Today’s Key Market Drivers: 6th March 2019
Euro and Swiss Franc fall as more strong US economic data is released.
Italian GDP and Swiss Inflation data missed estimates on Tuesday which put both the Euro and Swiss Franc on the back foot through the European and US trading sessions. Euro Zone Retail sales did come in slightly higher but it wasn’t enough to stop the Euro’s slide. Couple this together with more strong US economic data and the Euro and Swiss Franc lost considerable ground against the greenback.
US Home Sales rose 3.7% in December which smashed economists’ estimates of -8.7%. Non-ISM Manufacturing data also impressed with a reading of 59.7 in the month of February compared to the expected 57.3. When it comes to manufacturing data numbers anything over 50 means expansion and anything under 50 means contraction.
US economic data continues to impress which leads me to believe the US Fed is going to raise rates in July or August if this trend continues and if this Friday’s official US jobs report impresses again then I would expect big money traders are going to turn US stock indexes over and sell them off in coming weeks. It will also help drive the US Dollar even higher.
RBA statement fails to move the Aussie Dollar.
The RBA was more upbeat than downbeat in their assessment of the local economy when it released its February statement on Tuesday. I hosted a live Facebook feed on the Train with Andrew page and read the statement for everyone moments after it was released. If you haven’t seen the video you can watch it by going to @trawinwithABnow. (those of you that don’t use social media you are missing some great content that I share and urge you to follow the Train With Andrew pages on either Facebook, Twitter, Instagram or YouTube)
After acknowledging at the National Press Club in February a rate cut was possible Graham Lowe made no mention of it in Tuesday’s statement which I must admit was a surprise. Whilst the statement was more upbeat than many expected traders were not convinced there was any forward guidance on interest rates to grab onto and therefore the volatility on the AUD was muted post the release.
Governor Lowe is speaking this morning at 9.00am at a breakfast in Sydney so if you see some volatility between 9.00am and 10.00am you will know he has mentioned something traders are using as forward guidance on what the RBA will do next.
Did Aussie growth fall in the 4th quarter of 2018?
More and more economists are suggesting Australia is heading for tough times and today at 11.30am AEST we will find out if Australia grew at a slower pace in the final quarter of 2018. Housing prices seem to be in free fall in Sydney and Melbourne and the negative wealth effect this will create will hurt the economy in time. It is my expectation we will see a recession in Australia in 2020 and potentially a significant global economic slowdown.
We already know China is slowing and the Chinese Premier speaking in Beijing on Tuesday said the Chinese Government expects to sustain 6% growth over the coming 12 months. This is a small decline from the current 6.6% and still leaves many economists scratching their heads and pondering just how bogus the numbers really are. China somehow continues to spend up big on infrastructure with sky scraping ghost towns dotted across the country sitting and waiting for occupants.
What is a negative wealth effect, what causes it and why should you care?
Today on the Train with Andrew social media channels I will be posting a video on what causes a negative wealth effect and why I want you to be informed about how a negative wealth effect will impact Australia. History shows negative wealth effects can have serious and profound impacts on society and economies and you should not bury your head in the sand and ignore these important lessons.
Don’t be busy, be productive. 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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