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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."