In the latest revision to the IMF's economic outlook published this morning, the fund warns that the world is facing "a crisis like no other," and now expects global growth to shrink -4.9% in 2020, 1.9% below the April 2020 forecast of -3.0%.
The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, the IMF said, adding that the recovery is projected to be more gradual than previously forecast.
Moreover, equities dropped following a Bloomberg report that the US is weighing new tariffs on 3.1 billion USD of exports from France, Germany, Spain, and the UK. According to the report, the USTR wants to impose new tariffs on European exports like olives, beer, gin, and trucks, while increasing duties on products including aircraft, cheese, and yogurt.
The European Union is also debating whether to keep the door shut to American travelers this summer.
The greenback strengthened on Wednesday, and it erased a large chunk of yesterday's losses as sentiment soured. The EURUSD pair fell back below the 1.13 threshold.