Today’s Key Market Drivers: 17th May 2019

Aussie Dollar slips below 0.69c.

The official unemployment rate in Australia jumped to 5.2% from 5% when the official jobs figures were released on Thursday. Although there were 28,000 jobs created in the month of April the uptick in the official unemployment rate was enough for traders to sell down the local currency which appears to be in a consistent free fall at present.

Strength in the US Dollar through the European and US trading sessions only accelerated the declines and at the current rate of decline, the AUD v USD could be below 0.68c by the end of June.

Trade tensions between the US and China support the US Dollar.

It’s no surprise that the US Dollar is rallying as the trade dispute heats up between the US and China. This is exactly the way price reacted some months ago when the Trump administration first announced the increase in trade tariffs. The Chinese are clearly in the weaker bargaining position and the US wields the bigger stick and if it wants to get tougher it’s only going to make things worse economically for the Chinese.

There have been comments about China selling down its trillion US Dollars’ worth of US Treasuries but that would be a complete disaster for China and whilst it may help drive up US interest rates it would sink the Chinese currency and only weaken a slowing economy even further.

Trump knows the US economy is running hot and he’s going to use the leverage the US has to push China as far as he can to get the best deal for the USA. The only thing that may go against Trump is a weakening economy in 2020 as a result of the hard-line stand he is taking now on China. But love him or hate him, he backs himself, he backs the USA and he is prepared to go for it. The US is the most resilient economy in the world and you’d be a fool to back against it.

Concern around European parliamentary elections weaken the Euro.

Next week Europe will host fresh European Parliamentary elections and in the lead up to the vote Italy is rocking the boat saying European rules are tearing the economy apart which is one of Europe’s largest. Italy has one of the biggest bond markets in the world and remains in one of the most precarious financial positions of any country throughout Europe. Broke!

The Pound also fell again with Theresa May and her conservative party continuing to struggle to get any traction on a new Brexit deal. As time drags on and we get closer and closer to the October deadline “boring old Brexit news” is going to have to be part of this report again. Sorry!

Markets to close the week on a high.

With no high impacting news out of the USA that has the potential to derail financial markets, I suspect after a strong lead from Wall Street on Thursday markets will close out the week on a bullish tone. This would mean stock indexes rally today and the safe haven currencies such as the Yen and Swiss Franc decline.

Feel the fear and do it anyway.



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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