Today’s Key Market Drivers – 18th September 2017

The latest terror incident in London and another missile from North Korea over the top of Japan failed to fire the safe haven currencies back higher with the Yen losing ground on Friday as US stock indexes once again push to new record highs.

The US Dollar was always likely going to struggle through the US trading session after the latest US Retails Sales showed a weaker reading than economists expected. Every time there is a weaker than expected economic data number for the US the question marks grow larger to whether or not the US Fed will raise the official cash rate again before Xmas. The Fed meets this week for its two-day meeting and will issue a statement at 4.00am AEST on Thursday morning. Currently, the market is not pricing in a rate hike between now and Xmas so if the Fed on Thursday indicates that it may still raise rates this year the US Dollar would move sharply higher as the news would be unexpected. The Fed’s current mandate is to see inflation rise before it raises the official cash rate again and I doubt they will move on the official cash rate until they are convinced inflation is on the rise. Janet Yellen will hold a press conference this month after the official statement is released so any move on the US Dollar between now and Thursday could simply be posturing as the Fed statement and Yellen’s comments in her press conference will likely create significant volatility for the greenback.

The Canadian Dollar & Euro were the standout performers in the first half of 2017 and I would expect the Pound could be the currency that will rally strongly in coming months. The BOE signaled on Thursday its intention to likely raise rates soon and on Friday a Bank of England official said: “the appropriate time for a rise in Bank Rate might be as early as in coming months”. Traders are highly likely going to buy any dips on the Pound as they price in the expectation of higher interest rates at the Bank of England.

The economic calendar shows a busy week ahead with plenty of comments from Central Bankers, however, the big news this week from the scheduled announcements will likely be the US Fed’s monthly statement on Thursday at 4.00am AEST. The Bank of Japan is also due to release their monthly statement this week and traders don’t anticipate the BOJ to change its current stance on interest rates or the amount of money it is currently printing and injecting into the Japanese economy. There is no high impacting news scheduled for today.

 

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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