Global equity markets tumbled overnight, as risk appetite crumbled and economic prospects darkened. European and US share markets fell out of bed with fears over weaker than expected earnings and global growth prospects. The Fed is expected to leave rates unchanged and QE Infinity in place, but fears are rising that the party may be coming to an end. The language around the Feds comments will be watched closely. German Consumer Confidence plunged deeper into negative territory, collapsing to minus 15.6, pushing the EUR back to 1.2100, while the GBP dropped to 1.3700. Markets will be watching the US GDP closely, after the record 33.4% last quarter, expectations are extremely low.
Australian inflation was stronger than expected, rising 0.9%, which is relatively good under the circumstances. The good news had propelled the AUD above 0.7750, but the global equity sell-off and a sharp spike in the safe-haven reserve currency, crunched the AUD back to as low as 0.7650. The NZD experienced similar gyrations, crashing below 0.7200, ahead of key trade data scheduled for release today.
All eyes are on the Fed and then markets will turn their attention to the US GDP number. The severe lock-down restrictions will ensure weak economic data for well into the second quarter.