Risk Aversion Mood Sets In

China's trade balance released earlier today showed that growth bounced back at a modest pace in August. China's trade balance increased $60.3 billion above the median estimates of $46.9 billion but remained soft from the $60.2 billion seen previously. The rebound in trade balance is expected to remain low with the export orders in September PMI showing a print of 47.9 in September, posting the second lowest reading in nearly 31 months. In early trading, the Asian equity markets were lower pointing to a possible risk aversion mood setting in. The Australian dollar, alongside the Kiwi and the dollar from Canada were all trending weaker, losing on average -0.50% to the Greenback with the Japanese Yen surging 0.13%. AUDUSD retreated off the near 7-week highs of 0.737 to trade near the lows of 0.731.

The British Pound, which gained close to 1.46% since hitting a 20-week low of 1.5106 two weeks ago, will be looking to the monthly inflation data due today at 09:30. Expectations are slightly hawkish with the core annualized CPI expected to rise 1.1%, up from 1.0% previously while the headline CPI is expected to rise a modest 0.2% annualized from 0.0% last month. The GBPUSD pair is also potentially signaling the end of the correction based on yesterday's price action and looks poised for a dip back to 1.5285 level of support. There is not much of data from the US today so the focus in GBPUSD will clearly be the CPI and the PPI data.