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Despite a rally in European equity markets, the AUD has failed to push higher in-line with risk sentiment. At 11:30 AEST we get the latest NAB business confidence figures, although I don’t see this data point really impacting the pair greatly, while at the same time we get the Q2 house price index. The annualised pace of house price gains is likely to slow from 10.9% in Q1 to 9.3%, so a number below 9% could see better AUD weakness as traders feel there is greater scope to cut later this year. I continue to hold a short bias and look for a move to the recent lows of 0.9210, although the 200-day moving average just below is a level that the market is focused on.
There is good volatility in this index at present and this should remain the case given the reaction seen in this market to geopolitics. Comments from NATO overnight that it sees a ‘high probability’ that Russia could intervene militarily in eastern Ukraine should keep the equity bulls at bay, largely as a result of JPY buying. At 14:30 AEST we get the latest read on Japanese industrial production and recall last month we saw a 3.3% decline, which in turn should weigh on Q2 GDP which is released tomorrow. With some in the market expecting the BoJ to ease again in October, it seems bad news is certainly good news for Japanese stocks.
Comments from NATO overnight have kept the EUR from extending gains from Friday, and with geopolitics in mind it will be interesting to see the German ZEW confidence report tonight. Economists are predicting a sizeable drop in the level of confidence readings in the different surveys. While fairly optimistic, I would potentially be looking to short the pair on rallies to 1.3450, just below the 38.2% retracement of the July sell-off.
Bloomberg is reporting that NST will release full-year numbers today and it will need to impress given the huge move this year. The gold miner is the star performer on the ASX 200, putting on 131% and leaving other gold miners in their wake. In terms of earnings, the market is looking for FY14 NPAT of A$36.8 million, on revenue of A$296.4 million. It is also expected to pay a small, but welcome dividend of A$0.02c. It promises to be a fairly messy result and one that will be hard to read given the level of acquisitions the company has made in recent months.