Today’s Key Market Drivers – 23rd August 2017

After such a strong rally in recent months profit taking on the Euro was happening on Tuesday after a weaker than expected Economic Sentiment survey was released. There is also selling pressure on the Euro prior to the Central Bankers conference in Jackson Hole Wyoming this week where ECB President Mario Draghi will make a speech. He recently said that he would not be using the conference to announce any new policy changes however traders are always on edge when such an important Central Bank event is coming up.

The US Dollar gained on Tuesday as traders saw no need to buy the safe haven Yen or Swiss Franc with the Dow Jones Index having its biggest one-day gain since April. With the Euro being sold the greenback was the major benefactor but don’t be fooled, the US Dollar did not rise because of any important economic news it simply rallied because when one currency falls another must rise. My personal view is that any pull back on the Euro is likely going to be met with buyers as the ECB has in recent months been hinting and moving towards tighter monetary policy and Mario Draghi may not be about to say anything new in Jackson Hole but he is likely going to repeat what the ECB has recently said and that has supported the Euro in 2017. Trump’s policy agenda is in tatters and so is the White House administration with more sackings in Trump’s first year than an AFL end of season clean out. The US Dollar has been on the nose and any comments from Draghi along similar lines to recent months is likely going to support the Euro. When I look at the other side of the equation Draghi could send the Euro lower if he says the rally on the Euro in 2017 could dampen inflation expectations. Uncertainty is the reason why many traders will sell their Euro positions prior to his speech and buy the Euro back at a lower level.

The first piece of high impacting economic news that will likely impact the remaining 10% of volume TIA has on the GBP v JPY is UK GDP data which is due to be released on Thursday at 6.30pm AEST. Price is hovering above the 61.8% FIB expansion level that it touched on Friday and Thursday’s official 2nd quarter GDP figures will either send the Pound through the 61.8% level to the profit target or back higher to the stop-level which is well inside break even.

 

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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