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Will the EUR/AUD's fall continue?

Four key markets in focus today.

EUR/AUD

We’ve seen this pair lose 400 pips since January 24, as traders speculate that the divergence seen in central bank policy is coming to an end and the RBA could lose its easing bias this week. Certainly momentum oscillators have started looking much shakier of late, matching the weak ECB money supply and inflation print. Given the weak data I wouldn’t be surprised to see the pair test 1.5150 by the end of the week. It will be a big week for Australian data and the series starts today with ANZ jobs ads at 11:30 (AEDT), while China’s services PMI is released at 12:00. At 16:30 we get the latest commodity price index.

US 500

US earnings will still be in focus this week, and while the poor reports have made the headlines, the absolute number of beats have been impressive.  With 79% of companies having exceeding expectations, this is just above the 75% of companies that beat in Q3. At 02:00 tonight we get the latest manufacturing ISM report and the market expects a slight pullback in the pace of expansion, with the index anticipated to print 54.0. The index is testing uptrend support from November 2012, with a break of this level likely to see the 200-day moving average at 1706 come into play.

EUR/USD

The EUR is going to be closely watched this week given the ECB meeting on Thursday and some viewpoints that it could cut rates again. The two key measurements that the ECB look at in M3 money supply and inflation have recently printed lower than forecast, and the Eurozone now has the lowest in inflation in the developed world. There is also talk the Bundesbank is looking at more unconventional measures, such as not sterilising its prior bond purchases from its 2012 SMP (Securities Market Program). The idea here is that it will increase liquidity, although there will be protests that it is quasi-QE. Selling any rallies in the pair is the preferred strategy, with manufacturing PMI in focus tonight in Spain, Germany, Greece and Germany.

JB Hi-Fi

JBH has been building short interest of late, despite pre-guiding last week with good 1H14 earnings. JBH reports earnings today, and while most of the details are known the market is still keen to look out for full-year guidance, with the consensus calling for A$128 million. Traders will also be keen to look out for information around gross margins and sales composition as well.

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