Today’s Key Market Drivers: 11th April 2019
China and Aussie Inflation data will be closely watched today.
The Aussie Dollar rallied strongly over the past 24 hours but those gains could be erased today with the release of a Consumer Inflation Expectation report and the latest China inflation figures. March inflation for China is expected to be 0.4% with the annualised number being 2.3% so if the data is either side of these numbers the Aussie Dollar will likely see a rally higher on a positive number or a fall lower on a weaker number.
From a technical perspective, I think the price action indicates a move back lower is the more likely scenario but any move will be data dependent. The China Inflation number will be the one the market closely watches and it is due at 11.30am AEST.
Euro steady post ECB statement and press conference.
The Euro remains generally well supported following Mario Draghi’s statement and press conference in Frankfurt on Wednesday. It was widely anticipated the ECB would hold interest rates steady and not adjust its monetary policy program and with last month’s press conference full of negatives this month there were no surprises and the Euro held its ground and even rallied a few ticks against the US Dollar.
German inflation figures are due out today, however, the market has already priced into the Euro its expectation for inflation in coming quarters. If the Euro moves post the German inflation reading today the number would need to be well outside of trader’s expectations.
US Inflation data bang in line with estimates.
The latest US inflation figures for the US met the market’s expectations but failed to give traders any positive reason to buy back into the US Dollar with any gusto. The inflation figures confirmed again the US economy is miles away from a recession.
The Federal Reserve’s March monthly minutes were also released and didn’t confirm anything the market didn’t already know about. The Fed was discussing keeping rates on hold at its last meeting which it confirmed to the market in the March statement.
The US / China trade deal is the one piece of market data traders are really waiting for. There currently isn’t a major theme driving stock markets or currencies so patience is extremely important. Please ensure you don’t get sucked into trading currency pairs when they are moving sideways.
Australia will head to the polls on May 18th.
The Australian Prime Minister this morning announced that a Federal Election will be held on Saturday, May 18th. The Federal Election and potential for a new government will not impact the value of the Aussie Dollar, it never does. The market will be more focused on what interest rates at the RBA will be in the coming 12 months and currently, the expectation is they will be lower.
A fiscal policy such as Donald Trump’s “Make America Great Again” infrastructure program and Border Wall plans did impact the US Dollar when Trump was elected but that was because Trump winning the election was a surprise to the market. Here in Australia the polls are showing Labor is currently ahead and likely to win the election and frankly a Labor or Liberal Coalition government will have little impact on the future direction of the Aussie Dollar.
UK granted Brexit extension until the end of October.
The Pound remains steady following the European Unions decision to grant the UK a Brexit extension until the end of October. I have not yet read the details of the extension but no doubt the extension comes with a set of rules and the UK will be expected to get its act together once and for all by October.
The fact the EU has granted the extension simply means the Bank of England will continue to keep rates on hold. The extension will likely mean the Pound has some breathing space to move without the weight of an immediate Brexit deadline and I will have no issues with taking a trade on the Pound if the opportunity presents.
Change is inevitable. Growth is optional.
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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