Today’s Key Market Drivers: 25th June 2019

Market’s little changed on Monday.


With very little in the way of economic data on Monday, financial markets remained mixed with traders focusing their attention on the upcoming G20 summit in Osaka, Japan later in the week. The Presidents’ of the USA and China will meet on the sidelines of the summit in a bid to kick start new trade negotiations after both countries heaped trade sanctions on one another in 2019.

I don’t see any reason why stocks won’t continue to rally as they will continue to benefit from the pricing in of lower interest rates in the USA and the probability is the US and China will come to some trade agreement down the track. Both outcomes, if they happen, will be good for stocks and would keep downward pressure on the Yen if a trade deal is done.

Hedge Funds pair long US Dollar positions as Fed gears up to cut rates.


Hedge Funds are cutting their bets on the US Dollar rallying as the Fed gears up to drop interest rates in the US in coming months. Unless the economic calendar says otherwise, futures markets are pricing in a 100% probability the Fed cuts the official cash rate in July. The only likely reason they won’t cut is if the economic data improves between now and the next Fed meeting which isn’t until mid-July.

Later this week we will get the latest US Consumer Confidence number, US Fed Chairman Jerome Powell is speaking on the economy, US Durable Goods and Trade Balance numbers are due along with US GDP and Personal Consumption Expenditure. Plenty of US data to give the market a good guide as to whether or not the economy is growing or contracting.

Trump threatens Iran with more sanctions.


Whilst financial markets were mixed on Monday President Trump did give traders a reason to stay watchful as he said the US is considering tougher sanctions on Iran. The US pulled back from launching an air strike on Iran after one of its unmanned drones was shot down by an Iranian missile last week. If there is one thing that would get stock markets nervous and see the Yen rally is an escalation in tensions between the US and Iran. A military conflict would see safe-haven assets benefit very quickly.

You are an FX trader but I prefer you to have the attitude of an investor.


What I mean by the title is that most people who trade FX trade like a punter at a casino looking for a quick buck and some fast money. Trading implies entering and exiting the market over shorter time periods than investing but to trade successfully you need to have the mindset of an investor.

  • Patience.
  • A long-term approach to success.
  • A realistic attitude about your return on investment desires.

The average balanced managed fund in Australia has delivered about 8% per annum over the past 30 years. Your immediate goal in my mind is to achieve better than 8% and if you can achieve this looking after your own money over a 12-month period then you have initially won the battle. Winning the war, however, takes a longer-term approach and a realistic goal in my mind for investors is to make +20% per annum on a large sum of money. This can realistically be achieved by private investors provided they don’t fall into the trap of becoming a punter and they remain patient, manage risk appropriately and remain realistic about their outcomes.

Keep in mind the facts. A $10,000 investment compounded at 4% per month is $1 million dollars over 10 years. Just imagine what sort of income you could be drawing down on in your retirement if you focus longer term and set realistic goals for your trading (investing). I think most people would be very happy if they could just make it halfway with $500,000. Very achievable in my opinion.


An attitude of whatever it takes is impossible to stop.

AB

 

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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