Today’s Key Market Drivers: 31st October 2018

“Aussie inflation data will be important for the short term direction of the AUD today.””

The Euro was among the biggest losers on Tuesday following weaker than expected economic data numbers. Out of the 5 key economic data numbers released German CPI was the only data number that beat economists’ expectations. The Yen fell against all its major rivals except the Pound and Euro which continue to struggle under the weight of political uncertainty with Angela Merkel to step down as leader of Germany, Brexit, Italy’s budget and now weaker than expected economic data numbers across the Euro Area. Ratings agency Standard and Poor’s issued a statement on Tuesday suggesting that if a Brexit deal was not done the UK would slip into a recession and investors should not discount this probability. The Pound was quickly sold off lower on the news.

The USD v JPY was a stand out performer as the Yen weakened and US stock indexes rallied for just the 4th day out of the last 20 trading days. European markets kicked off higher but failed to maintain any momentum after the news I mentioned above filtered through Canary Wharf trading rooms in London. US economic data on the other hand continues to beat market estimates with Consumer Confidence showing strong gains over the past month and this helped spur the US Dollar higher. The 10 Year US Treasury Yield continued to tick higher on Tuesday touching 3.117% up from a low of 3.06% on Monday and if the Yield continues back towards its recent high of 3.248% demand for US Dollars is going to increase and likely push up the value of the greenback.

3rd Quarter inflation data for Australia is due at 11.30am AEST today and the inflation data has the potential to move the AUD more than 1 cent and unlike many countries that release official inflation figures monthly, Australia only releases official inflation data quarterly. Economists are expecting 3rd quarter inflation to have risen 1.9% Year on Year so a reading either side of this will see the AUD move sharply. China PMI data may also impact the AUD when released at noon but it will not likely have the same influence as the inflation number.

The Bank of Japan issues its October policy statement today and traders are not expecting any change from Governor Kuroda. The BOJ will continue to print Yen and pump it into the economy and keep official interest rates below zero. Euro Zone inflation data is set for release today and I can’t see this giving traders any reason to buy back into the Euro. Canadian GDP will keep the CAD busy and I suspect will move it higher and the unofficial ADP US jobs number is always a talking point 48 hours before the official US Labor Department figures.

Look after your risk management and I will see you at 7.30pm AEST for my Facebook Live European Market Open update. You can join me by logging onto the TrainwithAndrew Facebook page by searching for TrainwithAndrew or clicking on @trainwithABnow

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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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