Today’s Key Market Drivers: 15th February 2019

Markets are anxious as Trump and Xi will meet this weekend.

The US and Chinese Presidents will meet this weekend in Argentina at the G20 summit to try and thrash out a deal that will avoid more trade tariffs being put on one another. There is currently a trade tariff truce that expires on March 1st and unless the two leaders can agree on a new comprehensive trade deal, further tariffs on China imports into the USA will kick in March 1st. Trump has said on a number of occasions that he plans to increase the current 10% tariffs even further and I am certain the Chinese will retaliate with more tariffs of their own on US imports into China.

The trade tariffs are a negative for emerging market currencies which include Australia and New Zealand which are heavily dependent on China’s growth and consumption. A negative outcome this weekend at the G20 with little progress made and an expiry of the tariff truce on March 1st with no new deal would likely see the US Dollar strengthen and the AUD and NZD weaken. Add to this recent slowing growth in China and the probability of escalated trade tensions would be seen as bad news for Australia and New Zealand.

My expectation is both leaders are unlikely to patch up their differences over sideline meetings at the G20 and will more than likely say positive progress has been made and we are optimistic for a mutually beneficial outcome but nothing concrete has been signed.

Euro rallies as Euro Zone GDP meets expectations.

The Euro rallied off its lows on Thursday following a slightly weaker US Dollar and Euro Zone and German GDP numbers meeting economist expectations. European economic data has recently been weakening so traders were somewhat heartened with the “met expectations” result for Euro Zone GDP figures. German GPD actually beat market estimates albeit only just coming in at 0.9% vs the 0.8% the market expected.

The elephant in the room is the G20 summit in Argentina and the trade talks between the US and China. China’s economy is slowing and whilst the US economy is also slowing the US packs a bigger punch globally and will ultimately win any trade war that takes place. And China knows it and must be very careful dealing with a leader such as Trump who could slow global growth considerably if he enforces more trade tariffs on China imports.

January US Retail Sales was a fizzer.

After a month of positive economic data, January’s US retail sales figures disappointed traders coming in well below market expectations which help put downward pressure on the US Dollar post the data release. Compared to the same time last year US shoppers spent 1.2% less according to official data when economists were expecting a slightly positive increase in retail spending. The US Dollar weakened on the news but a retail sales numbers if out of line with expectations generally doesn’t have a hangover effect on the greenback like an inflation number or a GDP number would.

Interest rate traders are betting on one US rate hike this year.

Traders who bet on how many interest rate hikes the US Fed will deliver in 2019 are betting on the Fed to only raise rates once and the hike to be in the second half of the year.

Challenge yourself.

Challenge yourself to control the way you respond to situations. That’s where your power lies. Learning to control your emotions in day to day life when things get tough will greatly assist the way you control your emotions when you are trading. When you get emotional you won’t trade well because you will highly likely make snap decisions to exit trades based on emotion and not logic.

If you are depressed you are living in the past. If you are anxious you are living in the future. 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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