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XE Morning Update

The NZD opens at 0.6460

Fairly quiet night for the Kiwi, with NZ enjoying a Waitangi Day holiday yesterday. The smart ones will extend that into a 4 day weekend, so NZ Inflation Expectations out at 3:00 pm could react a little more aggressively than usual in slightly thin trading.

The market is still closely following developments around the Coronavirus, with no major news moving the needle either way. The Chinese Government is calling for regions other than Wuhan to get production back online, which is a positive step. However the downstream flow on effect from supply chain disruptions is pretty hard to overestimate. Hyundai for example has had to shut down factories in South Korea and other car manufactures are weeks away from closing European and US plants due to lack of parts. With production becoming more global and ‘Just in Time Inventory’ being so common, the system becomes less resilient to a shock, let alone a major one. The Chinese butterfly is flapping its wings, and the world is not looking forward to the Typhoon.

In more positive news- depending on your viewpoint- Trump has been acquitted in his impeachment trial. This is something that the markets have admittedly been fairly ambivalent about, but it does remove one potential hazard, and is a net risk positive.

Chinese Trade balance data, tentatively expected this afternoon will be interesting to watch if it misses the 306 Billion Yuan expected.

Global equity markets are up sharply, - Dow +0.32%, S&P 500 +0.34%, FTSE +0.30%, DAX +0.72%, CAC +0.88%, Nikkei +2.38%, Shanghai +1.72%

Gold prices are up 0.5% trading at $1,565 an ounce. WTI Crude Oil prices are down 1.7% to 50.76 a barrel.

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