Today’s Key Market Drivers: 4th June 2019

Market expects RBA to cut rates today.


The financial markets have all but priced in a rate cut when the RBA announces its June statement at 2.30pm AEST today. The extent of the volatility higher or lower on the AUD post the statement will be dependent on two things.

  1. If they cut what do they say in the statement about future rate cuts?
  2. If they don’t cut is it because they want more data?

The biggest reaction on the AUD will be if they don’t cut today. Mortgage rates have already been dropped by many lenders in anticipation of a cut so if it’s not today it will most certainly be in July.

US Dollar sinks as 10 Year Yield heads further lower.


The US Dollar has continued to lose ground early this week as the 10 Year US Treasury Yields falls to 2.11%. Traders are continuing to price in their expectation of lower interest rates before the end of 2019 as global trade tensions remain the major theme and threat. Donald Trump last week threatened Mexico with 5% tariffs if they didn’t change their immigration policy and China is continuing to ramp up its negative rhetoric saying it won’t be bullied into signing a trade deal.

The trade dispute between the US and China isn’t likely going to be resolved any time soon and it is my view financial markets will go lower in the coming weeks.

Morgan Stanley says the US is headed for a recession within 9 months.


According to Bloomberg, if the US imposes 25% tariffs on an additional $300 billion of Chinese exports and Beijing retaliates Morgan Stanley says the US is headed for a recession within 9 months. If they are right the Fed is going to need to lower interest rates and the current trend on the US Dollar could continue for some time.

Staying resilient.


My near 4 months run without a losing trade has come to an end and I once again felt that uncomfortable feeling of what it feels like to lose money to the market. But I don’t view it as lost money. I view it as a loan I have given to the market and if I am resilient and disciplined enough, I will get it back with plenty of interest.

Losing is part of making money in the markets. You cannot make money without having losing trades from time to time but many traders try to learn to trade by trying to avoid losses. Embrace them, learn from them and do whatever it takes to ensure your execution and risk management are correct. If they are then there should be no issue in staying resilient over time and continuing to step up for every trade that meets your plan.

What’s on the agenda in Europe and the US this Tuesday.


The latest Euro Zone inflation figures will be closely eyed along with the Euro Areas latest Unemployment numbers. The US trading session has Factory Orders and Durable Goods data and a speech from Jerome Powell in Chicago where he will be discussing US policy. The big theme right now is fear of a US recession and Jerome Powell’s policy address will overshadow the Euro Zone data.

Trump is in the UK for a 3-day visit.


Focus on two things when trading. Lose small, win bigger. End of story!

AB

 

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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