Today’s Key Market Drivers: 13th May 2019

Markets remain subdued as higher US trade tariffs kick in.


US and China officials met in Washington DC on Thursday and Friday and whilst both sides said the talks were constructive there was no official trade deal announced and at this point, there are no further talks scheduled. Trump says his relationship with the Chinese Premier and President remains strong and the tariffs may or may not be removed depending on future trade negotiations.

The news that trade talks hadn’t deteriorated into a slanging match saw the US Dollar strengthen and the safe haven currencies that were bought up on Thursday fall as the Dow Jones stock index staged a 450-point rally through Friday afternoon’s trading session.

To be frank, I am unsure how markets will react when they open and begin trading this week as I think most traders expected something more tangible to be announced regarding the trade deal over the weekend.

Trump tells China what he really thinks via Twitter.


President Trump took to his Twitter account over the weekend to really tell China what he thinks. In a flurry of Tweets on Friday night and Saturday Trump said.

I think that China felt they were being beaten so badly in the recent negotiation that they may as well wait around for the next election, 2020, to see if they could get lucky & have a Democrat win – in which case they would continue to rip-off the USA for $500 Billion a year…” He went on to say in a follow up Tweet. “…The only problem is that they know I am going to win (best economy & employment numbers in U.S. history, & much more), and the deal will become far worse for them if it has to be negotiated in my second term. Would be wise for them to act now, but love collecting BIG TARIFFS!

Like him or hate him he’s a great example of oozing self-confidence.

US Inflation continues to remain subdued.


The US Dollar failed to fire on Friday after April inflation data showed another tepid month with annualised inflation at 2.0% and with April’s inflation 0.3% both missed estimates. The numbers were not low enough to send the US Dollar substantially lower and I do believe that if the US economy continues to remain strong inflation will pick up in the second half of 2019 and the shouts of “the Fed needs to drop rates” will reduce and we will see one rate hike in November or December. Average hourly and weekly earnings also missed estimates in April.

UK GDP receives a pass mark.


First quarter growth in the UK met market expectations when released on Friday coming in at 0.5% for the quarter and 1.8% annualised but the data was not strong enough for traders to add to long Pound positions. The GDP figures continue to show the UK economy is doing “ok” and if the Euro Area can continue to show some green shoots this will be good news for the UK over the long haul. The Pound opened lower this morning but may be about to move higher into Wave 5 on the 4-hour chart.

The Canadian Dollar surges on strong jobs numbers.


The Loonie rallied strongly on Friday up half a cent following news 106,500 jobs were created in the month of April smashing economists’ expectations.

Canadian inflation data is due out on Wednesday and is the next piece of economic data traders will be closely watching. A tick up in inflation will mean more upward pressure on the currency and may quieten those who are currently saying Friday’s jobs number were “too good to be true”.

Why is the Canadian Dollar called the Loonie? It’s a Canadian water bird. The Canadian Dollar is also often referred too as the Caddy.

The week ahead.


There is very little in the way of high impacting news early this week and this will give the market time to settle down once again and find some rhythm following a week of trade talk volatility. It’s going to be one of the quietest week’s of data we’ve had for some time with no official Central Bank statements from any of the countries we follow and the most influential data numbers this week will likely be Euro Area GDP, US Retail Sales and the official Australian unemployment rate and month jobs numbers on Thursday.


Those who are most successful are doing what they love.

AB

 

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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