Today’s Key Market Drivers – 22nd November 2017


US Dollar looks for some positive news.

The US Dollar broadly declined on Tuesday as no high impacting news hits the markets early this week. At present market conditions are giving traders no reason to buy back the greenback or add to their already long US Dollar positions. Janet Yellen is giving a speech this morning to the Stern Business School so we may see some increased volatility on the US Dollar in the early Asian trading session which is often when the US Dollar takes a back seat for a few hours. As one trader put it “the US Dollar is just marking time”.

US Treasury yields did move lower on Tuesday but there is no reason for bondholders to abandon their investments, the 10 Year Treasury yield is still likely going to be higher this time next year and bondholders look long term and not short term. There is no fundamental reason for traders to sell long US Dollar positions but I do agree they may decide to diversify into the Euro in coming weeks and months as I am a strong believer there is a lot of room to the upside for the Euro Area currency in 2018. All the good news is baked into the US Dollar but that is not the case for the Euro currency in my opinion. The market has not begun to price in higher rates at the ECB at some point in 2018 but when investment banks and respected economists begin to talk up this news the Euro could rise sharply against any of the currencies where interest rates are not likely going to rise anytime soon. Such as the Aussie and Kiwi Dollars which I believe have the potential to fall throughout 2018 against the Pound, US Dollar and Euro.

Traders have thought through the political challenges faced by Germany and for the time being, have decided to lay off shorting the Euro any lower. Angela Merkel failed to pull together a coalition government and Monday saw a sharp fall in the Euro currency when financial markets reopened. Germany is the biggest economy in Europe and whilst the political unrest may impact short-term moves the longer term economic recovery across Europe over time is only likely to benefit the Euro rather than suppress it. Never forget this simple fundamental fact. Interest rates drive the value of virtually everything.

The Pound will get busy in the European trading session today when the UK’s Chancellor announces to parliament the UK’s latest budget. In the US trading session, the focus will be on a Durable Goods report which is a high impacting news item.

In December I am going to announce a special one-day Fundamental Course I will be running in February 2018. I constantly get asked. “AB how can I learn to follow the fundamentals of the markets the same way you do?” I am currently putting together the content and I will let you know more in early December. For the past 18 years, I have made it my business to understand how investment banks and hedge funds interpret and trade fundamental data and this one-day event is the culmination of 18 years of study and a heck of a lot of hard work.

Don’t forget that Thursday is Thanksgiving in the USA and Friday will likely be a slow day also as traders take a long weekend. Thanksgiving signals the beginning of the Xmas season in the USA with shopping Malls putting up their Xmas decorations and sales signs.

 

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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