Today’s Key Market Drivers – 7th August 2017

US Dollar bulls finally had something to cheer about on Friday with a better than expected July jobs figure. According to the Labor Department, the US economy added 209,000 jobs in the month of July, which was around 26,000 more than leading economists expected and well more than the private ADP report suggested. The National Economic Council’s Director Gary Cohn also contributed to the US Dollar’s rally on Friday when he said the US corporate tax rate should be closer to 24%, not 35%. The stronger than expected July jobs figures boosted expectations of a December rate increase from the US Federal Reserve back to 50%.

I would be careful trying to buy these lows on the US Dollar. Take a look at all the major US Dollar crosses and you will see other than the USD v CAD the US Dollar is still stair stepping to the downside without any major breach in price. Certainly, it is off its lows however the stair stepping formation clearly seen on the 4-hour chart is not broken against all the majors. I did mention late last week being short the US Dollar and long the Euro was an overcrowded trade but until the stair stepping is clearly reversed then any long position on the US Dollar right now is still a higher risk trade in my book. Just take a look at your 4-hour US Dollar crosses right now.

Looking ahead to this week the only major Central Bank reporting is the RBNZ on Thursday. Currently, the market is not expecting any movement in the official cash rate this month, however, Graham Wheeler has said in recent months the RBNZ may need to lower the cash rate to assist with inflation, which is well below trend. Today at 1.00pm AEST the RBNZ will release its 2 Year Inflation Expectation (3Q) Report. This report inflation today will likely give traders a better understanding of what the RBNZ statement on monetary policy will say on Thursday so expect to see increased volatility on the Kiwi Dollar at 1.00pm AEST today. I hardly think the RBNZ will ignore the recent yearly inflation report that came in below the markets expectations and today’s report will all be about what sort of inflation expectation the RBNZ has for the coming 12 months. If it’s low for longer then the Kiwi Dollar is likely going to be sold off.

 

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).

If you would like to speak to one of our Senior Client Advisors regarding the relative client opportunities offered at LTG GoldRock and how you can follow along with our Professional traders each day in our live trading room please contact us today or you can register for one of our a live coaching and trading webinars by clicking here.