Over recent weeks, US markets have not always been a good indicator of the mood on the local market. Until recently the ASX 200 was involved in a concerted up trend as it played catch up with international markets.

However, the situation may be a little different now. Like the S&P 500, the ASX 200 index is now well above its most recent low. The Australian up trend has also lost momentum over the past week as investors show signs of being content to sit back and wait on fresh news.

Against this background, there may be a little local nervousness about the fact that the US S&P 500 put in its weakest session for some time. The index closed on its low and well below the open with the sellers clearly in charge. After this price action, buyers may be cautious until there is clarity on whether or not selling continues and US markets begin a correction.

Both currency and stock markets are waiting on news of who will be appointed as Chair of the Fed. This is a significant decision for markets. Central banking is as much art as science and personnel decisions could make a difference to future monetary policy. The appointment of Mr. Powell who is regarded as relatively dovish on rates and in favour of reduced regulation could be seen as a positive for stock markets and bearish for the $US. Mr. Taylor on the other hand may lead to a boost in $US and some nervousness in stock markets.