Today’s Key Market Drivers – 13th September 2017

The British Pound was the stand out performer on Tuesday following better than expected inflation data was released for August. Annualised inflation for August came in at 2.9% above economists’ expectations and this comes only 48 hours before the Bank of England releases its monthly policy statement. Naturally many traders are now expecting the BOE to be hawkish in their outlook when Governor Mark Carney delivers the Bank of England’s monthly report on Thursday. Some will be thinking with the ECB to reduce its stimulus program the BOE should also begin to move towards higher interest rates. In time, they will but there are some challenges ahead for the UK that the BOE has flagged in recent months. Sure, inflation is doing nicely but the BOE has recently commented on the fact that wages growth still needs to pick up further and the giant elephant in the room is Brexit and how the UK will handle the coming 18 months economically as it leaves the European Union and renegotiates new trade deals.

There has certainly been a trend change on the Pound this week and now we have TIA #2 set ups in play we will take advantage of these new impulsive moves. With any change in trend, there is always a pull back as the wave count moves in the direction of the trend so be patient and ensure the plan you are trading you can benchmark the performance and you are not just firing away randomly trading in a fashion that cannot be replicated with risk and reward.

The economic calendar shows more important data for the UK today with weekly earnings and the latest unemployment report set for release. Euro Zone Industrial Production data will also be released but the popular theme in currency markets this week is the Pound. The US Dollar is off its lows and is being supported by higher US Treasury Yields and a global financial system that is feeling relieved tensions with North Korea seem to have settled down. I don’t believe we have seen the last missile to be fired but for now, traders are less concerned.

US Inflation data is released on Thursday at 10.30pm AEST and has the potential to provide a bang for currency markets simply because the US Fed has said inflation must rise before it raises the official cash rate again. If the Inflation data released on Thursday is better than expected you will see a strong rally in the US Dollar as traders price in an interest rate rise from the US Fed before Xmas. It’s these sorts of data announcements that create the pull backs and impulsive moves on currency markets we like to trade.

 

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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