Today’s Key Market Drivers – 19th October 2017

Traders on Wednesday continued to price in the likelihood that Donald Trump will appoint a more hawkish US Federal Reserve Chairman for when current chair Janet Yellen steps down on February 3rd next year. Trump will likely announce his pick early next month and what we are seeing is the US Dollar being bought higher in anticipation that his pick will be someone who is likely to campaign amongst his colleagues to raise interest rates faster than current Chair Yellen. Traders are also optimistic that Trump’s new company tax plan will pass and if the company tax rate is reduced this will be positive news for US companies and demand for US Dollar assets will only likely rise pushing up the value of the greenback. Overnight we saw what is called the US Beige Book released and it’s a gauge of the economic activity in each of the 12 Federal Reserve Districts that are scattered across the US. The Beige Book is released 8 times a year before a US Fed meeting takes place and this month’s Beige Book report said that economic activity in each of the 12 Federal Reserve Districts expanded.

The US stock market has again surged to new all-time highs overnight and is helping drive US Dollar demand with the Dow Jones closing above 23,000 for the second day in a row. To give you an idea what sort of run the US stock market has had since the lows of the 2009 GFC the Dow Jones has risen in value from 6470 to 23,159. That’s a rise in the Dow Jones Index value (top 30 stocks) of more than 350% or on average approximately 43.75% per year.

The Aussie Dollar is going to be busy today with the economic calendar showing unemployment data and China GDP figures due for release this morning. UK Retail Sales are also due in the European trading session and if out of line with expectation will move the Pound.

 

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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