Today’s Key Market Drivers: 22nd October 2019

Traders continue to price in a Brexit deal.

It’s got me stumped why but traders are continuing to price in the expectation a Brexit deal is somehow doable between now and October 31. The Pound escaped any major declines on Monday after the UK parliament rejected Boris Johnson’s latest Brexit proposal which triggered a letter to the EU asking for an extension and a second letter from Boris Johnson saying the first extension letter he does not agree with but his government was compelled by law to send it.

Johnson was due to have another crack at getting a Brexit deal agreed to on Monday but House of Commons Speaker Bercow rejected Johnson’s request saying a second attempt at getting the same deal through parliament is not parliamentary convention and the same questions cannot be repeatedly asked by politicians. He said another vote on Monday would be “repetitive and disorderly”.

I continue to hold the view the UK will at the last-minute attempt to extend the Brexit deadline but will ultimately decide to hold another referendum whereby the country will vote to stay in the EU.

There was a good lesson in Monday’s price action.

Monday’s lack of price action following the weekend’s Brexit news showed there were very few major players willing to have a crack at moving currency markets for fear of being on the wrong side of the market.

Whilst we were right to be mindful of what could have been the majority of the time these major events that crop up in financial markets end up being a storm in a tee cup. But…and it is a very big But. It only takes one mistake, one greedy moment, one slip up to completely destroy your trading account if you do not closely monitor these important events.

Canada’s PM Trudeau may be forced from office.

Keep a close eye on the Canadian Dollar today as the results filter in from Monday’s Federal Election where incumbent PM Justin Trudeau may be forced from office. The Canadian Dollar moved higher on Monday against the US Dollar, however, the next 12 to 24 hours will likely see plenty of short-term volatility.

National elections rarely have any long-lasting impact on the direction of currency unless we see a surprise result like the US Federal Election in 2016 where Donald Trump’s policies were extremely pro-growth which did impact the US Dollar in the medium term. A currencies value long term is determined by monetary policy and interest rate settings which are controlled by the nations Central Bank.

Aussie and Kiwi Dollars continue to remain supported.

Over the weekend Chinese officials said both sides had made substantial progress in trade negotiations and the Chinese were looking forward to addressing each other’s trade concerns. They also acknowledged a trade deal between the US and China would be good news for the global economy and positive sentiment from both sides late last week and early this week has meant the Aussie and Kiwi Dollar has remained supported.

Donald Trump said last week he hoped Phase 1 of a trade deal could be signed between both countries before the Asia Pacific Economic Conference in Chile in November. If that is the case then the AUD v USD and NZD v USD will likely continue to grind higher.

In other news.

US stock indexes are inching towards record highs and my expectation of a pullback early this week due to Brexit has not resulted yet. If Brexit does not rock markets, I suspect the impending trade deal between the US and China and the fact US company earnings are holding up reasonably well will see stock indexes hit new highs before the end of the week.

The next 24 hours has only a sprinkling of Medium impacting data that isn’t likely to move currency or stock index markets in any new impulsive moves.

Winners focus on winning. Losers focus on winners.


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).

If you would like to speak to one of our Senior Client Advisors regarding the relative client opportunities offered at LTG GoldRock and how you can follow along with our Professional traders each day in our live trading room please contact us today or you can register for one of our a live coaching and trading webinars by clicking here.