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All eyes on US earnings season

Four markets in focus today: US 500, AUD/USD, NZD/USD and BHP Billiton.

US 500 Cash

After fairly whippy price action in US markets overnight, the upcoming session is packed with event risk. There is a raft of earnings reports, including Bank of America and American Express, but also after the bell we hear from Google (IG clients can now trade Google after-market). On the data side we get housing starts, building permits and industrial production. If that wasn’t enough, we also get to hear from a handful of Fed speakers including Janet Yellen at 2:25am (AEST).

AUD/USD

On the hourly chart the pair has broken the uptrend drawn from the April 3 low at 0.9373. The pair is also right on the 38.2% retracement of the move from 0.9205 to 0.9461, at 0.9363, and a failure to reclaim this level could suggest short positions. At midday we get a raft of Chinese economic data, with retail sales (expected to grow 12.1% yoy), fixed asset investment (+18%), industrial production (+9%) and Q1 GDP (+7.3%). The economist range for GDP is 6.8% to 7.7%, which seems fairly wide for a number that is usually so accurately predicted. Comments from a Chinese state researcher yesterday suggest the print should be in-line with consensus.

NZD/USD

The pair seems to have run out of steam, similar to what we have seen in the AUD/USD, however it will be interesting to see today’s NZ inflation print at 8:45am. The market expects a 10 basis point increase to 1.7%, which would be the highest level since 2011; however one concern for the NZD bulls is the sharp decline in global dairy prices. This is leading to speculation of a cut to Fonterra’s forecast dairy payout.

BHP Billiton (BHP)

RIO’s production numbers didn’t really cause too much of a stir yesterday, given the numbers were largely in-line. BHP shareholders will still be keen to look for BHP’s March quarter production numbers this morning. The market expects a 10% increase in petroleum (on the quarter), while a small decline is expected in base metals.  Iron ore will also be keenly watched. Overnight there was talked in a Canadian newspaper about BHP making another tilt at Potash corp.

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