Friday January 31st, 2020

The number of coronavirus cases have now surpassed that of the Sars epidemic in 2003. Coronavirus cases have risen to 9,962, spreading to 20 countries with 213 deaths in China. The WHO declared a global health emergency, with foreign citizens being evacuated from China. Positive US Q4 GDP yesterday and upbeat Chinese manufacturing PMI data today has calmed investors. The major currency have stabilized, as the markets assess the economic damage from the China virus. AUD, NZD and THB currencies have been impacted hardest from the China virus and remain under pressure. Intraday a number of key US consumption data releases will provide directions to the markets.

Oil prices rebounded slightly after the WHO opposed curbs on travel or trade with China. C$ is holding onto the key 1.3225 level, but looks vulnerable to further weakness towards 1.3350 level. Canadian GDP data released this morning could be the deciding factor for C$ direction today. Our bias is to see a weaker C$ as growth of the coronavirus cases continue.

Euro doggedly holds on above the 1.0980 level despite disappointing EU data this morning. A number of geopolitical issues could impact Euro in the short term, but the stable US$ is assisting Euro. Updates in the Coronavirus and US data results will provide direction to euro.

GBP appears oblivious to global conditions, boosted by the BOE rate decision, the pound continues to rally on bullish Brexit sentiment. The GBP is on track for its second consecutive week of gains vs US$ and has the potential to retest 1.33. Post-Brexit Monday may see investors focus return to the challenges of reaching a new trade deal with the EU by the end of 2020.