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Qantas and capex data in focus today

Four markets in focus today: AUD/USD, Qantas, Northern Star Resources and EUR/USD.

AUD/USD

It’s a big day for AUD traders with Q4 capex numbers due at 11:30 AEDT. The most important part of this though is the business intensions estimate for 2014-15, which will be the first estimate for future capex intensions. While these ‘intensions’ prints will be revised five times, we need to look at today’s print against the first estimate of the 2013-14 estimate, which was A$152 billion, and given the RBA has detailed before that they expected a 10% drop, this is what we can use as a guide for today’s currency playbook.

Working on this premise, a number of A$137 billion or below (i.e. a 10% fall from the initial 2013 to 2014 print) should cause AUD weakness, and a number A$145 billion or above should cause an AUD rally, given this is half the fall that is priced in. On the daily chart we’ve seen the MACD cross the signal line, so momentum is headed lower in what is a bearish development and a break of 0.8920 would add to downside momentum.

Qantas (QAN)

QAN will get the lion’s share of the media attention today and the market expects a pre-tax loss of A$275 million, with company guidance for a loss of A$250 million to A$300 million. Revenue is expected to be around A$7.9 billion. There is a huge amount for traders to dissect including a reduction in capex, outlook for capacity growth and the results around the structural review. Will there be sizeable job losses?

Northern Star resources (NST)

It’s going to be an interesting day for gold plays, with spot gold actually lower by $11 from yesterday’s ASX 200 cash close. NST, along with MML and IGO (in the gold space) report earnings and while these stocks are fighting a lower gold price, it’s important to also remember the strength seen in the share prices of late. NST is actually the best performing stock in the ASX 200 this year, putting on 59% this year.

EUR/USD

We saw good weakness in the EUR overnight and traders will be keen to look out for German (regional) CPI tonight; however the more important metric will be M3 money supply. Along with inflation, this is the main data point the ECB look at and while the market expects a slight uptick to 1.1% (from 1%) a weaker read should push EUR/USD lower. I suggested shorts on February 17 and a closing break of 1.3660 would be a further negative development.

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