Today’s Key Market Drivers: 14th October 2019

Markets likely to cheer US / China trade deal in the short term.

Friday’s announcement by US President Trump that a phase 1 trade deal between China and the USA will be written over the coming 3 weeks will likely be enough to keep sentiment positive when markets begin trading today. US stock indexes cheered the news on Friday and the Aussie Dollar rallied strongly and the US Dollar lost ground against all its major rivals.

An official trade deal has not been done, what the market has heard so far is that China has committed to buying more US agriculture, the US has agreed to hold off any new tariff increases this month and some sort of currency pact and foreign investment deal has been agreed too. No firm details of any trade deal have been announced and it is important to note the major sticking point, an agreement on intellectual property rights has not been mentioned in Phase 1 of the deal.

In my view, the market will want more details but in the very short term I expect sentiment to be positive which means stocks up, the US Dollar lower and the Aussie and Kiwi higher.

Is the world’s economy slowing?

This week we will find out. The economic calendar shows no less than 5 high impacting inflation reports this week. The first will China today, then on Tuesday its New Zealand the UK and Canada and finally Japan on Thursday. Global inflation has been falling and this is why global interest rates at Central Banks are at 0% or very close to it.

In any other week the market would likely use the collective inflation data to make a case for a buying or selling theme but with the US / China trade deal likely to steal most of the headlines only if the data is significantly out of line with trader’s expectations will we see any impulsive moves post the data releases.

Price action on the daily charts suggests a rally is imminent.”

History shows when we see three consecutive days of buying pressure off a low with a solid shift in fundamental sentiment markets have the potential to rally strongly for the coming week or two.

If you view my Sunday Pre Market Prep video, I show you specifically on the daily charts why I have the view markets may continue higher. I am speaking about the US stock indexes and the AUD, EUR, GBP, NZD against the US Dollar and Yen. We will need to see that solid third day of gains so I will be keenly watching price action today. If the markets I just mentioned do not make new highs again today my expectation of new monthly highs will be reversed.

Do you have what it takes?

In case you missed last Friday’s Money Exchange I shared with viewers the personality traits that I believe are best suited for trading. If you haven’t yet watched Episode #9 click on the following link.

Patiently waiting.

Whilst it has been just over a week since my last FX trade, I am in no hurry to press the button and will do as I always do and let the market do what it does and I’ll wait for my set up to be within my sweet spot. Only then will I swing and enter the market and this consistently allows me to keep my risk low and aim for larger profit targets.

As I always remind new traders, their inclination is to trade and their expectation is that unless there are trades all the time, they won’t have the opportunity to make meaningful profits over time. The total opposite is true. As a new trader, you will give yourself a bigger chance of making money by trading less and aim to ensure you take one trade at a time and every trade is managed with a reward to risk ratio where you aim to make greater than you risk on every trade.

Aussie Unemployment data could reverse the rally.

If you are long on the Aussie Dollar this week Thursday’s official unemployment report could reverse the uptrend and you must be aware of this. The official unemployment rate unexpectedly rose last month and the RBA immediately commented that the jobs market was a major concern and if the unemployment rate did not come down, they would be forced to lower interest rates again.

If Thursday’s jobs report disappoints the AUD v USD could quickly drop half a cent or more in minutes and you should be aware of this if you are long and take action to protect risk.

Win in your mind and you win in your reality.


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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