The strengthening US dollar carved a swathe through global markets overnight, sending Wall Street to its biggest one day loss in five months, knocking commodities lower, led by gold and oil, and setting up another big loss for the Australian stockmarket today.
A combination of the second day of European Central Bank bond buying (which sent yields on 10 year German bonds to an all time low of just 0.24%), and a firming belief US interest rates will rise sooner than later, rattled all markets.
And a small fall in the spot iron ore price will add to pressure on local markets.
The price eased 0.7% to $US58.18 overnight, the lowest since the current index system started back in 2008-09. It took the fall so far this year to a nasty 18%.
So our market is set up for a loss of close to 50 points this morning after overnight trading in the futures market.
The Aussie dollar fell 76.16 at 7.30 am in Asian trading, down a cent in a day.
The US dollar was the culprit as it drove the euro lower, it fell under $US1.07 several times overnight as it plunged 1.5 US cents, a huge movement given that the US dollar/Euro currency pair is the biggest in forex markets.
The euro was trading around 1.0698 US dollars at 7.30 am. Emerging market currencies, such as the South African rand, the Turkish lira and the Brazilian real were all smashed lower to multi year lows.
Gold fell to $US1,060.10 in New York, its lowest level since November. Oil lost more than 2.6% to $US48.69, despite encouraging news on US oil trends showing a big slowing in output in coming months.
The Dow lost 333.7 points, or a huge 1.9% to 17,662.94, the biggest fall from October 9, 2014.
The S&P 500 shed 35.26 points, or 1.7%, lower at 2,044.17. The Nasdaq Composite ended the day down 82.64 points, or 1.7%, at 4,859.79.
The euro has fallen below $1.06 for the first time in more than 12 years.
In Australia yesterday the ASX 200 Index rose just 0.05% to close at 5824.2 points after earlier in the day trading as high as 5856.7.
Resources giant BHP Billiton lost 0.75% to $31.91, Rio Tinto lost 1.1% to $58.55 while Fortescue Metals Group lost 5.6% to $2.02.
