Today’s Key Market Drivers: 25th July 2019

It’s all about the European Central Bank today.

Financial markets are bracing themselves for what could be an aggressive stimulus program from the ECB which is bound to encourage US President Trump to cry foul if investment banks and hedge funds sink the Euro v US Dollar. Trump wants a lower US Dollar and if the ECB delivers on the market’s expectations today, we could see the Euro substantially lower against the Greenback and other major currencies.

Wednesday saw more weaker than expected economic data for the Euro Area with a Consumer Confidence number missing estimates along with another month of poor manufacturing figures. Traders are speculating the ECB could lower the official cash rate further into the negative with a 0.10% cut and also announced a new round of quantitative easing which is artificially printing money. Between 2012 and 2018 the ECB printed billions of Euros to buy the bonds of cash strapped countries such as Spain, Italy, Greece and Portugal in an attempt to keep interest rates low.

How low will the Euro go? It depends on how deep the stimulus program turns out to be and don’t discount a short squeeze back higher. The favourite trade right now is to be short Euro v US Dollar and this is exactly when I prefer to be out of the market and looking to trade something that is not correlated.

Will Boris allow the UK to crash out of the EU without a deal and sink the Pound?

That’s the question that many are pondering and the reality is nobody knows the answer. The new UK PM will have one heck of a job in the next 6 weeks to pull together a deal that both EU leaders and his colleagues in the UK parliament are willing to accept and the Pound is bound to remain volatile through the next few weeks.

Wednesday saw the Pound move off its lows and this was in part because traders were exiting long Euro positions ahead of the ECB’s statement today.

Be hardcore about what needs to be done in the next 6 months. You’ll blow yourself away with what you can achieve.


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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