Today’s Key Market Drivers: 17th April 2019

New Zealand inflation data misses estimates sending the Kiwi Dollar back lower.


A report surfaced not long after European markets opened on Tuesday suggesting some ECB policymakers were concerned about how optimistic the Central Bank was about future growth and inflation targets. You will notice the Euro fell sharply around 7pm AEST and this was exactly when the report surfaced which was not scheduled and immediately caused a flurry of sell orders to hit the Euro.

CNBC is reporting this morning “Several ECB policymakers said the bank’s economic projections are too rosy as weak growth in China and trade tensions linger, four sources with direct knowledge of discussions said.”

One analyst said he thought the comments were designed to push the Euro back lower after it has appreciated somewhat in recent weeks. A lower Euro value would help European exporters and potentially fuel growth in wages and unemployment.

China’s GDP number at midday AEST will be closely eyed.


The market is expecting China’s growth to have continued to slow in the first quarter of 2019 with annualised GDP to be around 6.3% or 1.4% for the first three months of 2019. China data numbers are notoriously difficult to predict simply because the economy is so heavily propped up by the government and central bank and many say the number is manipulated. So, are the numbers bogus? I cannot concern myself whether the numbers are bogus or not, the bottom line is the market will trade the numbers.

If China’s GDP meets the markets estimates or is slightly better, we are going to see a rally on the AUD and NZD and the opposite is true if the numbers are below expectations.

RBA Minutes points towards a rate cut if inflation continues to remain weak.


Tuesday saw the release of the RBA’s April monthly minutes which showed the Central Bank is concerned about inflation and the unemployment rate ticking back higher.

Minutes from April 2nd meeting stated the board saw no strong case for a near term move in rates but a rate cut would be appropriate if inflation stayed low and unemployment trended up. The likelihood of near-term rate hike was low given subdued inflation. The Board agreed inflation was likely to stay muted for some time. It expects further gradual progress on unemployment and inflation. The Aussie Dollar was 30 ticks lower post the minutes as traders saw the minutes as more bearish than bullish.

US stock markets rise as US company earnings beat market estimates.


With the Fed effectively on the sidelines with respect to rate increases in 2019, it’s only going to add more upward pressure on stock values if US company earnings continue to beat the market’s expectations. That appears to be happening as the first quarter earnings season is now in full swing and US companies are for the most part beating expectations once again. The US market was also helped higher on Tuesday by Boeing’s share price rising 1.7% after a US regulator said its recent software upgrades for the troubled Boeing 737 Max aircraft were “operationally suitable”.

With US stocks continuing to rise there is just no fear in the market and safe haven currencies such as the US Dollar, Swiss Franc and Japanese Yen remain rangebound or falling.


Two things you can control. Attitude and effort.

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).

If you would like to speak to one of our Senior Client Advisors regarding the relative client opportunities offered at LTG GoldRock and how you can follow along with our Professional traders each day in our live trading room please contact us today or you can register for one of our a live coaching and trading webinars by clicking here.