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The AUD will be in focus, with Q2 private capital expenditure due at 11:30 AEST. However, the market will be most keen to see to see the third estimate of plans for 2014/15. Recall the second estimate of future intensions highlighted a fairly rapid decline in mining that was partially offset by planned service spending. There is expected to be a revision higher in the estimate of spending intensions (from $137 billion), but we will need to see a number above $150 billion to cause a major move higher in the AUD. We know the RBA looks at CAPEX fairly closely, so traders should too. Technically, I would be waiting for a close above the double bottom neckline of 0.9346 to initiate potential longs.
It’s a big night for the EUR, with German unemployment in focus at 17:55 AEST and German CPI due at 22:00 AEST. The German inflation numbers will feed directly into the European aggregate CPI print on Friday. From a trading perspective, it’s positive to see some stronger trends developing in the market and we’ve seen the EUR become the funding currency of choice in the carry trade. Personally, I wouldn’t be shorting the EUR here and would wait for a rally in the likes of EUR/CAD, EUR/AUD and EUR/NZD to sell into. For EUR/CAD, I like potentially selling into the 1.4380 area, placing a stop loss on the trade at 1.4570.
QAN have been consolidating over the last few weeks and the bulls will want to see a close above clear supply at A$1.345, which is also a double top. There is no real trend to the price action at present and clearly a new catalyst is needed. Today’s earnings will naturally be in play and, as things stand, the market expects revenue of around A$15.3 billion with an underlying NPAT loss of A$545 million. Traders will be looking out for FY 2015 capacity growth guidance and an update on the review of its portfolio assets.
A weaker open is expected in Australia. However, it promises to be a fairly lively day of corporate news. Private capital expenditure (11:30 AEST) could be an influence, although this is more likely to be an AUD play than an equity story. On the earnings front, we get numbers from NEC, AGO, SFR, MQA, PPT, RHC and QAN. Numbers from AGO will be especially interesting, given the iron ore price made a new year low overnight.