It will be a busy day in Australia in terms of data, with December home loans (expected to increase by 0.7%), investment lending, January NAB business confidence and the Q4 house price index. Naturally housing is a key metric that the RBA looks at and it’s one of the reasons why many feel interest rates should go higher over time. Technically the 90 handle has been a key entry level for shorts of late; however the 38.3% retracement of the 11.3% fall seen between October and January at 0.9079 would be a much more significant break for me. Given negative AUD positioning and the threat of good domestic data over this week, the possibility of a squeeze to 0.9079 is real, however the bears will be keen to initiate new shorts here. AUD/JPY still seems the high beta play here though.
There is plenty to focus on in the US tonight, with NFIB small business optimism at 23:30 (which is currently at multi month highs), while the key focus will be on Janet Yellen’s first public speech as Chairman in front of the House at 00:30. I cannot see Ms Yellen being overtly dovish as she is still speaking on behalf of the Fed collective, and the general bias of those who have spoken of late has been that tapering will continue despite two poor US payrolls reports and a 5% sell-off in the S&P. This will then be followed by a speech by Charles Plosser, who has already detailed to the market that the Fed should taper at a faster pace to reflect gains in the economy.
Spot gold continues to move higher and has broken above the top of the daily ichimoku cloud (at $1272) for the first time in months. The commodity is testing key resistance at $1278 (the 38.2% of the 1433 to 1182 sell-off), which also coincides with the January 27 high. The daily MACD is above zero and pullbacks right now look like potentially good buying.
ANZ come to market with its Q1 trading update. Analysts will be keen to look at the update and what it means for the 1H earnings. Updates are generally given less emphasis than actual earnings reports; however traders can still see certain trends in margins and capital levels.
COH release its 1H earnings today with the market expecting NPAT to fall sharply to $52 million. Sales should fall a touch to A$359 million, while 2014 guidance is expected to be a similar amount as in 2013. Of course with a name like COH we need to look at the number of implants sold and the momentum behind the sales.