Global Themes

Fresh evidence of deteriorating global growth weighed broadly on markets and kept America’s dollar on an overall subdued footing. Chinese imports plunged more than 20 percent, British inflation fell below zero, matching lows hit in April that were the lowest since the 1960s. German investor morale darkened for the seventh time in as many months, hitting one-year lows. The recently higher flying Aussie, kiwi and loonie tumbled from multi-week highs on China’s fresh signs of trouble. A big U.K. brewery deal fanned a happy hour rally for sterling which was abruptly halted after British inflation unexpectedly turned negative. Though on a mixed to weaker footing, the U.S. currency found a negative catalyst in the new signs of global economic duress which risks a further postponement in the Federal Reserve raising borrowing rates.

CNY

The latest trade news from China was mixed but markets focused on the bad: A massive 20.4 percent plunge in imports in September. China’s $60.3 billion trade surprise widened a notch while the 3.7 percent fall in exports marked an improvement from August. On balance, the data pointed to consumers in China turning more frugal which bodes poorly for growth in the world’s No. 2 economy. The Aussie, kiwi and loonie fell in response to China’s grim import data which offered concrete signs of weaker Chinese demand for their resource exports.

GBP

Sterling’s happy hour rally spurred by Anheuser-Busch InBev’s deal to buy SABMiller for £69 billion ended soon after it started, eclipsed by alarming news on U.K. inflation. Sterling tumbled nearly two cents from three-week highs after inflation unexpectedly fell 0.1 percent in September which matched all-time lows dating to the 1960s hit in April. The lack of inflation and risk of economy-strangling deflation was the latest sign of weakness in Europe’s No. 3 economy, dealing a blow to U.K. rate hike expectations, and weighing on the pound.

EUR

The euro notched new three-week highs against the dollar as worries about global growth shifted the so-called carry trade into reverse. The euro struggled to build on its gain though after Germany’s influential ZEW survey of investor confidence darkened for the seventh month running in October, fall to 1.9 from 12.1 in September, hit by the crises embroiling emerging economies and Volkswagen.

CAD

New signs of global weakness weighed on the loonie which descended from ten-week highs against its U.S. counterpart. Caution also lurked ahead of Canada’s national election on Oct. 19 and the next meeting of the Bank of Canada two days later. Next week also brings key news on the Canadian consumer with retail spending on Thursday and inflation on Oct. 23.

USD

The dollar was mixed, enjoying selective strength against peers with the closest ties to China like the Aussie, kiwi and loonie. The dollar maintained a subdued overall tone as global uncertainty loomed as a roadblock to a Fed rate hike.