Today’s Key Market Drivers – 10th October 2017

The US Dollar on Monday has hung onto its recent gains as we step closer to the US Fed’s latest monthly minutes and US retail and inflation figures. The Dow Jones again finished slightly in the red marking two days of small declines and keeping the US Dollar v Yen from rising back to its recent range highs. I am a fan of the US Dollar and I found an article whilst surfing the web last night that is titled 10 Reasons Why the US Economy is Actually in Good Shape. I encourage you to read it as it will give you a good guide as to why close to 90% of traders expect US interest rates to continue to rise again before Xmas and 3 more times in 2018.

The US Fed will soon have a higher cash rate than any other currency that we trade. The AUD v USD was 0.50c the last time the US Fed had higher rates than the RBA and unless the RBA is going to suddenly get hawkish and talk the economy and rates up I can’t see the buyers holding on too much longer to the AUD v USD. Absolutely the next move from the RBA is likely up but the RBA is going to cheer the AUD v USD lower as a lower AUD makes the Aussie economy more competitive for exports and ditto for the Kiwis. The RBNZ would cherish a rapidly falling NZD if they could get it and I think its only just around the corner. The probability in my view is that we will see a stronger US Dollar leading into when the Fed lifts the official cash rate again with December the likely month. I will be taking any buying opportunity on the US Dollar that meets my criteria. Reports from the Commodity Futures and Trading Commission show traders have reduced their short US Dollar positions in recent weeks and added to their longs.

The Pound gained on Monday following reports an unsuccessful bid to wrestle the Prime Ministership from Theresa May would likely fail. The British PM has been going from bad to worse recently and personally, I think it is only a matter of time and not a question of “if” we will see a new British PM. I just can’t see her hanging on to the top job for another 3 years. Monday was a public holiday in the US for Columbus Day so trading volumes would have been lighter. Japan also took a long weekend so today we will see the biggest economy and the third biggest economy back at work and I suspect the recent currency trend changes should continue.

Today’s economic calendar sees a slew of Medium impacting news most of which is centered in the European trading session and relates to the Pound. BOJ Governor Kuroda is speaking at a Branch Managers Meeting and any comments on the BOJ’s monetary policy will be closely eyed.


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 key-note 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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