Today’s Key Market Drivers: 23rd July 2019

A mixed Monday as traders await the ECB statement on Thursday.

Financial markets as expected remained mixed on Monday with the Asian trading session closing lower however the European and US sessions eking out some positive gains as traders await Thursday’s important European Central Bank report and interest rate decision.

US company earnings season continued on Monday with most companies beating the low expectation bar that was set leading into the second-quarter reporting season. We may see an uptick in volatility Tuesday and Wednesday with Facebook, Google, Amazon, McDonald’s and some other major corporations reporting their earnings.

Expect to see Donald Trump continue to push hard for lower interest rates at the US Fed as he knows this will help keep the US currency from appreciating and debt repayments low for companies who have borrowed up big in the past number of years. These are two of the biggest influencing factors driving US company earnings in future quarters.

If there was a winner on Monday it was the US Dollar.

The US Dollar moved higher against its major rivals with a strong push against the Canadian Dollar. I suspect the Greenback will see some money come for it before Thursday’s ECB statement as traders’ price in their expectation the European Central Bank will announce plans for some sort of stimulus program to assist the Euro Area. If stock markets continue to weaken the US Dollar is generally a benefactor as it is seen as a safe-haven currency in times of uncertainty along with the Swiss Franc and Japanese Yen.

The US Dollar is going to be volatile in the back half of this week with traders potentially favouring it in the event of an ECB policy shift. If the US GDP figures on Friday are out of line with expectation this will see traders enter or exit the Greenback quickly.

We will know who the next British PM is this week.

It won’t come as a surprise when Boris Johnson is announced as the next British Prime Minister but what traders are eager to hear is how the new PM plans to tackle Brexit in the next two months. Johnson has recently been quoted as saying the UK will leave the EU with or without a trade deal and his comments have weighed on the Pound. There is still no clear exit strategy 3 years on from the referendum that has seen two Prime Minsters fall on their swords and countless deals with the European Union rejected by the UK parliament.

If the European Central Bank this week becomes the next major Central Bank to loosen monetary policy it is likely the Bank of England won’t be far behind in dropping its official interest rate. It is tough to make a case for the Pound to rally at present and if stock markets continue to retrace off their highs the US Dollar and safe havens will become more attractive and likely keep the Pound under pressure.

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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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