Collinsonfx Daily Market Commentary

US equity markets charged back in to record territory, as fears over the 'Coronavirus' subsided and economic news took over the narrative. The Chinese Government confirmed 473 cases and 17 deaths, while the US CDC confirmed one case and said the disease posed little risk to America. US Existing Home Sales increased by 3.6% and President Trump presented a strong case of a booming economy in the US, at the Davos World economic forum. Trump impressed upon participants the need for deregulation as the driver of economic freedom and growth.

The Bank of Canada left rates unchanged, as CPI inflation data weakened, recognising downside risks and the option for further rate cuts at the next meeting. The UK had surprisingly strong Business Optimism numbers, released overnight, jumping from a contraction of minus 44 before the election, to plus 23 post-election. This was a massive reversal in fortunes and reflects the strong turnaround in confidence and sentiment, pushing the GBP up to 1.3120. President Trump confirmed negotiations for a trade agreement with the EU were underway, but suggested they were more difficult than the Chinese and threatened vehicular tariffs would be used, if an agreement was not made. The EUR slipped back to 1.1080 and is looking challenged.

Commodity currencies have been unsettled by the possible impact of the 'coronavirus' and drifted to the downside. The NZD fell back to 0.6580, while the AUD dropped to 0.6835, awaiting key employment data. The Australian employment numbers will likely impact the currency, as a litmus test for future RBA actions, while the extent of damage the bush fires have on the economy will not be fully released until their federal budget.