Today’s Key Market Drivers – 15th November 2017


Euro jumps on positive growth numbers.

The Euro rallied strongly on Tuesday following better than expected GDP figures for Germany, Italy and the Euro Zone area. All three third-quarter GDP figures beat the market’s estimates and saw the sharpest one-day rally on the Euro in over 5 months. What also helped the Euro higher was the ZEW Institute economic sentiment survey showing Europeans are growing more optimistic about the region’s economic prospects. The ECB has kept the official interest rate below zero for some years now and recently announced a cut to its stimulus program. I now anticipate the trend on the Euro to be bullish leading into 2018 as traders will begin to price in an interest rate hike at the European Central Bank at some point next year. There is a new flavour of the day folks and it’s highly likely going to be “buy the Euro”. Today the LTG Daily Trading Plan is telling us the Euro v US Dollar has now turned bullish and is recommending long positions be considered. Based on the GDP data released on Tuesday European growth is currently outstripping US growth. With all the good news priced into the US Dollar and Trump struggling with his tax reforms, the Euro is looking the goods.

The Pound remains vulnerable with weaker than expected inflation data released on Tuesday, political instability with a Prime Minister that is hanging on by a thread and a Central Bank that is likely going to hold fire on any future interest rate increases until well into 2018. The Pound has the potential to weaken further against the Euro in coming months and if Trump can get his tax reform agenda back on track and through the Senate the Pound will also likely weaken against the US Dollar. Today sees the latest US inflation figures released and the data will be important for the short-term direction of the US Dollar. A better than expected inflation number will see the US Dollar rally and the reverse for a weaker than expected inflation number.

TIA sold the long EUR v NZD position this morning just in front of the 61.8% FIB expansion level. Being long EUR v NZD is an extremely expensive trade to hold due to the negative swap. However, being long EUR v USD or EUR v GBP is a completely different story. TIA is eager to enter another Euro long position in coming days and will eye off a potential entry against the Pound or US Dollar off the 1 hour or 4-hour charts.

The Kiwi and Aussie Dollars remain weak and Tuesday’s worse than expected China retail sales and industrial production numbers did little to help the down under currencies. Thursday’s official unemployment report for Australia is the next hurdle the AUD needs to get over.

For those Buffett fans I just read this morning he has sold down his stake in IBM and added to his Apple holdings.

 

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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