By Greg Peel

The Dow closed up 56 points, or 0.4%, but the S&P closed flat at 1615 and the Nasdaq added 0.3%.

Let's break this down. Bridge Street opened sharply lower on Monday morning with Wall Street down 0.4% (S&P) and the Aussie down 1.5 cents. Weaker Chinese manufacturing PMIs sparked a second wave and we closed down 1.9%. Tuesday morning saw Wall Street up 0.5% and Aussie up a cent. We opened sharply higher, a second wave was sparked when the RBA suggested another rate cut is possible and we closed up 2.6%. Yesterday Wall Street was flat, but the Aussie was down a cent. We opened sharply lower and fell further on a weaker Chinese service PMI, levelling out at a 1.9% fall after Stevens suggested a July rate cut was a close run thing.

What can we deduce?

Well firstly, Wall Street has nothing to do with it. Secondly, Chinese data on the one hand, and RBA policy on the other, have a lot to do with it. But RBA commentary is making the Aussie weaker, and that is the one clear factor. When the Aussie falls, the world sells Australia. Last night Wall Street closed flat, the Aussie is down 0.7 cents, there are no Chinese data releases today and no RBA talk. Which way do we go?

On the lower Aussie, we go down. Unless you just like symmetrical mathematical patterns, in which case we go up. There is one important factor though: America is having a holiday, hence maybe we do get a breather from currency-linked US selling. Perhaps the SPI Overnight is providing a clue, it's up 19 points or 0.4%.

There is no doubting a slower China is a concern for Australia given the transition to a more domestic focussed economy, and an exporter of more than just rocks, will take time. Scoop Stevens warned yesterday the Australian economy is struggling, and he noted we very nearly got our cut on Tuesday. This means August is almost a lay-down misere. The ironic part is that while the weaker currency forces out the foreigners, and slams our stock market, the weaker currency increases forecast net ASX 200 company earnings by default. That is, increases stock valuations. So what is really being slapped here, in the down-days, is the market PE.

Which is why it appears that when the Yanks, and others, lay off, the locals move in. Despite the volatility, the ASX 200 is little changed since May.

Yesterday Beijing's official service sector PMI for June showed a fall to 53.9 from 54.3 in May. HSBC's independent survey showed a tick up to 51.3 from 51.2. Whichever way you look at it, China is slowing down. The service sector, which represents 46% of China's economy, will have suffered from lower manufacturing activity, but also a seasonal slowdown in construction. The question remains as to how weak Beijing will let the economy become, as it pushes through market reforms before more stimulus is once again injected.

Australia's services PMI showed a tick-up in June, to 41.5 from 40.6 ? not nearly as decisive as the jump in the manufacturing PMI and still way into contraction. The eurozone was disappointed with a tick down to 48.3 from 48.6, while the UK is the star of the show these days with 56.9, up from 54.9, and complementing Monday's equally strong manufacturing number. The US slowed, to 52.2 from 53.7.

Jobs were nevertheless the main focus in the US. The ADP private sector measure showed 188,000 new jobs were added in June against a 160,000 expectation. This was taken as good news despite the implications for Fed tapering, but the weaker PMI and also an increase in the trade deficit, announced last night, provided the balance on a monetary policy basis. Wall Street opened lower, closed higher, and at 1.00pm everyone disappeared for a holiday.

The mixture of global data saw the US dollar come out the loser last night, after a big jump on Tuesday night. The dollar index is down 0.4% to 83.21. The Aussie is down 0.7% to US$0.9084 on rate cut expectations. Gold bounced up US$11.90 to US$1253.20/oz.

Base metals had a mixed session, with copper up 1%, tin up, lead flat, and aluminium, nickel and zinc all weaker. Spot iron ore rose another US$1.20 to be back above the important 120 mark at US$120.50/t.

When the oil markets closed (officially, they continue electronically) last night it appeared the Egyptian president was headed for a showdown with the army, suggesting further MENA destabilisation. Brent crude rose US$1.81 to US$105.76/bbl and West Texas rose US$1.64 to US$101.24/bbl. Mohamed Morsi has subsequently agreed to step down, and the majority of Egyptians are partying. How oil markets respond tonight will be interesting, with WTI 100 a psychological barrier as an impediment to US (and global) growth. But there will be no US market tonight.

The SPI Overnight, as noted, closed up 19 points, or 0.4%.

Tonight all US markets are closed. The ECB will hold a policy meeting tonight, with the Portuguese government under threat of collapsing. The Bank of England will hold its first policy meeting tonight under the new guv'na.

In Australia, economists do not expect a great reading for May building approvals given April approvals jumped substantially.

Due to other commitments, Rudi will not be making his regular appearance on Sky Business today.

Happy Independence Day to our Seppo mates. Our day will come.