Today’s Key Market Drivers – 21st September 2017

The US Dollar surged higher early this morning after the US Federal Reserve announced that it still planned to lift the official cash rate one more time before Xmas and it will begin to unwind its $4.5 trillion-dollar balance sheet beginning next month. Even as inflation remains below the Fed’s desired target it said 3 rate hikes in 2017 was still the plan, which means markets should expect one more increase in coming months. Currently, futures traders are pricing in a 73% chance December is the month for the next and last rate hike of 2017. The Fed is going to tread softly when it comes to selling down its huge balance sheet and will begin selling US Treasuries and Mortgage Backed Securities in October. The Fed printed money artificially on a computer after the GFC, bought the assets nobody wanted with money it created and it will now sell those assets and recoup the cold hard cash. What a deal!!! Just imagine being able to do that. Print money out of thin air, buy cheap assets and then when they recover in value sell them and bank the cash. Rippa!

The Kiwi Dollar surged late Wednesday afternoon after a news poll showed the Labour Party is falling well behind the National Party in the lead-up to this weekend’s National election. The Nationals are now 9 points ahead of Labour with only 2 days to go. The market clearly sees a stable incumbent government in New Zealand as a good thing. New Zealand’s latest GDP figures released at 8.45am AEST today confirmed the New Zealand economy is ticking along at 2.5% annually. The Kiwi Dollar fell after the GDP number was released, which confirms traders were looking for a better number than 2.5% GDP reading.

Looking at today’s economic calendar there is plenty of news to keep markets busy. 3 key Central Banks bosses will deliver important speeches with BOJ Governor Kuroda likely to get most the attention when he speaks at 4.30pm AEST following the Japanese Central Banks monthly policy statement. The market does not expect any change in monetary policy from the BOJ today although Governor Kuroda has been known for surprises. European Central Bank President Draghi also speaks today in Frankfurt but is unlikely to surprise financial markets with any new news.


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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