China crash, Greece almost out of cash, US dollar reverses

Quick Recap

The reverberations from the massive Shanghai selloff yesterday afternoon  were only slight overnight with stocks in the US and Europe down but only slightly in the case of the US and less than the 1% in the case of Europe. The FTSE managed to buck the trend and rally – somehow – even though the GDP read of 0.3% was a little lower than the market forecast.

On currency markets the big news was that the US dollar surged again over the past 24 hours knocking the Yen to its lowest level since 2003 at just under 124.50. Aussie was pole-axed by Capex and is trading toward 76 cents after finding support right where it should have overnight. The Euro though seems to have found a base for the moment and has now had two up days in a row.

USDJPY hasn’t pulled back much from the highs but traders did pay a little attention to the remarks from Finance Minister Taro Aso that the big fall this week had been ‘rough’. I’m not exactly sure what that is supposed to mean but some talk is that this is a warning to intervention. I doubt it.

Elsewhere gold is steady, oil rose a little, Dalian iron ore dipped back – unsurprisingly given yesterday’s move in Shanghai –  and bonds were steady.

On the day

On the data front the big news in the next 24 hours is the next read on US Q1 GDP. Expectations have been pared materially as more data has come out in the two months since the first read and economists are expecting negative growth. Before that though, in Australia, we get HIA home sales and Private Sector credit. GDP is also out for Switzerland, Italy, Greece and Portugal.

Here’s the overnight scoreboard(7.10am AEST):

• Dow Jones down 0.2% to 18,126
• Nasdaq down 0.17% to 5,097
• S&P 500 down 0.13% to 2,120
• London (FTSE 100) up 0.11% to 7,040
• Frankfurt (DAX) down 0.79% to 11,677
• Paris (CAC) down 0.86% to 5,137
• Tokyo (Nikkei) up 0.4% 20,551
• Shanghai (composite) down 6.5% to 4,620
• Hong Kong (Hang Seng) down 2.23% to 27,454
• ASX Futures Overnight (SPI June) +3 to 5,731
• US 10 Year Bond down 2.13%
• Australian 10 year bond 2.78%
• AUDUSD: 0.7652
• EURUSD: 1.0962
• USDJPY: 123.83
• GBPUSD: 1.5319
• USDCAD: 1.2425
• Crude: $58.00
• Gold: $1,187
• Dalian Iron Ore (September): 422

CHART OF THE DAY:  AUDUSD, finds support

Watch this line. Support is 0.7614. I’ll respect that for the moment and that means rthe Aussie has satisfied the move we were looking for when it rejected the 0.8150 level and have been gradually calling.

I think it will break lower again after some consolidation.

Yesterday on the ASX200 I said “It’s a difficult and messy time but my system has me long.” So I live with it.