Today’s Key Market Drivers: 10th April 2019
Traders are gearing up for the ECB statement today.
Today sees the release of the latest European Central Bank statement and press conference where traders are expecting the ECB to keep interest rates on hold at 0%. What traders are gearing up for is Mario Draghi’s comments about the Euro Area economy and if he mentions the need to inject more stimulus into Euro Area banks. Recently he has been very downbeat about Euro Area inflation and growth expectations in 2019 and the Euro has subsequently been sold off. A low was created last week as a result of March’s weak economic data numbers and the reason why the EUR v USD has been rising this week has more to do with a weak US Dollar than a strong Euro.
If Draghi does not give the market anything new to get negative about the Euro is likely going to trade higher but if he says the world’s largest economic region is continuing to deteriorate then the Euro would fall back lower. Any mention of more stimulus would also see the currency sold off quickly.
A US trade official on Tuesday threatened Europe with tariffs of up to 11% which turned European and US stock markets bearish and pushed the Euro off its daily high. CNBC reports that the tariffs will cover a wide range of products from commercial aircraft and parts to dairy products and wine.
US CPI data will move the US Dollar today.
The latest US inflation figures will be important for the short-term direction of the US Dollar and this is a classic case of when many novice retail traders can get burnt. The ECB announces its policy decision at 9.45pm AEST and no doubt will get the Euro either moving higher or lower. This will likely cause novice retail traders to chase the price not realising the move they have just entered could be completely reversed when the US inflation figures are released 45 minutes later.
For example, if the ECB’s statement is bearish and the Euro begins to sell off that move could be reversed if the US inflation number is weaker than the market expects. So, it is extremely important that your trading plan and approach in the FX market takes into consideration price action that can and will occur throughout the month and your stop loss is placed wide enough to allow you to stay in the game. You won’t be able to stay in the game every time, you will need to take losses from time to time but what you don’t want to do is take a loss and then see price move in your trade direction and you are left on the side of the road not riding the wagon.
IMF downgrades its global economic outlook.
The International Monetary Fund announced its latest global economic outlook report on Wednesday which downgraded global growth and inflation expectations for the coming 12 months. The market has already priced in weaker economic conditions globally for 2019 and 2020 so the report failed to give traders anything they didn’t already know.
Aussie and Kiwi Dollars fall as safe havens turn positive.
With US stock markets closing weaker on Tuesday the safe haven Yen was higher and commodity based and emerging market currencies were sold which included the Aussie and Kiwi Dollars. I am expecting a relatively sombre Westpac Consumer Confidence number today that will likely add to the selling pressure in the short term but the losses could be erased in the US trading session with the release of US inflation figures.
Wednesday’s European and US trading sessions are lining up to be the most volatile we will likely see on currency markets this week. Watch how the fundamentals impact price action and learn to trade into a new market move early, that is fundamentally based and you will increase your probability of success.
The way to get started is to quit talking and start doing.
About the Author: Andrew Barnett
Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular keynote speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).
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