Today’s Key Market Drivers – 11th October 2017

The Euro has recently been under pressure due to Spain’s Catalonia region campaigning for independence and a referendum recently showing more than 90% (those that voted) wanted to break away from Spain. The reality is there is no way Spain is going to allow the region of Catalonia to leave Spain and the Catalonian leader knows it and today he announced the Catalonian parliament will begin talks with Spanish leaders in Madrid. This geopolitical Spanish sideshow won’t derail the Euro Area and the ECB’s plans. What also assisted the Euro higher on Tuesday was better than expected German export figures. The ECB next meets on the 26th October and traders have already priced into the Euro the likelihood the ECB will begin tapering the artificial money printing program it has had in place for a number of years. The ECB has been printing money out of thin air and buying the bonds of cash-strapped Euro Area countries to ensure the interest they need to pay on the money people lend those governments through bond sales doesn’t skyrocket like it did

What also assisted the Euro higher on Tuesday was better than expected German export figures. The ECB next meets on the 26th October and traders have already priced into the Euro the likelihood the ECB will begin tapering the artificial money printing program it has had in place for a number of years. The ECB has been printing money out of thin air and buying the bonds of cash-strapped Euro Area countries to ensure the interest they need to pay on the money people lend those governments through bond sales doesn’t skyrocket like it did with Greece. The ECB believes the Euro Area is strong enough to survive on at least one foot and will likely begin to taper this money printing program in coming months. What the market doesn’t know yet is how much they will taper and when they will start to taper. Those two questions need to be answered by the ECB on October 26th and volatility on the Euro can be expected when they do provide answers to both questions. A larger taper than the market expects will see the Euro likely rise and less of a taper means the Euro will likely fall.

The economic calendar is light on today with the market likely to ignore the medium impacting news unless it’s out of line with expectations. The US Fed monthly minutes that are due for release at 5.00am Sydney time Thursday morning and I doubt the minutes will tell us anything new but they will likely be a reminder to the market of the Fed’s commitment to raise the official cash rate again before Xmas and continue to raise rates further into 2018. Any pull back on the US Dollar, in my opinion, is going to be seen as a buying opportunity for large speculators.

 

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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