Today’s Key Market Drivers: 20th November 2018
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The tech-heavy Nasdaq index dragged US stocks lower on Monday closing down 2.5% and sending the safe haven currencies such as the Yen and Swiss Franc back higher. With no high impacting news on Monday, traders continued to focus their attention on comments made by Fed officials last Friday who said global growth may slow in 2019. This saw traders’ price in the possibility of the US Fed slowing its interest rate tightening cycle and the US Dollar has been sold off as a result. The market has priced in the expectation the US Fed raises rates one more time in December making 4 rate hikes in 2019 and continues to hike rates quarterly in 2019. If traders overwhelming view of this shifts, the US Dollar could see some sizeable pullbacks in the coming months.
The Fed will give traders an update on their plans for 2019 next month when they release what is called the dot plot survey, a guide to how many interest rate adjustments they expect to make in 2019. If this shifts from three to only two the greenback will fall sharply in the short term. CNBC is reporting today that Goldman Sachs strategist said in a recent report “the greenback may decline as much as 6 percent against most of its developed market rivals, as the U.S. economy starts to slow with the impact from tax cuts and easy conditions fading through the year.” Goldman Sachs also believes the US economy is going to slow significantly in 2019.
The Euro was a strong gainer on Monday breaking some recent downward stair stepping formations and showing signs of a shift back higher. After a steep sell-off in October and November, a weaker US Dollar has helped the Euro off its lows without any positive economic data or a conclusion on Brexit or Italy’s 2019 budget. As I mentioned in my Facebook Live update on Monday, I expect the Euro may be a stand out performer early this week and if traders elect to continue to sell down US Dollar holdings the Euro will continue to benefit. The Pound remained volatile on Monday as Theresa May continues to dig her heels in on her recent draft Brexit plan.
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Today sees the release of the November RBA monthly Minutes which is unlikely to impact the Aussie Dollar by more than a few ticks. It’s a lacklustre day of economic data with the only other noteworthy mentions Bank of England Governor Carney testifying in London and US Building permits data set for release. My expectation is Asian markets will likely follow Wall Street’s negative lead and the safe havens will continue to be broadly supported.
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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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