There has been a lot of market moving news and trading action overnight around the world and across asset classes, but perhaps the most important action has been the big declines in USD and GBP today. The greenback has dropped off sharply in the last few minutes after US retail sales came in below expectations. Weaker than expected earnings from Macy’s confirmed a slowdown in consumer spending even though the company blamed it on bad weather and west coast port issues. Traders appear to have taken these numbers as another sign that the US economy has not really rebounded in April, making a June interest rate liftoff pretty much impossible and likely putting off rate hikes until much later in 2015. The second worst performing currency on the day has been GBP which has fallen on a combination of a soft UK employment report, Bank of England GDP forecast cuts and indications from Governor Carney that the first rate hike may not come until a year from now. he also indicated that further stimulus remains unlikely which appears to have softened the blow a bit. Sterling sold off on the UK news but has been able to rebound a bit following the US news. Today’s USD crash has enabled commodities and currencies to rebound. AUD and NZD has been very strong even before the GBP and USD selloffs, even though last night’s China data came in on the soft side. Perhaps traders are still hoping for more rate cuts out of the PBOC. Crude oil is up again today even though the IEA confirmed my suspicions that higher OPEC production has more than offset falling US production. In other words, the market share war continues unabated, leaving me to wonder how much more upside crude could have before US producers figure this out and turn on the taps again. WTI is up more than Brent but NOK is outperforming CAD to the upside with the loonie seemingly lagging due to its exposure to the softening US economy. Crude oil could be active through the day today with US inventories due out mid-morning. Gold is back above $1,200 today in what appears to mainly be a response to the USD selloff. Treasury yields in Europe have come back down a bit while European indices have rebounded indicating some of the risk fears over Greece have eased a bit for now (but could flare up again any time). US indices have been weakening through the morning and took another leg down following the retail sales report. At this point in time, with the Fed trying to decide when to raise rates, instead of cheering bad news as had happened in the past, traders have started to react negatively on bad news with the impact of data on corporate earnings becoming more important than its impact on liquidity. Corporate News Danaher has agreed to purchase Pall Corp for $13.8B, or $127.20 per share in cash. Plans to then split into two separate companies, one technology, one industrial. Macy’s $0.56 vs street $0.62, sales $6.23B vs street $6.32B, 15% dividend increase, increases share buyback program by $1.5B Economic News Economic reports released overnight and this morning include: Bank of England forecasts based on a mid-2016 start to interest rate hikes Bank of England GDP forecasts cuts 2015 to 2.5% from 2.9% cuts 2016 to 2.6% from 2.9% Bank of England inflation forecast to reach 2.0% by mid-2017 UK jobless claims (12K) vs street (20K) UK rolling 3M jobs change 202K vs street 225K UK average weekly earnings 1.9% vs street 1.7% UK unemployment rate 5.5% as expected US retail sales 0.0% vs street 0.2% US retail ex auto 0.1% vs street 0.5% US retail ex auto and fuel 0.2% vs street 0.6% Canada Teranet house prices 4.4% vs previous 4.7% France GDP 0.7% as expected Germany GDP 1.1% vs street 1.3% Italy GDP 0.00% vs street (0.2%) Eurozone GDP 1.0% as expected Greece GDP 0.1% vs street 0.7% China retail sales 10.0% vs street 10.4% China industrial production 5.9% vs street 6.0% China new Yuan loans 707B vs street 903B China M2 money supply 10.1% vs street 11.9% Bloomberg China monthly GDP estimate 6.40% vs previous 6.35% Germany consumer prices 0.5% vs street 0.4% France consumer prices 0.1% as expected Spain consumer prices (0.6%) as expected Eurozone industrial production 1.8% vs street 1.9% New Zealand food prices (0.3%) vs previous 0.1% Australia wage price index 2.3% vs street 2.4% Economic reports due later today include: 10:30 am EDT US DOE crude oil inventories street (0.25 mmbbls)