NEW YORK ( TheStreet) -- So far this week, equity markets are focusing more on corporate fundamentals than on the macro environment.Earnings have not disappointed but the global macro picture continues to show weakness. China export data contracted Tuesday and German business activity faltered. Global growth is not expected to be robust anytime soon, and this continues to play into selling inflationary assets.
Intermarket chart comparisons illustrate the recent downturn in Europe and how it has affected currency movements. There are two charts above. The top chart is of MSCI Germany Index Fund (EWG) over FTSE All World Ex US ETF (VEU). The pair has been rangebound since late last year but recently has seen weakness with the increased volatility surrounding the region. The price action has broken lower, out of the range, which is indicative of risk pullback. The chart below it is of CurrencyShares Euro Currency Trust (FXE) over DB USD Index Bullish (UUP). This simply measures the euro against the U.S. dollar in a more pronounced way. The pair has moved in step lower with the fall of relative strength in Germany. This should weigh on world equity markets eventually. The next chart is of DJ-UBS Copper Total Return Sub-Index ETN (JJC) over an equal weight DB Commodity Index Tracking Fund (DBC). This pair has seen extreme weakness lately due to a weak Chinese picture and tepid inflation expectations. The breach of a long-term relative bottom highlights the decline in demand for industrial commodities and slowdown in worldwide manufacturing. Goldman Sachs recently cut its commodities outlook, which signals the sour taste commodity weakness has left investors. Until Dr. Copper bottoms, global growth sentiment should remain constrained.