*Aussie elections are creating uncertainity for the markets *Housing data remain the focus for the RBA *Stocks with strong upward and downward momentum
RBA Focused On Housing Data
Aussie dollar is failing to find any luck among traders, there are concerns about the upcoming Federal elections in Australia. This comes in the midst of speculations that the Reserve Bank of Australia is likely to change its stance towards the monetary policy.
Property prices are tumbling and households have tightened their belt towards their spending. Remember, in Australia, the household spending accounts nearly 60 percent toward the gross domestic product. The government has promised the tax cuts and cash handouts, these factors are likely to support consumer spending.
It is widely expected that the bank is going to cut the interest rate, but I think it may be a little too early to say that. The economic picture does look soft, but it doesn’t show that the economic conditions are dire.
Housing market data is the key matrix for the central bank and if the Reserve Bank of Australia sees the data is deteriorating further, it may pull the trigger on the interest rate cut. This may happen as soon as August. The upcoming home loans number, due tomorrow, may provide a better picture of this.
In terms of economic data for this week, we have RBA’s Debelle’s speech on Wednesday and the banks' financial stability review on Friday. Both have the ability to bring some swings for the currency.
Labour Party In Lead While Speculators Have Ranched Up Short Bets
Between now and the May 18th when the nation will head to the polls, we are expecting more weakness for the currency. Newspoll shows that Labour is leading the game for the time being. But the lead margin is narrow and it hasn’t improved much either if you compare this to the previous month figure. Speculators are seeing an opportunity here and we can see that the leveraged funds have increased their short positions. The yield on the government 3-year bond has dropped by three basis points, and on the 10-year it declined nearly four basis points
Aussie Stocks With Big Momentum
In terms of stocks, we like Afterpay Touch Group Ltd, Doman Holdings Australia, and Magellan Financial group because of the strong momentum, they are trading above the 20/50/200 MAs and the RSI is also confirming the momentum. As for the laggers, AVEO Group and National Storage are in the bearish trend- the RSI is confirming that the bears are in control of the price.
In terms of highest short interest increase, APA Group, Southern Cross Media are sitting at the top of the table and these stocks may see serious downward move.