Today’s Key Market Drivers: 17th July 2019
Stronger than expected US Retail Sales help boost the US Dollar.
The US Dollar was given an unexpected boost on Tuesday after Retails Sales beat the market’s estimates coming in at a gain of 0.4% vs the 0.1% the market expected. The US Dollar’s rebound sent the AUD and NZD off their highs and whilst not changing the current uptrend it has given traders an opportunity to consider selling previously held long positions.
The US Fed is still expected to cut the official cash rate by 0.25% this month and the better than expected Retail Sales number put a question mark on whether or not the Fed may hold off until August if more better than expected US data is released between now and July 31st.
Pound and Euro fall to new lows as Brexit concerns weigh.
The British Pound and Euro both fell sharply early this week on the back of ongoing concerns that both the UK Prime Ministerial candidates Hunt and Johnson will take a hard-line stance on Brexit which could potentially see the UK leave the EU without an exit deal in October. Boris Johnson is the front runner and is seen as being the more aggressive of the two candidates however it appears this week both are trying to outgun one another in an attempt to win support from those who will decide the next UK Prime Minister.
The Euro continues to struggle this week under the expectation that more stimulus may be on the way from the European Central Bank. The IMF on Monday encouraged the ECB to keep monetary policy loose to support the Euro Area which is continuing to see stubbornly low inflation and high unemployment.
Trump says a China trade deal is still a long way off.
The Aussie Dollar and Asian currencies fell through the US trading session after Donald Trump said a trade deal with China still had a long way to go and the US could still impose further tariffs on China.
Trump’s remarks threatened to send stock markets lower however traders after consideration brushed off the remarks as a sideline issue and remain focused on what the Fed is likely going to do on July 31st.
Powell reminds markets the Fed will act as appropriate.
As expected, Jerome Powell speaking in Paris on Tuesday reminded financial markets the Fed would act as appropriate when it comes to interest rate adjustments. The Fed Chairman didn’t say anything the market isn’t already fully aware of so his comments did not cause any impulsive moves like we saw last week.
Looking ahead to Wednesday’s European and US trading sessions.
The European trading session sees an economic sentiment survey for the Euro Area which isn’t likely to move markets however the Canadian Inflation data due at 10.30pm AEST does have the potential to move the CAD up to half a cent if out of line with expectation. I am looking to re-establish a short position on the CAD v JPY and share my approach with you in my daily video update.
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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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