Today’s Key Market Drivers – 3rd October 2017

The US Dollar and US stock indexes rallied on Monday with the Dow Jones closing at a new all-time high with traders shrugging off the lone wolf attack that has so far killed 59, the worst mass shooting in US history. The latest US ISM Manufacturing data, when released on Monday, surged to a 13 year high and continues to support the US Fed’s theory that the economy is likely ready to withstand higher interest rates. Donald Trump, after 10 months as President, appears closer to getting his tax reforms taken seriously after outlining the finer details last week. US Treasury Yields are also on the rise which is a clear sign that money is coming for the US Dollar and will likely help support the greenback leading into Xmas. The Euro, on the other hand, continues to struggle with Spain’s Catalonia regional independence vote giving investors more reason to sell the Euro in the short term. It is reported that approximately 90% of those who voted in the unofficial ballot voted for Catalonian to break away from Spain. Whilst this is a significant blow for Spain’s political leaders it is unlikely to impact the way in which the ECB treats its monetary policy decisions in coming months. The ECB has recently announced that it will likely reduce its stimulus program in October, which traders had been pricing in for months sending the Euro higher all throughout 2017. For the Euro to turn on its heels and head back higher the ECB is going to need to provide the market with some new positive news.

The RBA is widely tipped to leave the official cash rate on hold at 1.5% when it releases its latest policy statement at 2.30pm today. The market expects the next move from the RBA will be up and this will likely happen before the middle of 2018. Any forward guidance from the statement today will see the AUD react with increased volatility.

The economic calendar shows no high impacting news scheduled for today however at 2.45am AEDT Wednesday morning US Fed Chair Janet Yellen is delivering an address on US Inflation, Uncertainty and the US economy and I expect her address to have an impact on financial markets. New Zealand Trade Balance data that was released this morning came in weaker than expected and pushed the Kiwi Dollar a little lower. The RBNZ announces its monthly interest rate decision on Thursday at 6.00am AEDT as well as releasing its latest statement on the state of the economy and I expect increased volatility on the Kiwi Dollar at this time. Please now take a moment to watch both trade video updates.

 

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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