US dollar a little weaker in Asia, Shanghai stocks edging closer to 5,000

Quick Recap

GREG HERE – THIS NEVER WENT OUT LAST NIGHT FOR SOME REASON. BUT HAVE HIT PUB THIS MORNING FOR CONTINUITY

Never mind the warnings on Fed tightening or the fact that pretty much every major stock market has fallen over the last two sessions, Shanghai stocks still managed to rally a very solid 0.77%. That rally of 38 points takes the Shanghai Composite  up to a remarkable 4,948. Pull the cord – time to hop of the bus.

Elsewhere the ASX 200 fell 0.83%, Tokyo loved the weaker Yen but only managed to rally 0.17%. The Hang Seng was lower as was the Kospi and the Straits Times.

On forex markets, the US dollar was a little weaker today as Asian traders rejected the Euro and Aussie weakness with both currencies making gains of around 0.4%. Other currencies lagged but were all generally stronger against the US dollar.

These moves are entirely in keeping with the oversold nature of the short term charts after last nights big moves. But, the overall trend to US dollar strength seems intact.

Gold is up a little as well and crude has had a strong rally.

On the data front today construction work done in Australia fell 2.4% in Q1 which was much worse than expected by economist but hardly unexpected given the size of the hole left by the mining boom. In China, industrial profits for Q1 were a bit stronger showing growth of 2.6% year on year.

Looking Deeper – Grexit

In game theory terms I think, have thought and said here often, that the players on each side of the unfolding Greek tragedy are thinking the other will blink. That means the chances of a mistake and Grexit are high I reckon.

My colleague, David Scutt, at Business Insider today covered some Deutsche Bank research on the chance of Grexit. Scutt says:

According to Deutsche the biggest risk is another Eurozone debt crisis sparked by the possible exit of Greece from the monetary union. In its opinion the probability of this risk has risen from April – not surprising given the news flow towards Greek debt negotiations at present.

Impossible to disagree.

Watch this space.

Here’s tonight’s Data:

Tonight in Germany we get the Gfk consumer confidence survey, mortgage applications and the Redbook in the US and then an interesting BoC monetary policy decision and announcement. There is also a big G7 meeting in Dresden.

Now, Let’s see what the charts suggest.  

Remember the rules though: positions sized using whatever method you use to account for actual and potential market volatility.

AUDUSD: The bias is still lower on the dailies.

EURO: 1.0840 was the target last night. Low was 1.0860ish so close for now.

The bias remains lower on the dailies.

Gold: Another trend line to watch. I love this market (except EURJPY that is.)

ASX200: Last night’s trade threatened and tested the long entered yesterday. I’m still not convinced but I’m in for a couple of hundred points maybe.

Please note: I usually look at 3 or 4 charts each day. These will not always be the same charts and the above is meant to help guide traders thought processes not offer advice.

The Scorecard

Here is the scoreboard around the region at 6.55 am London, 2.55 am Tokyo and 3.55 pm Sydney

• Tokyo (Nikkei Average) up 0.17% to 20,472
• Hong Kong (Hang Seng Index) down 0.81% to 28,020
• Shanghai (Shanghai Composite Index) up 0.63% to 4,941
• Sydney (ASX 200) down 0.83% 5,725

On Currencies and Commodities

• EURUSD – 1.0901
• GBPUSD – 1.5401
• USDJPY – 123.11
• AUDUSD – 0.7749
• Gold – $1,188
• Dalian Iron Ore Futures –  432.5