Risk-On Sentiment Continues

The AUDUSD opens higher at 0.6887 and the NZDUSD opens higher at 0.6358.

Risk is well and truly on, with the protests in America doing little to dampen the optimism. In positive news, Wuhan has tested almost its entire population of 11 million people, finding no new cases and only 300 asymptomatic cases. Of those ‘Silent carriers’, there was no sign of them being infectious. This is extremely comprehensive testing, so if the results can be extrapolated around the world, then it is a great argument for containment, and then reopening quickly. The markets were already looking for an excuse to rally, and found it.

The RBA was out yesterday, with the comment "it is possible that the depth of the downturn will be less than earlier expected". If this is how Central Banks are starting to think, then you can expect monetary policy to be less loose, and more specifically, QE to be smaller and not run as long as currently expected. This will be good for the currencies of the countries that move quickest, but probably not great for equities, as no one likes money printing like the stock market does.

The UK has also been on the wires with some tough talk about China’s security law imposed on Hong Kong. “If China continues down this path, we shall consider our response”… Lets just say, if that is the extent of their retaliation, then the market does not have a lot to fear.

Global equity markets are up - Dow +1.0%, S&P 500 +0.8%, FTSE +0.9%, DAX +3.8%, CAC +2.0%, Nikkei +1.2%, Shanghai +0.2%

Gold prices are off slightly to USD$1,728 an ounce, while WTI Crude Oil prices are higher, up 3.7% to US$36.9 per barrel.

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