Market Drivers February 14, 2020

• Markets very quiet
• EU GDP stays just above even
• Nikkei -0.59% Dax 0.21%
• UST 10Y 1.59%
• Oil $52/bbl
• Gold $1575/oz
• BTCUSD $10278

Europe and Asia:

• EUR GDP 0.1% vs. 0.1%

North America:

• USD Retail Saleas 8:30

It’s been a very quiet night in FX and equity markets but a mild risk-on tone has managed to prevail as the pace of new coronavirus cases has started to slow and there were no significant additional outbreaks outside of mainland China.

It’s still too early to tell just how much of an impact the virus will have on global Q1 GDP but for now, the market is operating under the assumption that normal business activity will resume in March as the quarantine period exhausts the infection.

That may be extraordinarily optimistic given the long incubation period of the virus but for now, investors continue to shrug off the economic impact of the pandemic as essentially a one-off affair.

Meanwhile, the economic calendar is quiet today with only the European GDP released. The second reading showed that the region grew at a sclerotic 0.1% rate in Q4 of last year as the manufacturing slowdown hurt Germany the most. Given the massive dislocation issues in Q1 of this year European growth in the front half of the year is unlikely to be much better and could, in fact, turn negative, but EURUSD flows have already anticipated a lot of bad news and the pair appears to be finding a modicum of support under the 1.0850 level.

Meanwhile in North America today all eyes will be on the US consumer as Retail Sales will be released at 12:30 GMT. The report has disappointed 4 out of the 5 past times, but last month’s data was a positive surprise and bulls are hoping that this is the start of a new trend as consumer confidence and low unemployment boost consumption. The market is actually looking for a lower reading of 0.3% versus 0.7% the period prior, but if the data does print better than expected it could provide a lift to USDJPY which has struggled to clear the 110.00 figure. A close above that level would signal that the risk rally continues and could open the way for a move towards 111.00 as the month proceeds.