tests 0.6600, on the downside. NZ Commodity Prices contracted 2.6%, impacting the trade exposed economy, but the weaker currency will impact export returns. These economies are reliant on the effectiveness of previously announced fiscal and monetary stimulus flowing through their respective economies in 2020.

Market will look toward the US Job numbers to set the tone for how markets finish the week.