Today’s Key Market Drivers – 4th September 2017

The Yen and Swiss Franc have both opened substantially higher this morning after tensions between North Korea and the United States have ratcheted up once again after the rogue nation supposedly test fired an atomic bomb on Sunday around 1.30pm AEST. Donald Trump when asked on his way out of church on Sunday if the USA would take military action Trump replied saying “We’ll see”. Trump’s top military general said in a press conference on the lawns of the White House later Sunday afternoon the USA has the ability to defend itself and its allies and its commitments amongst its allies is iron clad. He went on to say any attack against the USA or its allies would be met with a massive military response both effective and overwhelming.

In more subdued news the official US jobs number released on Friday created significant volatility on currency and stock index markets with the usual US Dollar sell off and then recovery rally when we see a weaker than expected monthly jobs report. The US Labour Department says only 158,000 jobs were created in the month of August with the official unemployment rate rising by one tick to 4.4%. The US Dollar initially fell on the weaker than expected jobs number but subsequently rallied into the closing bell on Wall Street, which pushed stock indexes higher and forced the safe haven Yen back lower. Even with the lower than expected jobs numbers for August some traders are not discounting entirely the US Fed may raise the official cash rate again before Xmas but I think this is unlikely unless there is an uptick in US inflation.

There is no high impacting news scheduled for Monday, however, Tuesday sees the Reserve Bank of Australia’s latest monetary policy statement and although there will not be a change to the official cash rate of 1.5% traders will be eager to read the statement to see if there is any forward guidance on interest rates. The Aussie Dollar v US Dollar is threatening to once again break above the 0.80c level and with the RBA’s statement on Tuesday and 2 nd quarter GDP figures due Wednesday there is every chance we could see 0.8066 which was touched on the 27th July breached and a new yearly high created. If the military action did happen with North Korea the likely initial reaction on the AUD v USD would be for it to fall in value. You can see the AUD v USD weekly chart below with the 200 EMA in red. Price has touched and has not been able to close above the 200 EMA in each of the past 7 weeks. If the AUD v USD can close consecutive weekly candles above the 200 EMA on the weekly chart it would be the first time the AUD v USD has done this since May 2009 when the local currency went on to rally eventually reaching a high of 1.1080 in July 2011. The last time the AUD v USD was above the 200 EMA on the weekly chart was in May 2013.

The week ahead sees plenty of high impacting news with the Reserve Bank of Australia, Bank of Canada and the European Central Bank all releasing their latest monetary policy statements. Of course, the market’s attention will be on North Korea and with the rogue nation seemingly increasing the stakes with every new test I will be keen to see if markets once again shrug off Sunday’s atomic bomb test.


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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