China’ s GDP printed slightly weaker than expected at 6.1% versus 6.3% forecast – its slowest pace of growth this decade, but despite the lower headline number underlying fundamentals suggest that the Chinese economy continues to expand at a healthy pace.

In a blink of an eye, the U.S. dollar has collapsed against the Euro, Japanese Yen and other major currencies. The trigger was comments from Tim Geithner who said that the U.S. is "quite open" to China's suggestion of moving towards a Special Drawing Right (SDR) linked currency system

Compared to yesterday’s sharp moves in the currency and equity markets, trading has been relatively quiet. U.S. stocks meandered in and out of negative territory while the U.S. dollar traded higher against nearly all of the major currencies. Profit taking has hit the financial markets dragging equities and currencies lower. This consolidation gives investors the time to think about whether Monday’s rally is the beginning of a new bull market or just a strong bear market rally. Since March 6th, the S&P 500 has increased 23 percent, which is marginally less than some of the rebounds that we saw during the Great Depression. The point is that equities could still extend its gains while remaining in an overall downtrend.

Australian unemployment hit a four year high reaching 5.2% versus estimates of 5% but surprisingly the country’s economy continued to generate jobs adding 1800 new workers versus forecasts of -20,000 loss. The labor participation rate also improved rising to 65.5% from 65.3%.

Job losses in the month of February are predicted to be very bad, but the latest service sector ISM data suggests otherwise. Activity in the service sector continued to contract with the non-manufacturing ISM report falling from 42.9 to 41.6.

Gold spiked to within two dollars of $900/oz in holiday leaden Asian trading as saber rattling between US and Chinese officials regarding the manipulation of the yuan ratcheted the tension in global capital markets. Last week Treasury Secretary-designate Timothy Geithner stated that China was a currency manipulator sending shock waves through the financial markets as the Obama administration appears to have taken a much more confrontational stance with Chinese authorities than its predecessor.

The euro started off the new week the same way it ended the last one – by sliding against the dollar as focus in the currency shifted towards the ECB. The central banker in Frankfurt are facing escalating pressure to lower rates in light of the severe slowdown in economic activity in the Eurozone. In contrast , Friday’s US Non Farm payrolls, though horrid at -525K, were far better than the whisper number of -700K and as a result support for the greenback stiffened as the data refused to confirm the dollar bears worst expectations.