Today’s Key Market Drivers: 12th June 2019
A lack of data keeps markets in check.
A lack of key economic data on Tuesday kept Wall Street in check, with Inflation figures that are due on Wednesday the likely next market mover. US stock index markets closed marginally lower with the S&P 500 down just 1 point or 0.04%. The safe haven currencies gained some momentum through the European trading session but fell away once again through the afternoon trading session here in New York where I have arrived early this morning.
Risk sentiment remained positive following the US and Mexico putting together an immigration deal that appears to have pleased the US President enough to suspend the 5% tariffs he threatened to impose.
The market is still nervous about the long-term economic impact heavy tariffs will have on the US and China and the G20 summit coming up at the end of June is shaping up as the next likely get together of key US officials including Trump and Xi.
If Trump announces things are back on track post the G20 I suspect the AUD and NZD will rally strongly and stocks may see a pullback as traders would not be heavily pricing in a rate cut from the Fed.
There is no way Trump is going to want to pull on a fight with China less than 12 months from needing to win big supporter votes for his tilt at remaining in the White House for a second term. He’s going to put together a deal with China in my view, he must or he risks the US economy slipping economically and that could take away votes before the Presidential election at the end of 2020.
Trump accuses Europe of manipulating its currency.
In a series to tweets on Tuesday, the US President accused European Central Bank officials of manipulating the Euro currency by suppressing its value. Trump claims the US is being disadvantaged by the ECB keeping its official deposit rate below 0% that consistently puts a ceiling on the Euro against the Greenback.
CNBC reports this morning that futures markets have priced in an 80% chance the US Fed drops the official cash rate at its July meeting. Others are suggesting such pricing in is overdone and the Fed will keep rates on hold for the balance of 2019. If the market gets any further indication from the Fed it will drop rates in July, they will quickly sell off the US Dollar.
China Inflation data has the potential to move the AUD and NZD today.
China is seen as a proxy for the AUD and if today’s China inflation data is out of line with expectation you can expect to see the AUD sold off or in the event of a better than expected data number a flurry of buyers. The AUD and NZD have started a new trending direction to the upside based on the fact the market has been selling down US Dollars and whilst the last 24 hours have seen both currencies pull back the price action is typical of what we see when a new trending direction is beginning. Please ensure you review my technical video update today as I share with you the ABC formation that has occurred on both currencies and when the next rally higher may be on both the AUD v USD and NZD v USD.
US wages data could also give traders a solid reason to trade.
We need to be mindful of the two high impacting numbers coming for the US on Wednesday. Inflation data as mentioned and also the latest wages data. One stronger data number could cancel out the other weaker number or they could be both weak or both positive. So, it’s important not to just stare at your charts and think “oh look, price is moving I wonder why?” You should always know whey price is moving and this is easy to do by keeping up to date with what the economic calendar says each day following high impacting news announcements.
Lower wages will be a sign the economy is weakening and therefore the US Dollar would fall as traders would see this as a sign the US Fed should drop rates. If the wages number is better than expected then you should expect to see the US Dollar rally and the size of the rally is determined by how out of line with expectation the data is.
How flossing your teeth will make you a better trader.
Trading is a game of patience, discipline and incredible willpower. It is not a game that needs high intelligence, anyone can trade successfully over time but they need to develop a level of discipline that is unique. They need to sit for periods of time and watch price action trade up and down until the market is in the sweet spot. Mug punters, the ones consistently losing and having larger drawdowns than their wins have virtually no discipline and willpower but yet they will be the first to tell you where price is going next on the chart and will be first to tell you that it’s ok to have a few trades in the market at once. Don’t listen to these people, they don’t make money, they are not successful and what every budding successful trader needs is to spend time away from the charts developing incredible mind skills in discipline they can then bring into their trading.
You may laugh but do you know one simple skill in discipline that if applied every single day for the rest of your life would improve your trading. Flossing your teeth EVERY DAY. Why? Firstly, because most people don’t do it, they can’t be bothered and think it’s a pain in the ass. Yes, it is a pain in the ass but when you do it EVERY DAY without fail, when you are looking yourself in the mirror running the floss through your teeth you are developing willpower, you are looking yourself in the eye, you will remind yourself how strong mentally you are, you will be tired, you will be ready for bed and you may laugh but this success habit works. But this daily practice is not for the lazy, it is a skill that not only saves you thousands in dental bills (not to mention bad breathe) it’s a mindset skill that most people just won’t stick at because they just can’t be bothered.
Willpower cannot be learnt by trading, you either have strong willpower as a person or you don’t. The best traders have the strongest willpower and the worst traders have none. You can’t pull willpower out of your back pocket, if you don’t have it you must develop it and the example of flossing your teeth every day is a great example. It’s actually not a waste of time, it’s incredibly important and it pays big time. Getting up for Sunrise every day is also another willpower skill that will help your trading. Alex Kozulin an LTG GoldRock Trader of the Year has one willpower skill he never misses every day. He jumps into his pool in his backyard. But he lives in Melbourne where his pool is freezing cold all year round.
The question remains what will you do? Most sadly won’t do anything but stare further at their charts thinking that is the answer. If you are to become part of the 5% that make great money trading then you need to do what the other 95% are not prepared to do.
Successful people build each other up. They motivate, inspire and push each other and are willing to accept responsibility for everything in their life.
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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