Westpac notes "as the Covid-19 outbreak has...>

FOREX: Westpac notes "as the Covid-19 outbreak has dominated market attention,

it is not surprising that the AUD has underperformed among G10 FX, with only NZD

weaker. GBP has limited its decline against a dominant USD to about -1%, with

help from the BoE's steady hand in Jan despite dovish commentary. Markets were

divided on the BoE decision but we exp. the steady 0.75% bank rate, given the

post-election surge in UK biz confidence & ongoing strength in the labour

market. However, we have had to scale back our more bullish scenarios for the

GBP ($1.33) as PM Johnson has hurt investor optimism over UK-EU trade

negotiations. We now see risks tilting back towards a rate cut in coming months.

The RBA's clear reluctance to cut rates again lends some support to AUD by

keeping mkt pricing for a cut to 0.5% below 50% until May. Also providing some

insulation for A$ as Australia's trade surpluses shrink is an overhang of short

A$ positions, implying plenty of bad news is priced in. Still, we expect

disappointing Australian growth and unemployment data to force the RBA to resume

easing policy, keeping AUD trending lower against the pound, eyeing AUD/GBP 0.50

or GBP/AUD 2.00 multi-week."