US equity markets staged a ‘dead cat bounce’ recovery, following the huge sell-off in the previous session, predominantly in the tech-heavy NASDAQ. The darling of last year's rally in US share prices, Nvidia, stabilised after losing US$600 Billion in the previous session. The paper losses were greater than the entirety of many nations total share market cap. The Chinese ‘DeepSeek’ AI open source has shattered the AI value chain. Markets are digesting the implications of this and the profound impact it could have globally. Imagine access to free AI and the value added. The market now turns its attention to Central Bank actions, with both the Fed and the Bank of Canada to announce their latest IRD’s tonight. The Bank of Canada will likely cut, but markets expect the Fed to hold, unless they have decided to follow the advice of Trump. Trump has called for world-wide cuts to interest rates to fuel the economic boom. The USD staged a mini recovery overnight, with the EUR falling back to 1.0420, while the GBP slipped to 1.2430.The rise in the reserve turned the commodity currencies red, with the AUD dipping below 0.6250, while the NZD dropped to 0.5650. Local attention turns to the Australian CPI release, which is expected to reveal big falls in inflation, allowing the RBA to begin the rate cutting cycle in February. If inflation remains stubbornly high, then bond yields and the currency will reflect that.
