Dollar strength experienced a strong reversal in today’s trading session. The EurUsd rose 100pips to the low range of 1.36, while the UsdJpy dropped a bit over 100pips through 93 to high 92 price area. The GbpUsd surged 200pips pushing the pair back above 1.50 ahead of the BoE rate announcement scheduled for tomorrow. Equity markets deteriorated in the US and Europe, with all the major indexes closing on the negative side. Bond yields were active but have since moderated levels still well below historical averages. Commodities slid across the board with oil down 12% at $42bbl, and gold off 2.4% at $843oz.

Eurozone PPI declined to an annualized rate of 3.3% vs. the consensus figure of 4.4%. This data point is evidentiary to the notion that deflation is growing trend in the region. This will alleviate some of the inflationary concerns expressed by the ECB in recent commentary, therefore allowing room for further easing as anticipated. German unemployment came in worst than expected at 7.6% vs. 7.5% which is key factor in measuring the health within the labor market of the Eurozone’s largest economy. Most of the global deflation trend is due to falling commodity prices which may be a key component in providing any financial stability for consumers. The Euro actually gained despite the negative employment news out of Germany and growing probability of further rate cuts. The market may have overreacted to the ADP employment in the US , which was compounded by negative earnings by technology company Intel and a short‐term correction may be on the horizon in EurUsd.

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