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ASX 200 focuses on earnings and hefty ex-div

Four markets in focus today: Bluescope Steel, EUR/USD, Australia 200 cash and Spot gold.

Bluescope Steel

BSL has had a good run over the past few weeks and managed to test the $6 level. After venturing slightly above this level the stock pulled back with some profit-taking kicking in heading into its 1H results. The company went through an extremely tough period and is now focusing on turning things around. Unlike Arrium, BSL doesn’t have iron ore to diversify earnings to an extent. BSL saw a good improvement in 1H earnings and expect 2H underlying profit to be similar. While the results are at the lower end of estimates, the improvement might encourage further buying and see the stock break through $6.

EUR/USD

It has been a poor start to the week for the single currency, with EUR/USD gapping lower after putting in a strong performance on Friday. The pair is looking increasingly choppy and will be in focus later today with the German Ifo business climate due out at 20:00 AEDT and CPI for the region at 21:00 AEDT. Any signs of a strong performance on the business climate front should underpin the euro and could see the pair retest 1.376.

Australia 200 cash

After a significant rally since February 6, the local market is now testing October 2013 highs. The level was 5,457 and the ASX 200 came very close to testing it on Friday. In fact the cash contract traded as high as 5,463 but has since pulled back to 5,429. With 16.2 points coming out of the market today, we could see some weakness early on. However, given 68% of stocks above the longer term 200-day MA, weakness could be used as an opportunity to buy and see this current uptrend continue.

Spot Gold

The precious metal remains fairly resilient despite the choppy sentiment we are currently seeing. The 61.8% retracement at 1,337 continues to contain gold and that will be the key level to look out for this week. Activity is relatively light on the US front tonight with flash services PMI being the only notable release. However, over the week we have Janet Yellen’s postponed second testimony and that will help shape up sentiment for the USD and gold.

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