• Slight bid ahead of G-7 Call
• RBA Cuts rate 25bp
• Nikkei -1.22% Dax 2.82%
• UST 10Y 1.16%
• Oil $48/bbl
• Gold $1598/oz
• BTCUSD $8892

Europe and Asia:

• EUR EU CPI 1.2% vs. 1.2%

North America:

• No Data

Markets were generally calm in Asian and early European trade today awaiting the G-7 finance ministers meeting with regard to the global economic ramifications of the coronavirus pandemic.

Equities were slightly bid continuing their strong rebound from yesterday when they catapulted more than 4% after a vicious selloff the week prior. Although the rate of new COVID-19 cases continues to rise, there have been no new hot spots yet and that has helped to lift sentiment somewhat, but equities could swoon once again the moment there is news of another big outbreak, especially in the US which so far has only seen minimal damage from the virus.

On the eco front, the big news overnight came from the RBA which cut rates 25bp as expected in response to the growing economic risks of the coronavirus on the AU economy. The central bank noted that the coronavirus has clouded the near-term outlook for the global economy and is expected to delay progress on jobs and inflation. However, the board also stated that it was too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path.

Overall, the move was generally restrained and the RBA abstained from any extraordinary macro-prudential measures which led the Aussie to actually rally in the aftermath of the rate cut with the pair trading to a high of .6567 in morning European dealing. The Aussie has been so badly battered over the past few weeks hitting multi-year lows that it could see further short covering flows to .6600 as the week progresses especially if risk flows improve.

In North America today the focus will be on the G-7 finance ministers meeting which is coming up shortly, though it’s doubtful that it will produce any coordinated policy response aside from a statement of solidarity. Politicians, just like investors are taking a wait and see attitude with the coronavirus before committing to any drastic fiscal measures. That, in turn, could disappoint markets and put pressure on risk as the day proceeds.u