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A number of the AUD crosses have had some huge moves over the course of the last 24 hours, with AUD/JPY rallying a massive 2.6% on the day. AUD/USD has put on 2%, which is one of the biggest intra-day gains in some time and I would not be surprised to see a squeeze higher from here. A daily close (09:00 AEDT) above 0.8924 (the 61.8% retracement of the recent 0.9087 to 0.8660 move) could see the pair go on to test 0.9087. With Australia’s trade balance and retail sales out tomorrow we could see the pair stage a move to the 90 handle sooner-rather-than-later.
I suggested this index may bounce in my afternoon report yesterday, especially given it closed four standard deviations from its 50 day moving average. As things stand we are calling the index to open 2.3% higher, however there are sixteen companies reporting today (including Mazda, Mitsubishi and Yamaha), thus whether we see follow through buying from local investors is hardly assured.
The index has found better buyers overnight; with a number of traders feeling yesterday’s dip was a buying opportunity. This may yet prove a poor decision especially with key data due over the next few days. In US trade tonight we the ADP private payrolls report (at 00:15 AEDT), ahead of the services ISM report (02:00 AEDT). In terms of the service sector data, the market expects the index to show better expansion (consensus is for 53.7 from 53.0), so if this does materialise then perhaps the concern over the US economy can fade a little.
EGP report 1H14 earnings pre-market, with traders expecting revenue of A$951.6 million and NPAT of A$70 million. Look for modest 3% EBITDA growth in The Star, with 1.7% yoy EBITDA growth in its Jupiter’s earnings.