Today’s Key Market Drivers: 4th March 2019

Canadian GDP sends the Caddie to new lows.


Friday’s weaker then expected fourth quarter GDP numbers has put the Canadian Dollar on the back foot leading into a week that could see it finish a lot lower than where it closed on Friday. 4th quarter GDP missed estimates by 0.6% coming in at just 0.4%. It was December’s negative growth number that weighed on the quarterly number with a negative .10%. Economists have been expecting to see economic data numbers to show the global economy slowed considerably in the final quarter of last year and Canada’s GDP numbers on Friday may have started a new GDP trend.

Canadian CPI and GDP have recently come in weaker than expected and this goes along with the Bank of Canada’s view the economy is not strong enough to withstand a rate hike as inflation will likely weaken throughout the year. The BOC will issue its March statement on Thursday morning and I just can’t see given the run of recent economic data Governor Poloz saying anything positive to give traders reason to buy the Caddie.

Ditto for the Aussie Dollar.

The RBA will issue its March statement on Tuesday and following Governor Lowe’s comments at the National Press Club a day after the last statement the market will be expecting the RBA committee to confirm a rate cut in future months could be on the cards. More and more respected economists are suggesting Australia will see two rate cuts this year with the negative wealth effect from a slide in house prices weighing on the economy.

Wednesday sees the latest 4th quarter GDP figures for 2018 and many leading economists are expecting the Aussie economy slowed considerably in the last quarter. Traders are expecting GDP annualised to come in at 2.7% so if the number prints either side of 2.7% you can expect to see plenty of volatility.

From a fundamental perspective, my expectation is we will likely see the AUD and CAD lower by the end of this week.

Volatility is a trader’s best friend.


As a trader you simply can’t make money if there is no volatility and this week there is going to be plenty. Three major Central Bank reports, Australian GDP and China CPI data, Canadian Unemployment numbers and add to this official US jobs figures and it’s going to be a week packed full of ups and downs across currency markets.

Having a systematic trading process that can be repeated again and again and again is so important. Millions of dollars in the FX market will be lost this week by retail traders who will attempt to chase the price and trade emotionally without any logical or systematic trading plan.

Most traders are far more emotional than they are logical and overreact to short term spikes. Professional money (investment banks and hedge funds) detach their emotion and trade systematically and this is exactly the success principle you need to learn.

Trump says he wants a lower US Dollar.

Donald Trump commented at a Conservative Political Action Conference that whilst he respected the US Fed’s rate hikes, he worries about how strong the US Dollar will become which could hurt the US economy.

Trump said during his speech “America is now booming like never before. Other countries are doing very poorly. That makes it even harder for us to be successful. Plus, we have a gentleman that likes raising interest rates in the Fed, we have a gentleman that loves quantitative tightening in the Fed. We have a gentleman that likes a very strong dollar in the Fed. So, with all of those things — we want a strong dollar but let’s be reasonable — with all of that we’re doing great. Can you imagine if we left interest rates where they were? If we didn’t do quantitative tightening? I want a dollar that’s great for our country but not a dollar that’s prohibitive for us to be doing business with other countries.”

China says nobody asked them to change.

After a small loss in January, I managed to remain patient through February and picked up 8.5% making the financial year to date 25.4%. I entered just two trades in February however one trade entered on the 30th January GBPNZD did close out profitable in February however I did not apply that positive result to the February returns with only the two trades entered and exited in February contributing to the February result.

Know what your weaknesses are. If you don’t the market will find them. 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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