Any relief rally seen in the Euro and currencies in general was well absorbed in European trade, with the USD finding renewed bids ahead of North America. Initially, risk correlated assets were sold on widening bond yields and a slew of downbeat comments out of the Eurozone, before finding some intraday bids on rumors that China would step up to the plate and provide more relief. However, the risk rally proved fleeting and risk liquidation picked back up on reports that the Unicredit CEO was meeting with the ECB to discuss additional funding fro Italian banks. All major currencies remain under pressure against the safe-haven US Dollar, which at the same time has been finding some additional bids on its own merits following a solid retail sales print in the US on Tuesday. We now see room for most of the major currencies to retest their October lows over the coming days.
The higher yielding commodity currencies are the hardest hit of the bunch, with the risk liquidation exposing the Australian and New Zealand Dollars in particular. The Australian Dollar is now on the verge of a break back below parity against the buck and has found some additional offers on some softer overnight data. Elsewhere, the Bank of Japan left rates on hold at 0-0.10% as widely expected but also lowered its economic assessment. In Europe, Eurozone inflation readings were as expected, UK employment data was mixed, while the Bank of England inflation report confirmed the anticipated dovish tone of the central bank. Looking ahead, US CPI, TICs data, industrial production, capacity utilization, NAHB housing, and oil and gas inventory data are the key economic releases in North America. On the official circuit, Fed Lacker and Rosengren are slated to speak later in the day. US equity futures and commodities are tracking moderately lower into the final session of the day.