Another day, another round of unexpectedly weak economic data. This time around in the form of trade and machinery orders data from Germany and Japan, which suggest that recovery momentum is stalling in two of the world’s largest economies. The Bank of England held interest rates firm at 0.50% and did not change the level of QE, keeping it firm at 375 billion pounds per year. Yesterday’s technical bounce in oil aided the commodity currencies with AUD and CAD being the biggest winners. This afternoon, we get a peek inside last month’s FOMC policy meeting with the Minutes release at 2pm EST. The US dollar, which lost a bit of ground on Wednesday, has continued to edge lower as North American trading kicks off.
Japanese stocks were lower by 1% while the yen lost a bit of ground on speculation the Bank of Japan may need to ramp up the printing presses again, to stave off deflationary pressures. Machinery orders took a big dip in August, falling 3.5% over the same period in 2014, and as these weak data points mount it brings into question earnings season which kicks off around the world next week. While in Germany, it was determined that exports fell 5.2% in August which illustrated their biggest monthly decline since 2009. Speaking of earnings, Deutsche Bank – Germany’s largest, most influential bank – is preparing markets for losses as high as €7 billion last quarter after writing down the value of its two biggest divisions. Deutsche Bank might also scrap its dividend for next year. As the euro has experienced a nice bounce at the greenback’s expense, this news coinciding with more bad news presumed from VW could weigh on Europe’s currency. In the US, Alcoa kicks off earnings this afternoon, reporting after the bell.
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