The Japanese Yen declined against the U.S. dollar and the pair indeed managed to breach the 100 level and is seemingly heading towards the 101.65 level which will be determinant for the pair’s movement over the medium term, though the pair might decline from that level in a correctional wave to unload some momentum.

Meanwhile gold prices also tumbled as investors’ reinforced confidence led them to drop their risk aversion and accordingly investors were investing in higher yielding assets, gold prices dropped today to trade within the $770 levels and could be heading towards the $750 levels soon.

The worst financial crisis since the Great Depression has been taking its toll on global economies, as the world’s major economies fell into the depth of recession, as credit conditions tightened further, global demand declined and unemployment continued to rise.

Japan released today the leading indicators index CI for the month of February, the index continued to deteriorate as it fell to 75.2 from 77.2 almost inline with median estimates of 75.3, meanwhile the coincident index CI dropped as well to 86.8 from 89.6 and slightly below the expected estimate of 86.9.

The Japanese economy has been deteriorating deeply amid the financial crisis, as the rising value of the Yen indeed dampened Japanese exports and accordingly economic growth was hurt deeply, meanwhile domestic demand weakened as the economy fell deep in recession, leading the world’s largest economy into yet another period of deflation.

The Bank of Japan had been fighting deflation for almost a decade before the crisis started to emerge, however the effects of the crisis on inflation was rather devastating for the Japanese economy, as prices declined deeply and the economy was indeed heading for another deflationary stage.

The BOJ accordingly reduced their benchmark interest rates down to zero in addition as they seemed to be determined in avoiding another deflationary decade, the BOJ will announce later today their decision on interest rates, and the BOJ are expected to maintain its target rate at 0.1 percent.

Moving on to Europe, as the producer price index will be release from the euro zone today for the month of February, PPI is expected to decline by 0.5 percent following the prior reported drop of 0.8% reported back in January, while compared with a year earlier PPI is expected to have dropped by 1.5 percent following the prior drop of 0.5 percent.

The ECB Chairman Trichet insists that the euro zone area is not facing a deflationary stage but rather a period of “disinflation”, as oil and other commodity prices continue to weigh down on prices, the European Central Bank reduced their benchmark interest rates last week by 25 basis points to 1.25 percent opposing markets’ expectations of a more aggressive rate cut to 1.00 percent.

The ECB still expects economic growth to be exceptionally weak during the first quarter of this year and the 16-nation economy is also expected to remain weak over the course of this year, as unemployment continues to rise, while exports growth continue to drop, meanwhile domestic demand is faltering alongside the global slowdown.

The euro zone will also release the retail sales index for the month of February; retail sales are expected to have dropped by 0.4 percent in February following the prior reported rise of 0.1 percent, while compared with a year earlier retail sales are expected to have dropped by 2.5 percent following the prior drop of 2.2 percent.

Moving across the Ocean, Canada will be releasing some data today with the absence of the United States from economic calendars, Canada will release its building permits for the month of February, which are expected to have dropped by 4.0 percent following the prior reported drop of 4.6 percent.

While the Ivey purchasing mangers index is expected to have risen in March to 47.0 from the prior estimate of 45.2, the Canadian economy was quick to follow the lead of the U.S. economy into the depth of recession, as the Canadian economy is highly dependant on the performance of the U.S. economy, especially considering the effects on trade among the two countries.