Today’s Key Market Drivers: 22nd May 2019
US Government and Google back off on Huawei and the market likes it.
Finally! Something else to talk about other than the US / China trade dispute although it still involves the US and a giant Chinese telecom company called Huawei. The US Government had recently placed restrictions on Huawei after a string of events too long-winded to bore you with the details here. Let’s just say the Chinese were doing things US authorities didn’t like, slapped bans on its ability to purchase US components for its phone handsets and said US companies needed to get a license to deal with the Chinese telco. Those restrictions were eased on Tuesday until August 19th and this is the main reason why the market was bullish.
The safe-haven currencies such as the Yen were sold as traders took the opportunity to buy back into US stocks which pushed the S&P 500 0.85% higher and sent the USD v JPY up to its 200 EMA on the 4-hour chart.
Shares in aircraft giant Boeing also surged higher when reports suggested the crash in March may have been caused by a bird strike.
RBA Governor sends the Aussie Dollar back lower to close gap.
The monthly minutes may not have sunk the Aussie Dollar when released at 11.30am AEST yesterday but Philip Lowe’s speech in Brisbane certainly did when he delivered the latest RBA Economic Outlook and Monetary Policy Report to the Economic Society of Australia. Broadly speaking the report backed up what traders had already started to price in last week and that is lower interest rates in Australia in coming months.
The report concluded by saying that if the jobs market did not pick up the RBA would likely be forced to lower the official cash rate from 1.5% and traders seized on the comments and sold off the local currency which has now officially closed the gap from last Friday’s close. In fact, the AUD v USD made a new low overnight of 0.6865 another 5 ticks lower than last week’s 5 month low. I will continue to remind traders that any rally on the AUD will be seen as a shorting opportunity by professional traders.
US Fed Chairman fails to move markets but remains upbeat about the US economy.
Jerome Powell spoke on Tuesday morning and said whilst US company debt was increasing this was not a major concern for the Fed and the economy could withstand the increase in the debt burden. The US Dollar was mostly unchanged following the US Fed Chairman’s speech.
Pound and Euro spike higher but retrace just as quickly.
Both the Pound and Euro spiked higher on Tuesday but those gains were erased just as quickly as traders continued to focus on buying back into the US Dollar where there is some economic stability. The Euro Area continues to struggle under the weight of low inflation and reports yesterday emerged that Singapore, Thailand, South Korea and many parts of Asia are slowing quicker than economist expected. Singapore is now growing at the slowest pace in 10 years.
UK inflation data will be released today at 6.30pm AEST with economists expecting April’s inflation to have risen 0.7% or 2.2% annually. If the official inflation reading is either side of these numbers investment banks and hedge funds will use the out of line with expectation reading to either buy up or sell off the Pound.
Good bye Facebook, hello Twitter.
Whilst I will continue to post my daily Sunrise video and general market update (LTG members receive a private market update video in this report) I won’t be posting, commenting or discussing anything trading related or anything else for that matter on Facebook any longer. I have switched to Twitter which is a far more convenient platform to post my thoughts on financial markets. Facebook is social, Twitter is better for business and my trading is a business and that’s where you can find me from now on.
My Twitter handle is @trainwithAB or you can search for Trainwithandrew.
Nobody ever wrote down a plan to be broke, fat and lazy. These are the things that happen to you when you don’t have a plan.
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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