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Australian fourth quarter inflation rose a touch to 0.7% from 0.6% expectations with improved dwelling prices having the biggest impact. Tobacco, Alcohol and transport fuel costs also had modest rises but food prices such as fruit and vegetables impacting from fire stricken areas were benign – for now. These products should filter through into inflation numbers over first quarter 2020. The annualised inflation rate moved higher from 1.7% to 1.8% which will please the Reserve Bank of Australia with some banks now predicting the RBA won’t cut rates today until April. Retail Sales and Trade Balance print late in the week.   

New Zealand

New Zealand plunged 1.5c against the US Dollar last week largely based on Coronavirus fears.  NZ are now blocking travellers who have recently travelled through mainland China in efforts to try to keep the virus out of New Zealand. The ban starts today with the government placing restricted entry into New Zealand on all foreign nationals who have travelled from China or through China. The virus has now killed over 400 people with the affected now more than 20,000. The first death outside China has been reported in the Philippines. This week on the economic calendar we have employment numbers with the unemployment rate expected to stay at 4.2% and quarterly Inflation expectations. 

United States

The Federal Reserve voted 10-0 in favour of retaining the current cash rate at 1.75%. Comments from Powell suggested the economy has been rising at a moderate rate. Recent unemployment remains low and household spending has been rising at a decent pace. The current stance which is exactly the same as the December stance/statement from the Fed on monetary policy is appropriate and supports sustained economic activity. Powell ruled out late last year’s rate cuts forecast saying such a step would require a sustained rise above the forecasted 2% inflation target. Non-farm Payroll holds attention this week, with great numbers of late we expect at least 160,000 people entered the workforce in January with a stronger big dollar.

United Kingdom

The Bank of England left their benchmark rate on hold at 0.75% with the vote 2-7 in favour of no cut. The Pound shot higher off the release which was initially based on a predicted vote of 3-6 in favour of no cut with investors expecting a closer decision. The English Pound was the best performing currency over the week climbing a whopping 4.85% against the Australian Dollar amid a big week of “risk off” movement and optimistic bank of England. The UK formally left the European Union after 47 years on the 31st of January. Brexit parties were held across the UK with Nigel Farage saying “This is the greatest moment in the modern history of our great nation”. From here through to the end of 2020 the EU will remain in charge with very few immediate changes until then.   


Euro annual inflation ticked up to 1.4% Friday from 1.3% in line with market expectations rallying the Euro across the board. German CPI m/m also published in line with expectations at -0.6% and the y/y rose to 1.7% from 1.5% a five month high due to faster increases in food prices. The risk off theme continued early this week with the coronavirus outbreak affected on the rise. With Eurozone data this week thin markets await Lagarde speaking in Paris at the end of the week for direction cues. 


The Japanese Yen dipped Monday after January manufacturing results released down on expectations. The index represented a contraction of 48.8 based on an expected reading of 49.3 signalling a tough time for manufacturers as demand remains down. Last week investors flocked to the safe haven Japanese Yen as risks around coronavirus remained elevated and affected numbers ballooned. The Yen rose to a three week high against the US Dollar as it pushed the Australian Dollar to a 4 month low. With the virus struggling to be contained, risk off sentiment could well flow into this week’s action with the Yen pushing its peers further south. Friday’s Unemployment Rate clicked lower to 2.2% from 2.3%. This is the lowest it’s been this since around 1990 based on a labour shortage and an ageing population.       


Canadian GDP for November printed above the expected 0.0 at 0.1% growth offsetting a lot of October’s decline. Movement in the Canadian Dollar was tiny with only a small reprieve for the underperforming currency. Risk concerns around the coronavirus still weigh heavily on markets across the world as “risk assets” including the Loonie continue to plunge in favour of the safe haven. This week’s data sees employment print for January with a forecast for 5.6% unemployment to remain.

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