Today’s Key Market Drivers – 20th November 2017
Canadian Dollar falls after weak inflation data.
The Canadian Dollar took a hit on Friday after Inflation data failed to beat the market’s estimates. Oil was also a contributing factor to the Canadian Dollar’s weakness last week with oversupply concerns pushing the price of Oil lower. TIA has been short on the Canadian Dollar for a few days and the CAD v JPY came down and touched the weekly 200 EMA this morning. The 200 EMA on the weekly chart can often be a strong area of support and therefore TIA has decided to take profit.
The Euro has fallen sharply on Monday after coalition talks collapsed between Angela Merkel’s conservative party and two rivals she was looking to form a government with. The Greens pulled out of negotiations on Sunday and the political uncertainty this created for the Euro Area’s biggest economic powerhouse saw traders sell down the Euro early in the Asian trading session. I don’t believe this spells the end of my recent Euro rally call. The Euro’s long-term value is going to be decided by what the ECB does and not who is Chancellor of Germany. All the good news is already priced into the US Dollar, however, I don’t believe the same can be said for the Euro. The market has fully priced in high-interest rates at the US Fed but they have not priced in higher interest rates at the ECB and I still have the view Mario Draghi’s committee will raise the official interest rate from zero in 2018 and there is a lot of upside potential.
The Aussie and Kiwi Dollars remain weak with no reason to buy either currency for a long-term carry trade. The stock market is starting to give off vibes a pullback isn’t far away with the Dow Jones last week having back to back days of 100 points up then 100 points down. That has not happened for some time and experience tells traders are beginning to sell down positions and a serious pullback in coming months is a higher probability.
There are no central banks reporting monthly statements this week, however, we will receive the months minutes of the RBA, ECB and US Fed and if anything new emerges that was not mentioned in recent statements expect to see increased volatility on the currencies directly related.
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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