Today’s Key Market Drivers: 17th October 2019

Sterling continues to shine as Boris says he won’t be seeking a Brexit extension.

The UK Prime Minister is insisting he isn’t going to ask for a Brexit extension and therefore the upcoming two-day EU summit in Brussels beginning today will be critical to whether or not he flies back to the UK with a deal he can put to his parliamentary colleagues. The UK is desperate to avoid a hard Brexit which would see it crash out of the European Union and potentially send stock markets lower, safe-haven currencies higher and Central Banks such as the BOE slashing interest rates.

The market has priced in the probability the EU and UK agree to a Brexit agreement but what is not priced in is Boris Johnson convincing his parliamentary colleagues to back the deal and make it binding.

US Dollar slips after poor retail sales data.

The US Dollar slipped on Wednesday following a far worse than expected September Retail Sales figure. The market was expecting a gain of 0.3% but instead, the number was -0.3% which gave traders a reason to be confused about the US economy and what the US Fed may do later this month with interest rates. It was the first time in 7 months the retail sales number had fallen.

It appears some sectors of the US economy are showing weakness however other sectors including corporate profits and earnings from some of the biggest companies in the USA are growing. Traders were confused, to say the least, and the US stock index market closed slightly in the red as a result. I expect today’s Asian trading session to be mixed and more than likely leaning to the downside.

The Aussie and Kiwi Dollars are up.

No, the US Dollar is down. When you look at your charts this morning you will notice the AUD and NZD are up sharply against the US Dollar. The reason why I want you to learn about the fundamentals that drive prices is that the AUD v USD and NZD v USD are not higher because of Aussie Dollar or Kiwi Dollar demand. They are higher because of a sell-off in the US Dollar through the US trading session.

When we trade currency, we must trade currencies in pairs and the value of a currency can be determined by the base currency AUD or the cross-currency being the USD. For example, if the EUR v GBP is lower this does not automatically mean weakness in the Euro. There may have been positive UK economic data that has driven traders to buy up the Pound and this would force the value of the EUR v GBP lower.

Selling Domino’s Pizza today for just shy of a 20% gain.

Members who are receiving my stock trades via the ShareSmart program please note I am selling my stake in Domino’s Pizza today. The price has gained just short of 20% in less than 8 weeks since I bought the stock at $42.50. It has been another great blue-chip trade and those members who are not currently receiving my stock market trades keep an eye out in your inbox in coming days for more information on how we can make this happen.

Having a diversified investment approach across the Foreign Exchange and Stock Market allows me to have a benchmark neutral trading plan that is highly likely going to see me make solid returns in virtually all market conditions. My investment capital is split 70/30 with 70% of my money invested in my FX trades and 30% allocated to blue-chip stock. I use a specific approach that does not see me in any more than 4 stocks at any one time, I only invest in blue chips stocks and I only buy them when they are cheap. Knowing when they are cheap is the key and my ShareSmart program tells me exactly when to consider buying the stock.

For example, I notified ShareSmart members that I bought Ramsay Health Care on October 10th at $66.20 and yesterday the stock was trading at $68.54. I anticipate my total return for all my stock trades in the calendar year 2019 will be above 20% return on investment and when I add my FX returns to this total it provides an excellent diversified approach and overall return.

In other news.

Bloomberg reports that China won’t sign a Phase 1 trade deal without seeing some of the recent US trade tariffs wound back. Trump is due to meet the Chinese President in Chile next month and has recently said there won’t likely be any deal signed until after his meeting with Xi. The buzz around the US / China trade talks last week evaporated when China contradicted some the remarks Donald Trump made on Friday.

According to CNBC, 83% of US companies in the S&P 500 that are currently reporting 3rd quarter results have beaten earnings estimates. This is one of the reasons why the market was confused on Wednesday. Weak US retail sales but strong company earnings. Impulsive moves occur in markets when things line up and Wednesday the data did not line up for an impulsive move in either direction.

A little progress every day is all it takes to achieve incredible results.


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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