Market sentiment has taken a decisively defensive turn overnight as concerns about tonight’s China retail sales and industrial production data, the situation in Crimea moving back toward the front burner with Sunday’s referendum on joining Russia approaching, and internal political tensions in Turkey once again. Growing worries about the impact of economic weakness in China and political unrest elsewhere on resource supply and demand has had a big influence on commodity trading. Recent Chinese data has disappointed, placing particular importance on tonight’s numbers which cover both January and February due to the Lunar New Year holidays. While commodities have been trading broadly lower today, political risk premiums for markets more sensitive to Ukraine continue to grow relative to their peers. For example, Brent crude oil is down 0.6% while WTI crude is down 1.6%. Similarly wheat is trading flat while soybeans are down 3.2%. Stock markets across all regions have been trading lower overnight and US indices appear to be heading for a lower open as well. With international economic and political risks growing and the Fed set to meet next week with continued tapering likely, traders appear to be taking profits out of the market and heading for the door. Capital leaving risk markets like stocks increasingly appears to be seeking defensive havens with gold and silver soaring once again while the usual defensive plays JPY and CHF outperforming other paper currencies. With commodity prices falling, it comes as no surprise really that resource currencies have been underperforming overnight, particularly NOK CAD (both sensitive to the oil price) and AUD. NZD has also been falling but at a slower pace. It appears to be attracting relative support ahead of today’s RBNZ decision. The RBNZ is expected to become the first major developed country bank in years to raise interest rates as part of a normalization of monetary policy process. In recent sessions, NZDUSD has climbed toward the high end of a broad trading channel. This suggests a rate hike has already been priced in which in the current environment could leave it vulnerable to profit-taking against the news. It may be particularly exposed should the central bank decide to stand pat. Later this morning, US energy inventories could spark some activity in WTI and gasoline. In addition to the RBNZ and China data, Australian employment is also due this evening, so in addition to the volatile political situation, there is a significant amount of economic news on the way that could move markets at home and abroad over the next 24 hours. Economic News Economic reports released overnight and this morning include: South Korea unemployment rate 3.9% vs street 3.2% Australia consumer confidence 99.5 vs previous 100.2 Australia home loans 0.0% vs street 0.5% Japan consumer confidence 38.3 vs street 40.0 Spain consumer prices 0.1% vs street 0.0% Greece industrial production 1.1% vs previous 0.5% India industrial production .01% vs street (0.90%) India consumer prices 8.1% vs street 8.3% vs previous 8.8% Brazil inflation 5.68% vs street 5.64% Canada Teranet house prices street 4.9% Economic reports due later today include: 10:30 am EDT US crude oil inventories street 2.0 mmbbls 10:30 am EDT US gasoline inventories street (2.0 mmbbls) 4:00 pm EDT RBNZ interest rate decision 0.25% increase to 2.75% widely expected