Today’s Key Market Drivers – 25th July 2017

There was a lack of high impacting economic news on Monday and frankly the Asian and European sessions today may be a bit of a yawn also. The Bank of Japan’s monthly minutes were released at 9.50am AEST and failed to fire the Yen in either direction. The US trading session will see the release of the latest US Consumer Confidence numbers, however, I doubt it will be enough to turn the tide for the US Dollar, which remains under pressure following President Trump’s failed attempt to have the US Senate agree to dismantle Obamacare. Trump’s son in law Jared Kushner was asked to appear in front of a closed-door Senate hearing to explain why he met with Russian officials 4 times during the 2016 Presidential campaign. The ongoing political challenges for Donald Trump combined with the US Fed’s interest rate agenda priced into the US Dollar is seeing it struggle to gain any traction and move back higher.

With a lack of high impacting news early in the week markets are looking to get some direction from the current US company earnings season that is now well underway. CNBC reports that 73% of companies in the S&P 500 that have reported so far have beaten market estimates, which is a positive sign for the US economy. There is virtually no chance the US Fed will raise rates when it meets this week with the market pricing in just a 3% chance the Fed will raise rates again after lifting them in June.

Tomorrow is sure to bring increased volatility to the Aussie Dollar, as the latest quarterly inflation data is due for release. Inflation data is only released in Australia ever quarter, unlike many other countries that report on Inflation each month. So the possibility of a surprise reading with the data only being released quarterly is reasonably high and the RBA has a track record of using CPI as a trigger to raise or lower the official interest rate. The RBA last week indicated that it would ideally like to raise rates to 3.5% in the future and therefore if tomorrow’s inflation reading is stronger than the market expects the AUD will highly likely rise quickly. The market expects inflation to have risen by 0.4% in the second quarter and 2.2% on an annualised basis. Anything either side of these numbers is going to likely increase volatility on the local currency.

 

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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