Today’s Key Market Drivers: 24th June 2019
Trump keeps markets on edge after threatening a strike on Iran.
The Yen and Swiss Franc benefited on Friday from tensions between the US and Iran over a downed US spy plane the US Government claims was flying in international airspace. US military weapons were locked and loaded and President Trump pulled out at the last minute after asking advisers how many civilian casualties would there be if the US struck Iran. Trump decided that an unmanned US drone was not worth more than 150 innocent civilian lives and pulled back from what was an imminent attack.
News wires are now reporting that the Trump administration is prepared to negotiate with the Iranians and there are no preconditions. CNBC is reporting that Vice President Mike Pence, in an interview CNN’s State of The Union, said “Iran needs to understand we’ll never allow them to obtain a nuclear weapon and we will not allow them to continue to sow violence across this region.”
Greenback’s value subject to more economic data and Powell comments.
The US Dollar has been the major focus in currency markets in the back half of last week with the US Federal Reserve keeping its powder dry on a rate cut but giving traders just enough forward guidance to believe a future rate cut is on the cards.
The Greenback was the big loser last week and its continued slide lower or potential recovery is going to depend on further releases of economic data and Fed Chairman Powell speaking later this week. Although the market has priced in a future rate cut at the Fed I don’t believe the current weakness on the US Dollar means its oversold. It won’t be a straight line down and it is my view any rally on the Greenback will likely be seen as a shorting opportunity particularly if the data is just after a recent rally up in price.
Aussie Dollar’s rise is thanks to a weak US Dollar.
The recent rally on the Aussie Dollar is not about new found local strength in the Aussie economy or a change of heart from the RBA on the potential for another rate cut. It’s got everything to do with weakness in the US Dollar and traders also now pricing in a higher likelihood the trade deal between the US and China will eventually happen.
The President of China and the USA will meet later this week in Japan at the G20 summit and it is expected that an announcement will be forthcoming about the beginning of new trade talks. Any good news for China on the trade tariffs is likely going to be good news for the Aussie Dollar.
Make hay when the sun shines.
The trading business is one where you are given certain periods throughout the year where your trading system works well and other periods when it doesn’t and the challenging part is you won’t ever know when the plan is about to begin to have its drawdown period. That is why I am so adamant that you remain steadfastly consistent with the trades you take and how you manage your risk.
When your strategy is in favour with the market you MUST maintain your discipline and ride them to the targets and not exit too early. You have to make hay when the sun shines because when the sun isn’t shining on your trades, I guarantee that you will sit in trades until your stop loss is hit. The reason being is that you will live in hope. Watch my Sunrise video today as there is an important lesson about mistakes and embracing them.
Do what is right. Not what is easy.
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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