Today’s Key Market Drivers: 30th September 2019
RBA expected to drop rates Tuesday.
80% of investment banks surveyed expect the RBA to drop the official cash rate on Tuesday when it announces its October policy statement. The AUD has continued to weaken since September 12th on stronger US Dollar demand and a stock market that is growing increasingly nervous about a number of factors.
Some of the RBA expected rate cut has been priced into the Aussie Dollar already so if the central bank does lower the official cash rate, I don’t expect a surprise impulsive move. I would expect initial weakness followed by a short squeeze rally back higher to take out those retail traders trying to trade the news and get short.
The AUD’s continued decline after Tuesday’s statement really does depend on how the stock market is trading leading up to the statement release and if the RBA gives any further forward guidance on another potential cut between now and Xmas. I would think it unlikely the RBA cuts again before Xmas and therefore the first possible rate cut in 2020 would be in February as the RBA does not meet in January.
Pound falls following Bank of England comments on interest rates.
The British Pound fell through the European trading session on Friday following comments from a BOE committee member who said lower interest rates in the UK may be needed as Brexit concerns drag on the economy. The UK has until October 31 to sort out a new Brexit deal and before then get the deal agreed too in the UK parliament, which appears to be a monumental challenge and one that cost Theresa May her leadership.
China and impeachment talks will remain headline news.
Trade talks between China and the USA as well as Donald Trump’s impeachment inquiry will likely remain headline news this week and therefore I expect safe-haven currencies and the US Dollar to remain well supported. Stocks and currencies were given no clear sign on Friday as to how they should trade early this week however my expectation is they will trade cautiously and likely to the downside.
Sit back and relax early this week.
Due to the weak lead financial markets gave on Friday and a lack of high impacting news on the final trading day of the week I am reluctant to fill a report full of financial entertainment for you this Monday. I just want to give you the facts and, in my view, we will likely have to wait until the US trading session gets going before we know the markets real mood early this week.
Sit on your hands, trade only if the strategy presents and don’t self-sabotage positions if the market moves for or against you.
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Effort is between you and you.
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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