Crude oil plummets in European session as investors see price above 80 not justifiable with weak fundamentals. Commodity prices also weaken after Germany's business confidence surprisingly dropped in February. Currently trading at 78.7 the front-contract for WTI crude will probably record a first daily drop in 6 days. Brent crude oil also slips more than -1% from Monday's close to 77.05.

The Ifo institute said that Germany's 'business climate' index plunged for the first time in 11 months to 95.2 in February from 95.8 a month ago. The market had anticipated an improvement to 96.1. the 'current situation' index also slid to 89.8 from 91.2 in January, indicating economic recovery in Germany, the largest economy in the 16-nation Eurozone, is losing steam. Moderation in growth was partly driven by extremely cold weather which suspended services in many sectors during the period. The 'expectations' index, however, beat consensus and rose to 100.9 from 100.6 in December.

The dollar, which initially plummeted after Fed's dovish comments yesterday, pares gains after disappointing data released in the Eurozone. Currently trading at 1.357 against USD, EUR erased all gains made earlier. Pound extends its decline after BOE Deputy Governor Charles Bean said weak sterling should help boost exports.

Moving in tandem with others in the commodity sector, the benchmark contract for gold drops to 1107. The 10-year Treasury yield remains at historical highs, although Fed officials have tried to tune down speculations for rate hike. The following chart shows the relationship between the spread between 10- year and 2-year Treasury yield and change in gold price.