Collinsonfx Daily Market Commentary

European markets stabilised overnight, while US equities posted early gains, although those gains have been dissipating throughout the trading day. US Bond Yields continue to trade around record lows, reflecting weak demand and a propensity for an interest cut from the Federal Reserve. The PBoC has been working hard to stimulate the economy through monetary policy, while the Government has extended resources to business, but the virus continues to spread. The coronavirus infections also spread globally, in Iran in the Middle East and lead by Italy in Europe.

The EUR remains steady, trading 1.0870, while the GBP fell back to 1.2900. The  support for the EURO has been a surprise, considering the pressures, although the lack of monetary options tend to support a floor perhaps? The Bank of England does have some ability to make further rate cuts, considering current positive interest rates, along with the Fed, RBA and RBNZ.

The spread of the coronavirus and the negative impact on the supply chain is now impacting the AUD, which has fallen below key support levels, plunging down to 0.6550. The impact of the virus on Australian economic growth, may force the RBA to make further rate cuts, thus opening up further downside in the currency. The NZD fell below 0.6300, with similar pressures driving speculation that the RBNZ may cut rates, as a response to the crises and key Business Confidence numbers out today may tell a story.

Coronavirus continues to dominate markets and extended losses will put markets into correction territory.