Today’s Key Market Drivers: 26th October 2018

“Join me today for Friday Live at 3pm AEDT.”

Join me today for Friday Live at 3.00pm AEST (Sydney time). Here is the access link and will also be available across the social media channels of TrainWithAndrew.

In Friday Live today.

  • Why I think stocks markets are still going to go lower and drive up the Yen and safe haven assets.
  • What did the European Central Bank say on Thursday and where is the Euro set to go next?
  • What technical levels you should be watching in FX markets next week.
  • Why so many traders can’t control their emotions when trading.

The European Central Bank as expected kept its interest rate steady at 0% when it released its October statement on Thursday. This gave traders something to ponder saying it expected inflation to pick up in the last quarter of 2018. It did not give any specific forward guidance on when it may raise the official interest rate from 0% but most traders don’t expect the ECB to move on rates until mid to late 2019. Traders won’t wait for the rate hike before buying the Euro, all they need to hear is that the ECB is looking to raise rates in future months and that will be enough to swing the trend back higher. The ECB President’s comments on Thursday with respect to inflation were not enough to see traders buy back into the Euro and it fell sharply against the US Dollar in the hours following. I do not expect the Euro to rally strongly until the ECB gives a clearer picture on when it will begin to raise rates and Italy fixes its budget issues. Whilst the ECB will stop artificially printing money to support European bond markets in December this was priced into the Euro months ago. Unless the US Dollar weakens the Euro is likely going to continue to drift lower as headwinds surrounding Italy’s budget and Brexit continue to stand in its way. The European Commission on Thursday rejected Italy’s latest 2019 budget proposal and this is what weighed heavily on the Euro through the European and US trading sessions.

Stock indexes through the US trading session rebounded and this saw the Yen weaken but as I point out in my daily video update the rally back higher did not erase all of yesterday’s losses and the major stock indexes I believe have not seen their lows. The fundamental facts have not changed and the reason for the sell-off on Wednesday did not disappear on Thursday. Interest rates in the USA are rising, company earnings will be impacted in coming quarters and the US economy won’t likely continue to improve at the same pace it has in the past two years. In fact, today we will get the latest US growth numbers when they are released at 11.30pm AEST and the market is expecting GDP to have slowed to 3.3% in the third quarter down from 4.2% in the second quarter. I still hold the view stock indexes will move back lower to their 2018 lows before Xmas or early in 2019.

Any trade updates throughout the day will be sent via Trade Time. You can also follow my daily updates on Facebook, Twitter, Instagram by searching for TrainwithAndrew. Make sure you subscribe to the Andrew Barnett YouTube channel after watching today’s Sunrise video below.

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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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