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Volatility becoming the norm.

Published January 31, 2020

By Rhys Miles

Absolutely no surprises that we are seeing risk on, risk off sentiment oscillating daily with reports fluctuating as to the extent of the coronavirus reach. With Asian equities losing a lot of ground yesterday the Dow was expected to follow suit after European equities were sold off aggressively. However, supported by very solid earnings reports with 71.4% of companies achieving upside results the Dow enjoyed a sharp turnaround finishing up just short of 0.50%.

Assisting US equities was US Fed chair Powell stating that the Fed was “not satisfied with inflation running below 2%.” This comment has heightened speculation of further Fed rate cuts throughout 2020. His comment appeared to provide the support for the AUD which was perilously close to getting into the 0.6600’s but bounced 20 points after the comment. Against the other majors though, the AUD has lost a lot of ground particularly against the EUR and GBP.

The Bank of England left rates on hold last night somewhat against expectations and the GBP bounced accordingly. Yesterday, New Zealand continues to punch above its weight reporting a positive trade balance surplus of 547m against 100m expected. Greater food exports to China and lower imports was the key.

With the virus story dominating the markets it is hard to see today’s Chinese PMI having too much of an impact unless it is way off expectations.

 

 

 

 

Adam Nikitins and Stewart McCallum were appointed Joint and Several Voluntary Administrators of EncoreFX (Australia) Pty Ltd on 30 March 2020.

Rees Logan, Adam Nikitins and Stewart McCallum were appointed Joint and Several Voluntary Administrators of EncoreFX (NZ) Limited on 30 March 2020.

Any queries regarding the Administrations should be directed to encorefx@au.ey.com.