Today we had some decent economic data releases for Valentine’s Day, most of which were pretty soft. It started in the Asian session with the industrial production showing a decline in Japan in December, while German economy fell flat in Q4 of last year, with the GDP at 0.0%, against 0.1% expected. The Eurozone economy expanded by 0.1% indeed in Q4, but that’s pretty soft as well, and the YoY ws revised down to 0.9%, from 1.0%. Retail sales from the US seemed OK at first glance, but after looking further into the details, that report wasn’t too good either.
Although, despite the negative data, there was not much action in the markets today. It seems liek traders might have taken a long weekend off, spilling their love on their loved ones, because i didn’t see any love for any particular asset today. Safe havens had a tendency of going up, since it is Friday and traders would want to turn away from risky assets, just in case coronavirus spreads outside of China and turns into a global pandemic. But, safe havens didn’t gain much either.
The European Session
- German Q4 GDP – there was a slight delay in the release by the source. German economic growth stagnated in Q4 last year but that is very much built into current sentiment already. The thinking is that 2020 would be where things start to look better so we’ll see how things go amid the virus outbreak.
- Germany Q4 preliminary GDP 0.0% vs +0.1% q/q expected
- Prior (Q3) +0.1%; revised to +0.2%
- GDP non-seasonally adjusted +0.3% vs +0.2% y/y expected
- Prior +1.0%; revised to +1.1%
- GDP working day adjusted +0.4
- BOE’s Carney Speaking – The Bank of England governor Mark Carney was speaking on Reuters earlier today, mainly on Brexit and the corovnavirus pandemic.
- Central banks might have to look through one, two quarters of data impacted by virus outbreak
- Watching coronavirus impact closely, will act if needed
- Seeing UK business confidence rebound and some firming of consumer confidence
- It is absolutely clear that Brexit has hurt productivity growth
- Eurozone Q4 2019 GDP Report – The Eurozone GDP report was released a while ago this morning, from Eurostat. This is the second estimate for Q4 of 2019 and shows that growth has slowed considerably in Q4. Economic growth for 2019 was also revised lower to 0.9% from 1.0% previously.
Latest GDP Data Released by Eurostat – 14 February 2020
- Eurozone Q4 GDP second reading +0.1% vs +0.1% q/q prelim
- GDP +0.9% vs +1.0% y/y prelim
Eurozone Trade Report
- Eurozone December trade balance €22.2 billion vs €19.3 billion expected
- Prior €19.2 billion; revised to €19.1 billion
- Non-seasonally adjusted trade balance €23.1 billion
- Prior €20.7 billion
- China’s President Li Speaking on Coronavirus – The coronavirus keeps spreading, especially in China, where the total number of cases has increased to around 65,000 and deaths to around 1,400. There have been cases abroad as well, with 270 cases in Japan and around 60 cases in Singapore and Hong Kong. It all looks scary and the Chinese President Xi was speaking on TV a while ago.
Comments by China president Xi Jinping via state television
- Need to mend the loopholes exposed in this coronavirus outbreak
- Says to push the roll-out of biosecurity law as soon as possible
- Ensuring safety, health of the people is a major task for the country
- To improve medical insurance and aid system for major diseases
The US Session
- US retail Sales Report – The US retail sales report for January was released a while ago. At first sight, it seemed a balanced one, but looking at the details, they don’t seem so good. Below is the report:
- Ex autos +0.3% vs +0.3% expected
- Prior ex autos +0.7% (revised to +0.6%)
- Ex autos and gas +0.4% vs +0.3% expected
- Prior ex autos and gas +0.3%
- Control group 0.0% vs +0.3% expected
- Prior control group +0.5% (revised to +0.2%)
- US Import Prices – The US import prices report was released a while ago as well, and this was a bit better than the retail sales report from the US.
- Import prices MoM for January 0.0% versus -0.2% estimate. The prior month was revised down to 0.2% from 0.3% previously reported
- import price index ex petroleum +0.2% versus -0.1% estimate. Prior month remained unchanged at +0.2%
- Import prices year on year 0.3% versus 0.2% estimate. The prior month remained unchanged at 0.5%
- Export price index MoM 0.7% versus -0.1% estimate. The prior month remained unchanged at -0.2%
- Export prices YoY +0.5% versus -0.2% estimate. The prior month was revised lower to -0.9% from -0.7% previously reported
- order prices rose 0.5% after no change in December
- consumer goods prices rose 0.1% after rising 0.1% in December
- industrial supply prices fell -0.7% after rising 0.7% in December
- capital goods prices rose 0.1% after rising 0.1% in December
- If you ex out agricultural, export prices rose 0.7% after falling 0.2% in December
- US Industrial Production – The industrial production from the US was released a while ago. it was negative again, showing that manufacturing and the industrial sectors are in difficulty still, all over the globe. Below is the report with all the details:
- Prior was -0.3% (revised to -0.4%)
- Manufacturing production -0.1% vs -0.1% expected
- Prior manufacturing production +0.2% (revised to +0.1%)
- Capacity utilization 76.8% vs 77.1% prior
Trades in Sight
- The main trend is still bullish since early January
- Coronavirus cases are increasing
- The 100 SMA provided support
- The retrace down is complete on H4 chart
The 100 SMA has turned into support now
USD/CAD has been bullish since the beginning of this year, as crude Oil turned bearish, losing more than $16 and pulling the CAD lower with it, hence the uptrend since then. But, OPEC is thinking about cutting production again, this time by 600k barrels, so crude Oil has retraced higher in the last few days.The CAD has been pulled up from Oil, as well as from the improvement in the sentiment during this week., despite cases of coronavirus increasing exponentially. As a result, USD/CAD has retraced lower this week, breaking below the 20 SMA (grey) and the 50 SMA (yellow).
But, the decline stopped right at the 1200 SMA (green) on the H4 chart. Yesterday, the price reversed higher as the 100 SMA was approaching, but the 50 SMA turned into resistance. Today, sellers had another go at this moving average, but it held again as support and USD/CAD has bounced off of it again. Now, the pullback is complete on this time-frame, so we should see this pair resume the bullish trend. But, the price action in crude Oil will also affect USD/CAD.
The US inflation report was sort of balanced, with inflation holding steady at 2.5%, while core CPI remains at 2.3%. So, inflation is steady in the US, not cooling off and not running away anywhere. Coronavirus sentiment is still driving markets around, so the data won’t have much impact, until it dies out.