Today’s Key Market Drivers: 3rd October 2018

“The Italians are stirring the pot again.”

The Aussie Dollar failed to fire post the RBA rate decision and statement on Tuesday even with some optimistic commentary in the statement about future wages growth. The RBA said:

Wages growth remains low, although it has picked up a little. The improvement in the economy should see some further lift in wages growth over time, although this is likely to be a gradual process.

What put a lid on any potential rally on the Aussie was the following remarks:

One continuing source of uncertainty is the outlook for household consumption. Growth in household income remains low and debt levels are high. The drought has led to difficult conditions in parts of the farm sector.

The bottom line is the RBA statement was not as positive as I expected and with stock indexes through the Asian and European trading sessions falling sharply on Tuesday the AUD fell back lower although it did recover some of those losses as US stock indexes recovered late Tuesday afternoon.

The safe haven currencies were the flavour of the day on Tuesday as Italy’s financial and political woes were again in the headlines and traders also focused on trade tensions between the US and China. One Italian lawmaker on Tuesday was suggesting Italy needs to break away from the Euro currency and bring back the Italian Lira suggesting the countries financial problems would be eased by having its own national currency. It Won’t happen! Recently the Italian budget was released showing another increase in spending for a country that is essentially broke. The widening in the Italian budget deficit has not been well received by the European Union and has given traders reason to sell down their long Euro positions.

The US Dollar and Yen were well supported on Tuesday being the market’s safe-haven plays in times of market uncertainty. Wednesday sees Australian Building Approvals, Euro Zone Retail Sales and a US private unemployment reading for the month of September. There is no high impacting data today and I suspect the Asian trading session will remain weak in a general risk-off mood which will continue to support the safe haven currencies.

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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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