G7 finance officials will on Tuesday discuss how to act in a united front to address the economic fallout from the spreading coronavirus.
With the virus spreading around the globe, governments and central banks are under pressure to support growth, which is suffering from travel restrictions, weakening demand, supply chain disruptions and a sharp market sell-off.
Finance ministers and central bank governors from the G7 group will hold a conference call at 1200 GMT to discuss the outbreak. However global policymakers are not expected to specifically call for new spending or coordinated interest rate cuts. Neither do they consider specific fiscal or monetary steps.
Global stocks and oil prices have made some recovery afters policymakers indicated willingness to help. Other major central banks have promised monetary and fiscal stimulus too.
The ECB said on Monday it was ready to take “appropriate and targeted measures” to fight the impact of coronavirus.
Australia cut its benchmark interest rate to a record low on Tuesday, putting its central bank among the first in the world to ease policy to fight the economic fallout from the coronavirus.
The coronavirus, which originated in China, has spread to more than 60 countries and has killed more than 3,000 people globally.
START TRADINGForex – G7 finance officials consider to act against COVID-19
Investors tempered hopes for the impact of global monetary easing with concern about how much it can do to combat the economic damage from the coronavirus outbreak.
Also due are euro zone inflation data at 1000 GMT and the Super Tuesday Democratic Party primaries in the United States. The Bank of Canada meets to set its policy rate on Wednesday.
The dollar fell as much 0.5% to 107.67 yen and to 0.9573 francs after unnamed G7 financial officials told that the G7 draft statement had no fresh fiscal or monetary pledges.
The dollar index was 0.1% higher at 97.641 and the euro was 0.2% lower at $1.111.
The Australian dollar gained after the Reserve Bank of Australia (RBA) cut interest rates by only 25 basis points, as anticipated. Markets had priced the possibility of a larger cut.
Sterling rose against the dollar and the euro on Tuesday. Britain’s fractious trade talks with the EU and expectations of rate cuts to counter coronavirus damage kept the currency near recent 4-1/2-month lows.
The currency stood at 86.94 pence per euro, up almost 0.3% on the day, having slid more than 1% on Monday.
Against the dollar, sterling was up 0.3% at $1.2791, holding above a recent 4-1/2 month low of around $1.2726.
In commodity markets, oil prices extended gains on expectations that central banks will provide financial stimulus to offset the impact of the coronavirus outbreak.
Brent crude rose $1.36 per barrel, or 2.6%, to $53.26 per barrel by 1140 GMT. U.S. WTI was up $1.48 cents, or 3.2%, at $48.23 a barrel.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money