Key Points

Bias: Risk off

Commentary

And just like that the market snaps back to reality. U.S. equities had their worst day in about two weeks overnight, pressured by the rising Corona Virus bases and by three U.S. states imposing quarantine restrictions on travelers. This saw U.S. airline stocks lead the way lower. Also pressuring was a Bloomberg report saying the U.S. was considering tariffs against France, Germany, Spain, the U.K. and Canada. Finally, the IMF also dropped its target for the global economy this year.

The USD caught a light bid overnight after the IMF cut its global target for economic growth to -4.9%. This safe-haven bid saw the Big Dollar outperform all other currencies, but still largely hold within recent ranges. Late trade saw the market grind to a half after a 6.2 magnitude earthquake in Japan.

Commodities were also weaker, with oil falling more than 5% on a rise in U.S. supplies. Gold was on the offer amid the short-term strength on the USD.

Bias

We are expecting the USD to continue to drift higher today, although with a Chinese bank holiday, volumes are expected to be light. Data today sees the Japanese Activity Index, while tonight we will see U.S. Durable Goods, Initial Claims and Final GDP.

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