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With respect to the Aussie, analysts at Nordea note that copper paired most of the December gains as Chinese quarantines and travel bans wrong-footed the reflationary positioning in Oil/Copper.

Key notes

“AUD is usually in slight trouble, when/if long Copper positions are being squared.”

“Potential further de-risking of the reflationary positioning is hence an issue for our positive AUD view.

“We remain relatively calm, though. Neither around the outbreak of SARS, nor around the outbreak of Swine -or Birdflu, did Copper prices fall of a cliff.”

“Hang Seng (and local Chinese markets) were hit by the SARS-outbreak, but it proved short-lived as the virus was contained within roughly half a year.”

“Global contagion effects were limited, and they should also be so this time around, even if the Corona virus has been spreading slightly faster than SARS.”

“Accordingly, the AUD also weathered the storm and even rose after a while post the SARS-outbreak.”

“Even if we remain upbeat on AUD vs. NZD (and GBP), it may make sense to remove a few chips from the table given the risk of a surprisingly large escalation of the Corona virus.”