Cautious end to the week looks likely

After three days of good gains, markets are likely to baton down the hatches as we head into the now familiar routine of a weekend with potential to create Greek induced risk and volatility next week. Having rallied to reflect consensus views that Monday’s negative market reaction to the situation in Greece was overstated, traders may be a little more cautious today. Both the result of Sunday’s referendum and its immediate consequences remain difficult to assess.

Mining stocks will be a focus in today’s trading. Despite the decline in iron ore prices, the major miners appeared to be swept up in the yesterday’s general recovery in stock prices. Whether they can maintain these gains in the face of another significant drop in the spot iron ore price yesterday may be a key issue for the ASX 200 index today.

Fed chair, Janet Yellen has made it clear that wage growth will feature heavily in her assessment of when to start lifting rates. While recent improvement in other US economic data has shortened the odds of a September rate hike, the average hourly earning’s growth data released with last night’s jobs report remains soft and creates an element of doubt about a September rate hike.

Markets will be looking for signs that the accelerated small business depreciation allowances announced in the May budget will begin to show up in May’s retail sales figures. A strong result from this morning’s data will be supportive for the Aussie Dollar.

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