The Kiwi Dollar remains at low levels, failing to bounce back from losses made earlier in the week despite an improvement in market risk sentiment overnight. Equity prices have bounced back and the US Dollar has continued to make gains as China reported another decline in new coronavirus cases. Expectations of further Chinese stimulus to counter a slowdown in growth is also a positive for markets.
The US Fed released meeting minutes from its Jan 28th meeting at which it held interest rates steady. Officials have expressed confidence about the state of the US economy and suggested interest rates would likely remain unchanged for a while. However like other central banks, they did make frequent mention of coronavirus and the potential impact on the local and global economy.
GBP Falls on Inflation Data
The British Pound traded lower despite better than expected inflation data released overnight. UK CPI rose to a 6 month high of 1.8% in January, vs market expectations of 1.6%, largely driven by the higher fuel and energy costs. The upbeat inflation figure pushed the Pound briefly higher before reversing the gains as difficult trade negotiations between the UK and EU continue to hang over the market.
The Day Ahead
Australian employment data at 1.30pm this afternoon will be closely watched after the RBA’s cautious tone from their last policy meeting. Markets are expecting an unemployment rate of 5.2% up slightly from the 5.1% reading last month.
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