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A cautious calm returns

Published January 29, 2020

By Rhys Miles

The recent Caronavirus driven hysteria has given way to a more cautious and analytical approach to its potential impact on global economic growth and the extent of its contagious impact.

The catalyst for a more positive outlook came from the markets welcoming China’s far more transparent and cooperative approach to battling the virus than it did during the SARS outbreak. Additionally the Chinese President agreed to the World Health Organisation sending in a team of experts to guide the response.

Equities markets in Europe and the US rallied with the ASX expected to follow suit. US data, specifically Consumer Confidence comfortably beat expectations while Durable goods orders were a little more solid than expected. Locally yesterday, NAB Business Confidence was unsurprisingly soft driven no doubt by the lingering impact of the catastrophic bush fires.

Despite what could be considered an active night last night there was very little impact on the currency markets. The AUD appears Araldited to the 0.6750 level possibly awaiting the RBA decision next week and also weighed down by soft commodity prices. On the cross rates, also no change. It is unlikely today’s local CPI will have too much impact as it is hard to see it coming in at anything too far outside the YOY result of 1.70%.