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The local currency will be in focus today heading into the RBA’s rate decision. While the RBA is expected to remain on hold, many analysts expect a change in commentary, particularly after the last CPI reading came in much better than expected. If the RBA sounds a less dovish tone, the AUD could see a recovery in the near term. In fact, we had already seen a significant AUD/USD recovery yesterday which took the pair to a high of 0.883 where it encountered selling and dropped back down to the 0.8750 region. The risk-off tone in US trade hasn’t done the pair any favours but it does give traders an opportunity to get set at lower levels. Alternatively, should the RBA not shift its tone there could be more room for AUD shorts.
The Nikkei is in for a tough start today with our opening call suggesting the index will open down around 3.5% to 14,153. Investors have flocked back to the yen following the risk selloff. This has seen USD/JPY drop below 101 and threatening to slide further. There are also some earnings due in Japan today which are likely to affect sentiment. As the Nikkei approaches 14,000, we might see some investors trying to take advantage of the recent weakness to accumulate Japanese equities.
REA has been one of the best performing stocks on the ASX for a while, and as a result investors have come to expect big things from the company. The recent departure of its CEO and CFO put a dampener on the stock temporarily and it’ll be interesting to see how the company’s results play out today. Its 1H earnings have come in line with estimates while revenue was up 30% and slightly ahead of estimates. Whether this will be enough to take the stock through recent resistance in the $42.50 region will be key for the stock going forward.
Coffee posted the biggest gain in over nine years, with the drought in Brazil continuing to threaten supply. Brazil is the biggest grower and exporter in the world. With expectations that dry weather will persist in Brazil, after the hottest January on record ever, we could continue to see further gains in coffee in the near term.