• Euro continues its rally following upbeat GDP releases from the European economies on Tuesday
  • European stock markets tumble another session on the trot taking a leaf out of their Asian counterparts
  • Bonds on the rise as waning risk appetite hastens capital influx

Taking a quick snapshot across the FX market one may conclude that the single currency keeps surging, the move which could have initiated possibly following better than estimated readings with regard to GDP growth across the European economies. On the other hand deterioration seen in the equity markets has pushed the Japanese currency much higher despite a streak of the sub-par macroeconomic data which came overnight. Otherwise, the Norwegian krone is losing momentum across the board in the aftermath of sliding oil prices which in turn are dropping ca. 1.3% because of a massive build of US stocks reported by the API yesterday evening. Furthermore, the IEA revealed on Tuesday the much less encouraging research on the oil market suggesting that global oil supply will outweigh demand at least till mid-2018, the view which is definitely less supportive of crude compared to the OPEC calculations. As a result the NOK is diving 1.1% against the US dollar and 1.4% against the single currency. Paradoxically, the British pound has been the least volatile currency within the G10 basket regardless of the jobs report which seems to draw a little bit more promising prospect as far as wage growth is concerned, however the broader backdrop has barely changed.

Moving to the Europeans equity markets one may spot that declines have deepened since the opening with the Italian FTSE MIB leading the losses being down as much as 1.6%, besides the DE30 is dipping 1.3% while other indices are withdrawing between 0.6 and 0.8%. Let as point out that the German index has entered the day being above its critical support area but now it’s trading below this level suggesting that yet more severe slides could be on the cards. Looking at the US futures there is nothing reassuring as the SP500 (US500 on xStation5) is declining 0.5% while investors across the globe are awaiting two readings from the US economy which could potentially come to help for the lately beleaguered greenback.

Widespread declines seen across the equity markets in the old continent and elsewhere as well have already translated into the bond markets which has experienced a capital influx in the wake of fading risk appetite. Consequently, the US 10Y yield is decreasing almost 4bps, the German 10Y yield is sliding the same while the UK10Y yield is going down 3bps as the labor market report hasn’t impacted investors’ perception regarding future rate increases.

On the commodity front one may notice that beside falling oil prices (the reasons have been outlined above) we have a decrease in iron ore being another drag on the Australian dollar. On top of that gold prices are rising 0.4%, wheat is grinding lower 0.3%, corn is treading water while soybean is gaining 0.5%.

Bitcoin is gaining momentum in early trading after a plunge seen at the beginning of the week, however we’ve got another bunch of equivocal reports pertaining to the cryptocurrency of late. Let’s begin with the news which came from Asia as the DBS, one of the largest banks there, said that it sees Bitcoin as a bit of a pyramid scheme. In order to offset a little adverse effect on Bitcoin coming from Asia, it’s worth looking at the UK where the real estate is attracting more and more offers in Bitcoin.

Wednesday is packed with many crucial macroeconomic releases which could provide reasons to see larger moves across major currencies. Looking forward there will be two prints from the US economy concerning CPI and retail sales while the DoE weekly report ought to be scrutinized by commodity traders.