Today’s Key Market Drivers: 20th February 2019

Trump remarks on China trade deal sends US Dollar lower.

Trade talks between China and US officials continued in Washington DC on Tuesday as investors remain nervous that the March 1st tariff truce deadline is approaching. The US Dollar was on the rise towards the back end of last week after trade talks in China between the two parties failed to reach a conclusion. The safe haven currencies were on the rise as trade tensions simmered but it appears that the US President is willing to compromise on the deadline date.

Trump sent the US Dollar lower on Tuesday when he said he may push back the key March 1st deadline telling reporters that discussions were progressing well and the March 1st deadline was not a “magical date”.

A positive trade deal outcome would likely send China exposed US stocks and currencies higher such as Apple and the AUD and safe have currencies such as the US Dollar, Yen and Swiss Franc lower. There is plenty of water to flow under the bridge between now and March 1st and I always have the view particularly with Donald Trump as President that anything could happen.

Euro and Pound higher but not on anything substantial.

European economic data was not responsible for the Euro rallying against the US Dollar, it was broad US Dollar weakness that sent the EUR v USD sharply higher on Tuesday. Economic sentiment surveys for Germany and the Euro Area met the markets expectations as Theresa May continues to try and negotiate a Brexit deal in Brussels that will satisfy her UK parliamentary colleagues.

I note that 7 Labor party members who sit in the UK parliament have formed a break away group saying they are tired of the road blocks Labor leader Corban continues to put in the way of getting a Brexit deal done. Whilst it hasn’t seen a spike in the Pound the break away groups actions may go a long way to helping Theresa May get the thumbs up when she next presents her new deal.

Central Bank monthly minutes are closely eyed.

Wednesday sees the release of the minutes from the last US Federal Reserve meeting in January and yesterday’s reaction on the AUD is a good example of how a Central Banks minutes can impact a currency value when released. The AUD fell following the release of the RBA minutes which show the local Central Bank was more pessimistic behind closed doors than the statement may have suggested.

The US Fed said in its last statement and press conference in January that it would take a wait and see approach to when it will raise rates in 2019 which was seen as a sign, they may not raise rates at all this year. The Minutes today have the potential to change those views if the committee members were still optimistic about the US economy and keeping to their pledge in December of likely raise rates twice in 2019.

Don’t worry about getting older. Just worry about how you’ll be better today than you were yesterday. AB

 

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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