Today’s Key Market Drivers: 16th October 2018

“New Zealand inflation data…estimates.”

All eyes were on stock index markets on Monday after last week’s plunge and the Asian trading session didn’t give the bulls anything positive to grab onto with the region’s stock indexes broadly lower and the major barometer the Nikkei in Tokyo down 1.8% and its safe-haven currency rising. Europe somehow bucked the trend after it opened with the DAX and FTSE up around 0.5% for the day and this helped the Yen drift back lower in the first few hours of the European trading session.

US Retail sales missed the market’s estimates by 0.5% and this kicked off a weak trading session on Wall Street, sending the Yen back higher. What is noteworthy is that US stock indexes were comfortably in the green around midday in New York but as the afternoon dragged on they were sold off into the bell with the S&P 500 closing back below its key 200 EMA on the daily chart. The Yen rallied once again as US stock indexes fell which capped any gains the base currencies such as the EUR, GBP, USD and AUD had against the safe haven. The NZD v JPY was the one currency cross that held its ground. The S&P 500 closed down 0.5% and the tech-heavy Nasdaq down 0.88% giving investors in Asia another weak lead.

The latest inflation reading for New Zealand beat estimates with a wonderful rise of 1.9% which beat the market’s estimates of 1.5%. This gives the RBNZ more reason to change its mind on when it will raise interest rates. With inflation rising to 1.9% there is no way it will be able to have inflation rise the same increase again without commenting on it which will only drive up the value of the Kiwi Dollar. It is my belief the US Dollar will weaken in coming weeks and the AUD and NZD vs USD will benefit in the medium term.

Today sees the release of China inflation figures which won’t move markets much, however, the Pound will likely see some volatility when the latest weekly earnings and unemployment figures are released. The Pound gapped down on Monday following more negative Brexit rumours with the border between Northern Ireland and Ireland being a sticking point amongst other immigration and trade issues. Economic sentiment surveys for Germany and the Euro Zone won’t likely get much attention nor will US Industrial Production numbers today. The theme in the market still revolves around global stock indexes. Will they go lower this week, will they recover or will they drift sideways? I am betting we are going to go lower again by the end of the week.

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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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