Today’s Key Market Drivers: 30th January 2019

Aussie Inflation data will be important today.

Official quarterly inflation data will be important for the Aussie Dollar when released today at 11.30am AEDT. The market expects a lower reading of 1.7% year on year or just 0.4% for the final quarter of 2018. If the inflation reading is weaker than expected or confirms inflation is slowing I would expect to see the Aussie Dollar sold off on the news. Inflation is a key barometer for the Reserve Bank of Australia to watch and falling inflation only means the RBA will be under pressure to lower the official cash rate later in 2019.

Unlike many other countries that release inflation data monthly, Australian inflation data is only released quarterly and therefore tends to have a bigger impact on the AUD if out of line with expectation.

Pound dips after Brexit extension vote.

The UK is set to leave the EU on March 29th and Tuesday saw an amendment to extend the date to December 31st defeated in parliament. It appears that UK politicians want resolution by March 29th and are not interested in any extensions. Besides, the EU would also need to approve any extension date and it has strongly suggested in late 2018 that is it not interested in delaying the process of the UK leaving the EU beyond March 29.

Theresa May will now return to Brussels in an attempt to get support for her adjusted Brexit plans as the Pound slips from its recent highs.

US Fed statement to hold the markets attention in coming days.

The US Dollar will likely remain range bound until the US Fed releases its statement on Thursday morning at 5.00am AEDT and traders get to hear from Fed Chairman Powell in his post-statement press conference. Traders are expecting the Fed to confirm that it will take a wait and see approach in 2019 to further interest rate increases and this is why the US Dollar has been weakening recently against many of its major rivals, particularly the Euro and Pound.

Whilst I do expect the Fed to keep rates on hold in January, I am willing to take an opposing view to most economists and suggest the Fed will confirm what it told the market in December and that is it will look to lift interest rates in 2019 but any rate hikes will be data dependent. Meaning the Fed will not lift rates if the economy continues to weaken but if stocks rally and the economy outperforms the Fed will hike.

US Consumer Confidence is falling as March 1st trade date looms.

Tuesday saw the latest US Consumer Confidence numbers released and it showed the world’s most resilient economy is beginning to lose some confidence as we head into 2019. Consumer Confidence figures for January failed to meet the market’s expectations falling for one of the first times in over 12 months.

The US and China agreed in December to a truce until March 1st saying they would not continue to increase tariffs on one another and would attempt to strike a trade deal. No trade deal has been signed and Tuesday saw the US Department of Justice file criminal charges against the CFO of China’s tech giant Huawei. Trump was recently quoted as saying he was “moderately optimistic” that a trade deal would be reached.

Apple is one of the US stock market’s darlings and its share price has been hit for six in recent months as US stock markets retreated and the China / US trade war intensified. Apple’s fourth-quarter earnings barely met estimates when released after the market closed on Tuesday with the biggest surprise being a 15% fall in its iPhone sales. The share price, however, rose 6% in aftermarket trading and I continue to remind investors that Apple is a juggernaut company and every investor, in my opinion, should consider owning Apple stock.

Wanna be happy? Have zero expectations of others. 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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