Today’s Key Market Drivers: 8th July 2019
Official US jobs data beats market estimates.
Friday’s official US jobs figures beat the markets estimates coming in at 224,000 vs the expected 165,000. Stocks pulled back on the data release and the US Dollar staged a mild rally as traders saw the 224,000 jobs being created as potentially a signal to the Fed that they should hold off dropping the official cash rate on July 31st.
The market has priced in a 100% chance the Fed cuts the official cash rate by 0.25% when it meets at the end of the month and any high impacting positive US economic data that beats the market’s estimate will likely see the US Dollar rally and stocks fall in the very short term.
Powell to advise of the Fed’s intentions on Wednesday and Thursday.
US Federal Reserve Chairman Jerome Powell is set to speak at two separate Senate hearings in Washington DC on Wednesday and Thursday and traders will be hanging on his every word. Trump is keen as mustard to keep the US Dollar on the back foot and stock market prices moving higher so he will want to hear the Fed is still on track to likely drop rates at the end of the month. My expectation is the US Fed Chairman will use his two addresses in Washington DC to remind the market that the probability is the Central Bank will lower rates but he will also remind the market plenty of economic data is due before July 31st including inflation this week.
The reason why I believe the US Fed Chairman will confirm a rate cut is coming is that the Fed believes inflation is going lower in the USA and if a Central Bank thinks inflation is going lower then they are highly likely going to lower the official interest rate at some point.
Bank of Canada’s July statement could sink the USD v CAD.
The Bank of Canada could send the USD v CAD even further lower later this week when it releases what I think will be a more hawkish view of its economy. Canada is ticking along just fine at present and whilst they are not blowing the lights out and need a rate hike, I don’t think the BOC is going to deliver a statement that hints that interest rate cuts may be needed.
If the US Fed Chairman has already weakened the US Dollar by late in the week the BOC could give the USD v CAD another serious kick lower if it issues an upbeat assessment of the Canadian economy. It won’t be over the top positive but I would be willing to bet its more positive than negative and the probability is any rally on the USD v CAD will be seen as an opportunity by professional traders to reload and get short USD v CAD.
Will Australia have a recession?
How bad will it get and when will it occur? Click on today’s Sunrise link for a different kind of Sunrise video. I share with you my views on the Australian economy, the stock market, the housing market and the Aussie Dollar. I am keen to hear your thoughts so please post in the comments section of the video after you’ve watched it.
Have a great week and please make your risk management your #1 priority.
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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