Friday January 24th, 2020

Investor concerns for the coronavirus eased after China’s repaid response and WHO refraining from declaring a global emergency. Chinese CNY remains and AUD in particular remain under pressure, as the China virus continues to dominate headlines. With number of cases of coronavirus growing expect safe-have currencies to remain firm in the near term. PMI data out of the US will be watched closely for signs of US economic strength.  US data and updates on the China virus will dominate the markets focus and provide intraday direction.

Oil prices continue to slip, as the commodity heads for a weekly loss driven by China virus concerns. C$ is off its lows but remains vulnerable to further weakness. Canadian retails sales data this morning is key, a weak number will prompt further C$ selling as it increases BOC rate cut concerns. Intraday coronavirus updates and Canadian retails sales data will dictate C$ direction.

Euro breached the key 1.1065 touching an almost 2 month low vs US$ after ECB Lagarde’s cautious comments on EU inflation growth. The ECB kept rates on hold yesterday and launched a review of its monetary policy strategy adding further uncertainty to Euro. With continued flows into safe-haven currencies expect Euro to remain on the back foot, with support at 1.0980 vs US$.

The GBP rally stalled today despite UK manufacturing PMI and services PMI data both beating expectations. Investors scaled back GBP positions ahead of next weeks BOE policy decision. Expect 1.3050 to provide initial support to GBP vs US$ as it awaits BOE and Brexit on January 31st.