Today’s Key Market Drivers – 3rd August 2017

The Euro rallied strongly again on Wednesday and it appears there is no reason to stop pricing in the likelihood of less stimulus and higher interest rates at the European Central Bank in the coming 12 months. Traders have bailed on the US Dollar in favor of the Euro as the White House remains in chaos and Trump’s economic policy agenda remains in limbo. 8 months into his Presidency and Trump has talked a lot, sacked a lot and Tweeted more times than we care to try and follow but in reality, he has got very little done and the market has turned its back on believing he’ll deliver on his policy agenda. Yes, the stock market continues to make all time highs but that’s got nothing to do with Trump and has everything to do with what’s been building over the past 3 or 4 years well before he came to office. Will the US Dollar rise again in 2017? Expect the unexpected is what I say and with the US Fed likely to announce its plans to sell down its trillion dollar balance sheet before Xmas, when it does the announcement has the potential to drive up US Treasury Yields, which would likely push the US Dollar back higher. The Euro is the overcrowded trade right now and the US Dollar is the trade that nobody wants. What is a top Warren Buffett phrase? “Buy when everyone else is fearful and selling and sell when everyone else is greedy and buying.” The tide will turn for the US Dollar but it’s going to need a king tide to get the momentum moving back higher and the Fed balance sheet announcement could be when the king tide returns.

Looking ahead today the Aussie Dollar will need to get over the latest Trade Balance numbers at 11.30am AEST and China’s Caixin PMI number can also be a mover of the local currency if out of line with expectation. It’s due just 15 minutes after the Trade Balance figures at 11.45am. The Bank of England will be the focus of the European trading session and if recent buying activity is anything to go by traders have been pricing in a positive statement from the BOE. The BOE statement is released at 9.00pm AEST today. The Private ADP US jobs report on Wednesday failed to meet the market’s expectations suggesting 178,000 jobs were created in the private sector in July which was less than the 190,000 economists expected.

 

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 key-note 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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