Today’s Key Market Drivers: 4th December 2018
“US Dollar remains under pressure as AUD and NZD make new December highs.”
A far stronger than expected US Manufacturing number helped send the US Dollar back higher through the US trading session Monday after the greenback fell sharply at the opening of Asian markets following the news out of the G20 Summit that the US and China would not continue to lift trade tariffs after January 1st. US Manufacturing activity surged in the month of November with a reading of 59.3 vs the 57.5 economists expected. A reading above 50 means expansion and a reading below 50 means contraction so a 59.3 reading was another valid reason for the US Fed to lift the cash rate one more time in December as planned.
For a slight change of pace, it was the Asian trading session that saw currencies make their biggest moves on Monday with the Aussie and Kiwi Dollars both gapping up and continuing to strengthen throughout the trading day. The Dow Jones US stock index was up over 500 points in the pre-market but those gains were erased through the Wall Street trading session and both the Aussie and Kiwi Dollars pulled back after the US Manufacturing numbers were released. Both currencies still remain well above their Friday closing prices with the “gap traders” no doubt eager to see if they can get some sellers to support a move back to Friday’s closing prices and close the gaps. The Canadian Dollar was also on the March through the Asian trading session with the USD v CAD falling below some key technical levels which I discuss in today’s video report. Against all of its major rivals and emerging market currencies, the US Dollar erased 50% of the losses it incurred through the Asian trading session, however, still remains vulnerable and my expectation is the buyers for the US Dollar will continue to fade in the months ahead.
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The Euro did gain against the US Dollar on Monday although the buying activity was not as strong on the Euro as it was for emerging market currencies. I continue to maintain my pending buy stop order for the EUR v USD. The Pound weakened under the continued weight of Brexit negotiations making a new 4-month low against the greenback of 1.2698. The latest UK Manufacturing numbers were released on Monday which showed manufacturing activity increased to 53.1 which was better than the 51.7 leading economists expected. If they can get a Brexit deal done the market likes the Pound will see substantially higher levels as the UK economy is doing just fine and the BOE is ready to lift interest rates again.
Keep a watchful eye on the Aussie Dollar today with 3rd quarter current account figures set for release at 11.30am AEDT and then the RBA policy statement at 2.30pm. Bank of England Governor Mark Carney is also addressing the UK Parliament and any time a Central Bank chief is speaking markets will be eagerly listening.
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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