Risk is off this morning as Chinese stocks take a shellacking as the government looks to curb the market’s enthusiasm. Reports of potentially capping loan growth and maybe a larger tax on stock trading helped cool animal spirits overnight and prompted a reassessment of the risk trade.
Oil has fallen another 2.5%, copper is off 2% and S&P is down a mild 0.6% in futures trade as the new global locomotive of growth is thrown a roadblock by its own authorities. Clearly the concerns of asset bubbles throughout the Chinese economy are beginning to unnerve the authorities.
EUR/USD is on the slide after triggering stops below 1.4120/30 support.
1.4073 is the top of the triangle we broke out of to the upside in mid-July while the 21 day moving average comes in at 1.4076, so that area should be sticky in the near-term.
