Today’s Key Market Drivers: 12th September 2019
All eyes on the European Central Bank today.
Will they lower rates into the negative and will they inject a sizable stimulus program for the Euro Area? The Euro’s short to medium term direction is going to be driven by the statement and press conference today. Wednesday saw traders take a swipe at the currency before today’s ECB statement selling it off by 65 ticks.
My preference is that if you want to give yourself an opportunity to win big and risk little consider the option of getting long on the Euro post the statement today rather than taking the herd mentality and thinking a move short is the best option when negative rates and stimulus is announced.
There will be more traders looking to get short than long and this means the volume of money that will come from investment banks and hedge funds could be substantial if the ECB delivers a stimulus package that is less than analysts expect. Price would rise very sharply.
My trading plan does not present me with a Euro trade today, however, I know many of you enjoy trading other setups and I am just warning you that whilst there is no reason why price can’t go lower (and it may) the best opportunity in my view for a risk to reward trade would be to go the opposite direction to the herd.
Safe haven assets continue to be abandoned.
Up it goes again! US stock markets continued their move higher on Wednesday seeing traders sell down safe-haven assets including the Yen and Swiss Franc in favour of higher-yielding stocks.
As sentiment remains positive and traders expect Central Banks to lower interest rates US indexes were helped higher mostly by Apple which was up 3.2% for the day. This comes less than 24 hours after releasing its latest smartphone as well as a $4.99 a month Apple TV and gaming offering.
Trump calls the US Fed “Boneheads” and says they should take rates below zero.
I’ve previously mentioned it a number of times that Donald Trump will continue to attack the Fed in an attempt to get interest rates lower which will, in turn, drive stock prices higher and the US Dollar lower. In a flurry of tweets on Wednesday Trump said…
The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet… …The USA should always be paying the lowest rate. No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of “Boneheads”.
Oil falls and drags down the Canadian Dollar.
If you are wondering why the Canadian Dollar is sharply lower vs the US Dollar this morning it is because Oil fell by 3% following a Bloomberg news report that said Trump was considering lifting Oil sanctions against Iran. Trump is reported to have said Iran wants to do a deal following sanctions the US put in place after the downing of a US drone in June.
Pound loses steam after Scottish High Court says the PM’s suspension of parliament is unlawful.
A Scottish High Court has ruled the British PM’s decision to suspend parliament is unlawful which gave traders a reason to reduce their bids on the Pound v USD and thus sending it off its highs by 0.20%.
The GBP v JPY continues to make new highs which are a direct result of the Yen being sold rather than the Pound being bought. My expectation is traders will continue to buy into stocks and sell down safe-haven assets as there is simply no fear in the market at present.
In other news.
US CPI data will be closely watched by traders today and if the data misses estimates it will likely add more upward buying pressure on the AUD v USD and downward pressure on the US Dollar. Lower inflation means the US Fed is more likely to drop interest rates and this would also mean stocks continue to move to new all-time highs.
Professional traders never lose! They either win or they learn.
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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