Today’s Key Market Drivers – 23rd November 2017
“Can I buy a loaf of bread please?”
The picture above of a man buying a loaf of bread with a cart full of money is the opposite of what the US Fed is currently concerned about. Rather than rising inflation, the US Fed at its last meeting was worried about the US inflation stalling and this is what sent the US Dollar sharply lower on Wednesday after the monthly minutes were released. CNBC reports the drop on the US Dollar Wednesday was the single biggest one-day decline in 5 months and Fed committee members may question if a December rate hike is warranted. But hang on one minute please! The last US Fed meeting was on 31st October – 1st November and just last Wednesday 15th November (two weeks later) the latest US inflation report was released which met the market’s expectations and even saw a rise in Ex Food and Energy inflation. The minutes released yesterday Wednesday 22nd November reflected the Fed’s concerns two weeks ago, well before last Wednesday’s improving inflation report. I still maintain the view the US Fed will raise the official cash rate in December and any pullback is going to be viewed as a buying opportunity by many traders. What added to the short-term selling pressure on the US Dollar was a weaker than expected monthly US Durable Goods number which was -1.2% vs the +0.3% the market expected.
So, the jump on currencies such as the AUD and NZD against the greenback will likely be short-lived in my opinion as the rise on both base currencies was simply due to a weaker US Dollar in the short term and nothing fundamentally changed in New Zealand or Australia in the past 24 hours to suggest buying AUD and NZD is a good long-term trade against the US Dollar. My favoured trade right now is long Euro v US Dollar and holding it back to the highs of 2017 which is around 1.20.
US markets are now closed for the Thanksgiving holiday and Friday will also likely be slow through the US trading session as traders take the opportunity to have their last long weekend before Xmas.
Keep the afternoon of the 7th December free between 2pm and 5pm as I will be conducting a live master class from my trading desk at LTG GoldRock. I will also record the session but it will be dedicated to sharing with you my fundamental and technical views heading into 2018 and you will receive a log in for the live training session the day prior and a reminder in the hours leading up to 2.00pm.
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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