Gold in focus ahead of non-farms

Four markets in focus today: Spot Gold, GBP/USD, Macquarie Bank and Transfield.

Spot Gold

It’s all about US payrolls at 10:30pm (AEST) tonight. The market expects 218,000 jobs, with this estimate being revised higher overnight on the back of the strong employment sub-component of the manufacturing ISM. The unemployment rate is expected to tick down to 6.6%; although the participation rate should stay at multi-year lows. Gold seems to be finding support on dips to $1277; however this could be a function of the lack of love for the USD. A good payrolls report, with a strong gain in hourly earnings (expected to increase 0.2%) should see gold through these bids and head down to key support at $1262 - the 61.8% retracement of the $1182 to $1382 rally.

GBP/USD

Cable is on fire at present, hitting a multi-year high overnight, with strong UK manufacturing numbers. The pair is up 14% since the July 2013 lows and sterling has rallied against all G10 currencies in that time. The data flow in the UK has been OK, however the big tier one releases have generally been strong and this has led a few to question whether the BoE could actually raise in Q4 2014. I would caution against this view; however there is no doubt that cable is strong and pullbacks look like buying opportunities. Next stop is the August 2009 high of 1.7043.

Macquarie Bank (MQG)

MQG report numbers pre-market and the market expects reported profit of $1.232 billion. Recall guidance is for reported profit to be up 40-45% on FY13, which in turn implies of $1.191 billion to $1.234 billion. The final dividend is expected to be $1.71.

Transfield (TSE)

TSE has been on a rally lately and volume has been fairly elevated as well. This name is certainly one to watch, however for those who believe in mean reversion could look to short this name if we see a slight rally on open today to $1.02- $1.03. The stock is now two standard deviations from its 20-day moving average; however the 14-day RSI is currently at 79. These two combined suggest the stock is overbought and could see some modest downside to the 90c levels on mean reversion.

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