Today’s Key Market Drivers: 21st August 2019
Markets are yawning waiting for the Fed minutes.
Currency markets continued to trade without any impulsive moves on Tuesday as traders await today’s US Fed monthly minutes and the opening address from US Fed Chairman Jerome Powell at the Central Bankers conference in Jackson Hole, Wyoming.
It was not unusual to see stock market traders lock in profits before today’s minutes particularly after 3 days of solid gains. There was no major catalyst for traders to sell down stock market positions and give the Yen a little boost. US Treasury Yields did pull back after rallying for two days with some suggesting the pullback was based on the expectation of stimulus from the Fed later this year.
RBA minutes confirm more rate cuts are likely.
Tuesday’s August minutes from the Reserve Bank of Australia confirmed the potential for more interest rate cuts, however, the Aussie Dollar failed to fire off lower simply because the minutes did not tell the market anything it didn’t already know.
RBA Governor Lowe addressed a Senate committee in Canberra the day after the August statement and told politicians that the RBA would not hesitate to continue to drop rates and also use unconventional monetary policy measures if the official cash rate got to 0%. The minutes simply confirmed these comments.
The market is overly dovish.
The financial markets in my view are overly dovish in their expectation of what Jerome Powell will say this week and I believe Powell will address this concern by reminding consumers in the USA that the economy still remains solid. Powell won’t be overly hawkish but he won’t be as dovish as many expect either simply because he risks talking the US economy into a self-fulfilling recession.
The USA is technically miles away from a recession, however, if consumers get wind of the potential of a recession, they will stop spending and this could force the US into a recession it didn’t need to have. Powell’s role is a delicate balancing act, he will want to remain optimistic whilst also reminding markets the Fed stands ready to do whatever is necessary to keep the economy on stable ground.
One of the biggest reasons why many people sadly never reach their full potential is because they listened when their family and friends said “don’t do it.”
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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