Today’s Key Market Drivers – 20th July 2017

The European Central Bank will release its latest policy statement today at 9.45pm AEST with Mario Draghi the ECB President to host a press conference at 10.30pm. Traders have been buying the Euro up in 2017 on the back of expectations the ECB will taper its money printing program and raise interest rates for the first time since the Global Financial Crisis. If the Euro is to rally today the ECB will need to say something “new” because the expectations of less stimulus are already priced into the Euro. The worlds biggest economic region is on a slow grind to more prosperous times and in my view, the Euro has the potential to be a stand out performer in the coming 12 months against the US Dollar. Trumps health care plans were dealt a blow this week and there is no question in my mind large currency speculators are looking to diversify some of their money away from the US Dollar now it is clear Trumps “Make America Great Again” plans are not exactly sailing along smoothly. The gloss is squarely off the US Dollar and with traders currently pricing in a lower than 50% chance the US Federal Reserve raises interest rates again in 2017 it will take something more than higher rates at the Fed to boost the US Dollar.

The Bank of Japan will also be closely watched today with Governor Kuroda due to address a press conference at 4.30pm AEST. The BOJ recently said it planned to keep Bond Yields at 0% and continue with its current program of printing trillions of Yen and injecting it into the economy. Simply put there is no reason for the market to want to buy the Yen provided the stock market continues to grind higher. The Yen will appreciate in value when the stock market pulls back however currently there is no genuine fear in the market, therefore, any pull back on a base currency against the Yen has been seen as a buying opportunity. The AUD, NZD, CAD, USD, GBP and Euro all offer positive carry trades against the Yen and with the Bank of Canada now in a tightening cycle of interest rates it is clearly evident on the charts which currency pair recently has been a strong performer. Kuroda is unlikely to spook the market with a major policy decision change today after only 10 days ago saying the BOJ intended to keep with its 0% interest rate policy.

Other important data announcements this week other than the ECB and BOJ statements are:

  • Aussie Unemployment data 11.30am AEST today
  • UK Retail Sales 6.30pm AEST today
  • Euro Zone Consumer Confidence 12.00am AEST today
  • Canadian CPI data 10.30pm AEST Friday
  • Canadian Retail Sales 10.30pm AEST Friday

 

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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