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Interestingly, the short-term price action (on the daily chart) is actually looking more constructive, having printed a higher high and closing above the 38.2% retracement of the year’s high-to-low point at $0.7881. Momentum and trend indicators are echoing this, as you can see in the stochastic and MACD oscillators.
Today’s Aussie capex data (11:30 AEDT) could be key as this feeds into the upcoming growth print. I think we will get a small increase in revised capex intensions for 2014/15, although this still leaves intentions down 7% or so over the corresponding period. We also get the first estimate for 2015/16 CAPEX plans. Economists expect a 4.3% decline from the 2014/15 figure.
With the market pricing in a 30% chance of a March rate cut from the Reserve Bank of Australia, there is some room for the pair to squeeze higher if you feel they won’t raise again in March. In this regard, any moves to $0.7960 look like a good point at which to work short positions into.