eFXdata reports that TD Research discusses the current market conditions and flags a scope for further rally in the near-term.

"The market takes a step back from the reflation narrative, reflecting a mix of stretched positioning, excessive momentum, and frothy valuations. We think this backdrop is a reset of excess rather than a rejection of it. The global growth data hasn't turned fast enough to justify the optimism priced in across markets. January PMIs showed more stability, but a noticeable lift-off remains absent," TD notes.

"The outbreak of the coronavirus has turned into the catalyst for the correction in risk assets. We note that our simple tracking model that shows MSCI World versus the global PMIs implies a +20% gap. Furthermore, our positioning tracking for the broad USD shows shorts sitting in the 90th percentile of the past year's range. Coupled with rich valuations, the USD has some room to rally in the very short-run," TD adds.