Collinsonfx Daily Market Commentary

A huge rise in 'coronavirus' cases reported by China caused a huge spike in fear, as the US reported that they 'have a lack of high confidence in the information coming out of China'. The announcement of a surge in cases and deaths follow a recent reported slowing of infection cases detected, that had improved sentiment. This crises is fast becoming catastrophic and the inability by markets to quantify the impact on economic growth and the supply chain, has not yet collapsed markets. US inflation CPI data was in line with expectations, coming in at 2.5% p.a., reassuring markets.

The British Chancellor of the Exchequer, Sajid Javid resigned overnight, and UK markets rallied strongly, along with the GBP. His advisors had been accused of leaking and Javid decided to stay with the sinking ship, while the new Chancellor is a rising star in the Tory party and seen as a fiscal expansionist and pro-tax cuts, deregulation and infrastructure. The GBP surged to 1.3050 on the news, while the EUR plunged to 1.0840, as economic conditions continue to deteriorate within the EU.

The RBA Governor stated that interest rates would 'remain low for years, if not decades' and that growth was 'a bit weak', due to bushfires, drought and the coronavirus. He cited 'climate change' as a significant downside risk to the economy, on a macro level. Climate change is now being recognised by many as a major economic downside risk, due to the incalculable measure of the phenomena on markets, it is a fantastic excuse for failure. RBNZ Orr also confirmed the downside risks the uncontrolled coronavirus poses to the economy. The massive spike in reported cases in China hit the trade exposed currencies, but the AUD settled around 0.6720, while the NZD withdrew back to 0.6430.

Uncertainty and fear remain.