• Risk off flow resume
• Cable drops as BoJo goes hardline
• Nikkei -2.13% Dax -2.07%
• UST 10Y 1.305%
• Oil $47/bbl
• Gold $1646/oz
• BTCUSD $8829

Europe and Asia:

• EUR EU Sentiment 103.5 vs 102.8

North America:

• USD Durable Goods 08:30
• USD GDP 8:30

Risk assets continued to dive in Asian and European trade today with US futures off by more than 1% in the wake of President Trump’s presser on coronavirus that failed to reassure the markets.

Although the absolute number of coronavirus cases outside of mainland China remains small, the fear that a global pandemic may be emerging continues to rattle the markets. The asymptomatic nature of the virus and its exponential infection function along with the fact that up to 20% of cases require hospitalization has forced many governments around the world to limit access to borders and quarantine parts of the population.

The markets continue to be concerned about the economic knock-on effects of the virus with the most bearish thesis assuming that the slowdown could impact global growth for two quarters or more.

The next two weeks will likely tell the story of the coronavirus impact. If the cluster infections begin to appear in the US and other European nations than the impact on global GDP will be chilling. If the number of cases begins to level off then the containment measures would have worked and investors will likely breathe a sigh of relief.

Meanwhile, in FX land, the pound was crushed as UK authorities took a hard line on trade negotiations with the EU stating that they were willing to operate without a deal if one was not negotiated in four months. It would be interesting to see how the unexpected impact of the coronavirus story affects the negotiations, especially if the more severe scenario plays out. In the meantime, traders wasted no time selling GBPUSD which was down -100 pips on the day.

In North American trade today the market will be looking at US GDP data and any miss of the 2.1% print will only add salt the wound for risk trades. With USDJPY already testing the 110.00 figure a weak print could send it to 109.50 as the day proceeds.