Today’s Key Market Drivers: 6th September 2019
Markets cheer the news that trade talks are back on between the US and China.
The Aussie Dollar continued its charge higher on Thursday following an announcement that China and the USA would again begin trade talks in Washington in early October. The local currency was already striding higher following better than expected China manufacturing numbers on Wednesday and further goods news on the trade talk front only helped bring more buyers to the party.
According to CNBC. “Both sides agreed they should work together and take practical actions to create favourable conditions for the negotiations.”
The recent collapse of trade talks between the US and China might have been the low point in discussions with both countries now on the brink of doing some real damage if trade tariffs were to be raised further. There is a lot of water to go under the bridge but I believe the probability is cooler heads will prevail and we may see some upside in developments in coming weeks. That would be good news for those traders who are long traditional risk currencies such as the AUD, NZD and emerging markets. The stock market in Australia also stands to gain handsomely from any positive trade news between the US and China.
US private jobs report shows the US jobs market remains strong.
Two days prior to the official monthly jobs number the market receives the private jobs report that frankly is rarely ever close to the official number that is printed on the first Friday of each month. The Private ADP jobs report on Thursday said that 195K jobs were created across the USA in the month of August, far higher than the 150K the market expected. The US Dollar was volatile post the private jobs report simply because the same report downgraded its initial July report. A stronger jobs market in August is going to put a question mark on whether or not the US Fed drops the official cash rate later in the month.
A stronger US economy means consumers do not need lower interest rates and with the market 100% convinced the Fed will cut rates this month, any better than expected economic data for the US is going to see the US Dollar be sold. The greenback is also a safe haven currency, bought higher when traders are nervous and since Wednesday this week the financial markets have been in a very positive frame of mind and there has been no reason for markets to support safe havens.
Traders buy back into the Pound as political instability settles.
The British Pound has continued to climb higher as the probability of the UK crashing out of the EU without a comprehensive Brexit agreement reduces. British PM Boris Johnson has been cornered in recent days with MP’s voting down any thoughts he might be about to pull on a general election or allow the UK to leave the EU on October 31 without a Brexit deal.
In other interesting news.
JP Morgan said this week the stock market is set to rally into the year-end with US stocks out performing European stocks. The world’s largest investment bank said in a statement. “Historically, if Federal Reserve rate cuts are not followed by a recession, the next three, six and 12 months are strong for equities.”
When someone tells you, something can’t be done. Keep in mind their view is a reflection of their limitations, not yours.
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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