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XE Morning Update

The NZDUSD opens at 0.6586 (mid-rate) this morning.

It’s been another quiet night for currency markets with only the CAD and GBP breaking out of tight ranges.

The Canadian dollar slipped lower after the Bank of Canada kept their interest rate unchanged at 1.75%, but slashed their fourth quarter growth forecast from 1.3% to 0.3% and are now predicting that 2020 growth is unlikely to reach its 2.0% target. The adjustments to the 2020 forecasts leaves the door open for future interest rate cuts.

The British Pound spiked higher following the release of the latest CBI manufacturing business optimism report which showed a significant uptick in optimism. The +23 reading following on from the pre-election -44 reading is an unprecedented rise in business sentiment and in combination with Tuesday’s better-than-expected employment report could result in the BOE leaving rates unchanged, as opposed to cutting at next week’s monetary policy meeting.

News that the Chinese government are implementing preventive measures in an effort to stop the spread of the coronavirus and are recommending that people not enter or leave Wuhan has managed to calm equity markets.

This afternoon’s Australian employment report will be the highlight of our trading day with any uptick in the unemployment rate, which currently sits at 5.2%, likely to lead to a further sell-off in the AUD as investors position their books for the RBA to cut the OCR on the 4th February.

Global equity markets are mixed, - Dow +0.11%, S&P 500 +0.23%, FTSE -0.51%, DAX -0.30%, CAC -0.58%, Nikkei +0.70%, Shanghai +0.28%

Gold prices are little changed trading at $1,557 an ounce. WTI Crude Oil prices are sharply lower, down 3.0% trading at 56.76 a barrel.

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