Collinsonfx Daily Market Commentary

Asian equities continue to flounder, dragging global markets lower, triggered by fears over the Chinese 'Coronavirus'. The virus has spread in Asia, with more than 600 cases and at least 17 deaths. The Chinese containment efforts will be watched closely and this will temper market confidence. The ECB left rates unchanged and QE in place. There were no surprises but the ECB head, LeGarde, did deliver a promise to review ECB policy and structure. The ECB have dragged interest rates into negative territory, while exploded liquidity to massive levels, never seen before levels. The process must be examined. The ECB have said low interest rates and the massive expansion of the Central Banks balance sheet, would stimulate growth, which would be measured in the CPI numbers. It has failed consistently and continuously. The definition of insanity is doing the same thing over and over again and expecting a different result!? The EUR drifted back to 1.1045, while the GBP held 1.3100, ahead of the confirmed Brexit day of 31 January.

Global equities markets drifted off record levels, awaiting developments of the Chinese 'Coronavirus', but sentiment remains high. Australian employment data was steady, with the headline rate falling to 5.1%, better than expected. This allowed the AUD to survive another day, holding 0.6835, while the NZD traded 0.6585. NZ CPI will reflect the growth in the local economy and inflation, which may have some influence on the currency. The benign inflation in the economy does not reflect the soaring cost-of-living, which the average citizen experiences, rather than the technical measure which denies the truth.

Look for developments in the Asian coronavirus for any possible market shakers, as there is little on the economic data front to drive major change to the economic narrative, until next week.