Today’s Key Market Drivers: 19th July 2018

“US Dollar continues to gain strength against its major rivals.”

The flavour of the day on Wednesday was again a rising US Dollar following remarks from US Fed Chairman Jerome Powell on Tuesday that said the US economy was heading for a period of solid economic and jobs growth. He also played down any concern the Fed had with respect to trade tariffs and traders took this as a sign the US Fed will not change course from its current interest rate tightening cycle. The Aussie Dollar v US Dollar touched a low of 0.7343 through the European trading session and whilst it did find some buyers in the US trading session after weaker than expected US housing starts data the downtrend still remains. The official unemployment rate numbers for Australia are set for release at 11.30am AEST today and if out of line with expectation could move the Aussie Dollar up to half a cent or more in the minutes following the data release. The current unemployment rate for Australia is 5.4% and any surprising news surrounding the number of jobs created or lost in June will see traders take to the Aussie Dollar with gusto.

In today’s daily video you will see I have now marked every currency pair with a wave formation number on the 4-hour charts that you can also copy onto your own charts. This will serve as a guide for you as to where we are in the wave count and why we are looking to buy or sell certain currency pairs into wave #5. The wave count on my charts will also likely dovetail into assisting you with the Daily Trading Plan trades as well as Laz’s shorter-term trade sets ups. Please ensure you take a moment to review today’s video update.

The US Fed is one of three major central banks that is expected to continue to raise rates in 2018 and following is a list of the major central banks that we follow and what is currently being priced in with respect to traders’ expectations on interest rates. These views could and do change over time, however, this is currently the view of most of the traders that I follow. Interest rate differentials between Central Banks will over time have a significant impact on the direction of the base currency. If a Central Bank is looking to raise rates in that country expect over time to see the currency rise in value. Eg US Federal Reserve vs the Reserve Bank of Australia. One is raising rates and the other is not, so expect to see continued upward momentum on the US Dollar against the Aussie Dollar. I expect the AUD v USD to be under 0.70c before the end of this year due to the interest rate differential benefiting the US currency.

  • USA Two rate hikes in the second half of 2018.
  • UK One possibly two rate hikes in 2018 starting in August.
  • Canada One more rate hike in the second half of 2018.
  • Europe No rate hikes in 2018 with the first being mid-2019.
  • Japan No rate hikes in 2018 or 2019.
  • Australia No rate hikes in 2018 or 2019.
  • New Zealand No rate hikes in 2018 or 2019.

Other than the Aussie unemployment data today the economic calendar doesn’t have anything significant jumping off the page other than UK Retail sales which isn’t likely going to impact the Pound too much. The currency trend from Tuesday remains with traders looking to add to long positions on the US Dollar and any rally on the AUD or NZD in my view is a good opportunity to short both base currencies.

Any trade updates throughout the day will be sent via Trade Time. You can also follow my daily updates on Facebook, Twitter, Instagram by searching for TrainwithAndrew. Make sure you subscribe to the Andrew Barnett YouTube channel after watching today’s Sunrise video below.

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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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