Equities fall on commodity prices. Risk aversion is back

Today’s Economic Data:

• German import prices m/m -1.5% vs. -1.4%
• Spain flash CPI y/y -0.9% vs. -0.6%
• German flash CPI m/m -0.2% vs. -0.1%; CPI y/y 0.0% vs. 0.1%
• UK M4 Money Supply m/m -0.4% vs. 0.7%
• UK Mortgage approvals 71k vs. 70k
• UK CBI Realized sales 49 vs. 29
• Canada RMPI m/m -6.6% vs. -7.3%; IPPI m/m -0.3% vs. -0.8%
• S&P Case Shiller composite HPI m/m -0.2% vs. 0.1%; HPI y/y 5.0% vs. 5.1%

Later:

• CB Consumer confidence
• BoE’s Carney Speech

The currency markets opened today on a strongly risk aversion note as the Yen made early gains in the Asian trading session and continued to remain firm. USDJPY dipped to session lows of 119.335 before posting a modest recovery to gain 0.03% for the day. There was no major data from Japan or from most of Asia. The equity markets remained under pressure with the Nikkei 225 losing over -4.0% for the day. The Aussie and the Kiwi were also under pressure dragged down by weak commodity prices. AUDUSD fell to session lows of 0.6946 before posting a modest recovery, while NZDUSD tested the lows of 0.6298 before gaining 0.49% for the day. End of month rebalancing is likely to see the US Dollar turn weaker giving some respite across the board.

The European trading session was marked with German import prices declining -1.5% for the month, below the median estimates of -1.4%. Spain’s flash CPI estimates came lower than expected at -0.9% against the median estimates of -0.6%. Germany’s flash CPI was flat on an annualized basis while the monthly inflation data was weak by -0.2%. Subdued inflation is likely to keep the ECB’s QE expansion talks alive in the near term ahead of a new trading month which will see further data and likely to shed light on the Eurozone’s inflation and GDP readings. The EURUSD failed to capitalize on its rally early in the day as the single currency declined off the highs of 1.1279 to trade currently at 1.12, losing -0.36% for the day.

The British Pound remained weak, down -0.21% for the day showing no signs of a relief rally to the strong declines posted this week. There were no data releases from the UK worth noting. Mortgage approvals came out modestly higher at 71k above median estimates of 70k.

The US trading session saw the release of Canadian RMPI and IPPI both of which beat estimates. Although weak, the data showed a better than expected improvement. The Canadian dollar, which has been trading weak, was currently flat after the currency tested the highs of 1.3423 before declining to current levels of 1.34.

US S&P Case Shiller home price index disappointed with the monthly data showing a decline of -0.2% while on a yearly basis the HPI index was down -5%. The US Dollar Index however remained firm currently holding on to its 0.24% gains for the day. The remainder of the evening will see the CB consumer confidence followed by a speech from Bank of England Governor, Mark Carney.