Today’s Key Market Drivers – 18th August 2017

The US Dow Jones Index fell 274 points or 1.24% and the safe haven currencies along with Gold gained as financial markets had their biggest one day fall in 3 months courtesy of the ongoing controversy and uncertainty surrounding the Trump Presidency. The resignations and sackings never seem to end and this time it was the possible resignation of US National Economic Council Director Gary Cohn. The White House released a statement saying the rumours were false.

Sadly we awoke this morning to the news of another terrorist attack this time in Barcelona. There is no doubt the news added to the negative mood the market was already in and would have seen safe haven assets rally in the short term. Whilst these senseless attacks have life changing consequences for the victims and their families financial markets have become very resilient to these sorts of events since September 11. We must all pause and give compassionate thought to what has happened. Strangely just a few weeks ago my family and I walked along that very street In Barcelona where this maniac drove his hired van.

The Euro was a major loser Thursday falling sharply after the release of the ECB’s monthly minutes that showed the committee is concerned the recent rally on the Euro could see an overshoot on the currency, which would not be good for Euro Zone inflation which the ECB wants to see rise. If you follow this report daily you will quickly learn that inflation is the elephant in the room for every Central Bank and when its falling or lower than where the Central Bank wants it the currency is also likely under pressure. Although I was taken out of a EUR v AUD trade overnight the Euro does need a healthy correction after such a strong rally in recent months. The comments from the ECB will not stop speculation rising that the Central Bank for the Euro Area will reduce its current stimulus program in the coming 6 to 9 months. Any fall on the Euro I believe will be viewed as a buying opportunity by Hedge Funds and Investment Banks.

There is no major high impacting news scheduled for the Asian or European trading sessions today and with such big falls on financial markets on Thursday, traders will likely be a little gun shy to add to those positions leading into the weekend. The trends may continue but the volumes will likely be lighter. The only high impacting news item scheduled for Friday is Canadian CPI data, which is due for release at 10.30pm AEST. Keep in mind the BOC raised the official cash rate last month citing an uptick in the Canadian economy and today’s inflation report will tell us if they were right. A stronger than expected CPI reading would see traders buy the Canadian Dollar.

 

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 key-note 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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