Today’s Key Market Drivers – 11th August 2017

Before we discuss the key market drivers I would like to remind all traders of the importance of being able to manage your dollar and percentage risk on each trade you take. Currently, I am getting close to my stop loss level on my long term AUD v JPY trade. The stop loss in pips was over 350, however, the dollar risk and percentage risk is 2% exactly the same as all TIA trades that may have a stop loss of between 80 and 130 pips. Please ensure you are using the LTG Risk Calculator to manage your risk on every trade. You simply cannot manage your risk correctly if you are taking a set volume size on every trade and thinking, “that’ll do”.

The ongoing tensions between North Korea and the west have spilled over into the third day of selling on global financial markets with the Dow Jones down over 200 points and the safe haven currencies such as the Yen, Swiss Franc and US Dollar gaining. Trump’s comments of “fire and fury” were met by Pyongyang’s comments of “a load of nonsense” and threatening to send 4 missiles Guam’s way. The reaction on financial markets still doesn’t constitute a genuine pull back given the size of the rally and I will still bet the war of words will remain just that, a war of words.

The Aussie and Kiwi Dollar as I said yesterday in this report have zero safe haven status and when there is heightened economic or geopolitical tensions the AUD and NZD will fall in value against most of the majors. The Kiwi Dollar seemingly fell out of bed not long after RBNZ Governor Graham Wheeler’s press conference concluded yesterday. Price initially rallied then completely reversed and fell 120 ticks or 1.2 cents from its intraday high. Anyone who bought the Kiwi Dollar in haste following the RBNZ statement was highly likely stopped out in the following hours. Yesterday’s NZD price action is a good reminder why trading the news is fraught with danger.

There is a key US inflation report due out today in the US trading session, which has the potential to move trader’s attention away from North Korea at least for the balance of Friday’s trading session. Producer prices in the US released this week failed to meet economist’s expectations and this doesn’t go well leading into the official inflation reading that is due out at 10.30am AEST today.

Australia’s RBA Governor Lowe is due to speak before the House Economics Committee in Melbourne at 9.30am AEST today, which could impact the value of the AUD.

 

 

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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