Today’s Key Market Drivers: 3rd December 2018

“The G20 summit proved to be positive for both China and the USA.”

The G20 summit in Argentina was an eventful get together with the biggest news being the truce between the US and China over their trade war which has seen both countries continue to slap trade tariffs on each other’s imports. Trump has hailed the deal as one of the largest deals ever made with both countries agreeing not to impose further trade tariffs beyond January 1st. I am frankly unsure how the deal will be viewed by the market in coming days as arguably it’s a good deal for China and the USA. In my Sunday PreMarket Prep video, I mentioned a halt to the trade tariffs may be seen as a good news story for China with its currency suffering in recent months and this may see a rise in the AUD and NZD. On the other side of the coin, it’s also a good deal for the US economy with China likely to buy more US agriculture products and other US goods and services.

The RBA will announce its last policy statement for 2018 on Tuesday with traders expecting the Central Bank to leave the official cash rate on hold at 1.5%. It’s going to be a busy week for the Aussie Dollar as Wednesday sees 3rd quarter GDP figures released less than 24 hours after the RBA statement. My expectation is the RBA under the current economic conditions will likely raise the official cash rate by mid-2019 and when they eventually hint at this in a future policy statement the Aussie Dollar will rally strongly. It is unlikely the RBA will want to give too much away on when it would like to raise the official interest rate as this would only fuel an unwelcomed rally on the Aussie Dollar and hurt local exports, which have been enjoying a lower AUD over the past 4 or 5 years. With the US Fed now going to slow the pace at which its going to raise rates in the coming 12 months I expect the AUD v USD to be back above 0.80c by this time next year. The NZD v USD would also tag along for the ride and even though the RBNZ has said it won’t be raising rates until 2020 I believe they will also raise rates in the second half of 2019 unless the global economy takes a turn for the worse.

Aussie Building Approvals data is scheduled for release at 11.30 AEDT and 15 minutes later China’s latest manufacturing numbers so expect to see some movement on the local currency just before lunch. Swiss, UK, Canadian and US manufacturing numbers are also due for release today and whilst never really major market movers if any are out of line with the markets expectation you will see increased volatility. Today’s theme will be centered around the deal struck between China and the USA at the G20 summit and how the market reacts to that news.

Oil prices fell 22% in November the biggest monthly decline in over a decade according to CNBC. The price of US Crude Oil closed at US $50.93 a barrel on Friday. I wonder if petrol prices will fall a similar percentage as we head into Xmas. I won’t hold my breath.

If you missed Friday Live here is the link.

Click on the below image to play today’s Sunrise video.

 

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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