Today’s Key Market Drivers: 19th September 2018

“2nd Quarter GDP data for New Zealand will be important tomorrow morning.”

The announcement from the White House that the Trump administration plans on adding a 10% trade tariff to another $200 Billion of China imports which jumps to 25% at the end of the year failed to derail financial markets and failed to fire the safe haven currencies Tuesday. The Chinese announced late on Tuesday afternoon that it needed to retaliate and quickly and they added levies on $60 Billion worth of US imports. Escalating trade tensions weeks ago was seeing the US Dollar rally strongly and stocks fall, however, traders have now mostly priced into the market any potential protracted trade tariff war and clearly the overall market is not concerned any longer. The Dow Jones on Tuesday was up 185 points and the safe haven currencies such as the US Dollar and Yen were again lower overall.

The reversal patterns that I spoke about on Sunday continue to steadily head in our favoured direction and I suspect will continue to do so all the way through until the US Fed’s policy statement next week. My guess is the Fed will mention the trade tariffs in its statement suggesting they may adversely impact US economic growth and this will keep a lid on any US Dollar advances in the short to medium term. In fact, I am expecting the US Dollar to fall in coming weeks post the US Fed’s September statement.

The Pound may tread water until after the European Union summit meeting later this week which may bring some fresh news about a trade deal between the UK and European Union. Traders have recently been buying back into the Pound on the expectation a trade deal will be reached. The Aussie and Kiwi Dollars against the greenback remain well supported but it’s important to remember that the moves higher on the AUD v USD and NZD v USD have been about US Dollar weakness and not local AUD and NZD strength. Thursday sees the latest 2nd quarter GDP numbers for New Zealand and I am willing to bet they meet or exceed the market’s estimates which should help the NZD v USD higher.

The Bank of Japan releases its monthly September statement today with traders not expecting any change in monetary policy from the BOJ. UK inflation data will be important for the Pound when released at 6.30pm AEST and a better than expected inflation figure will see more upward pressure on the Pound. Mario Draghi is also speaking in Berlin but it is unclear on what subject. It doesn’t appear his comments in Paris on Tuesday had any significant impact on the Euro although the market is increasingly looking to buy more Euro’s and Pounds.

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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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