Today’s Key Market Drivers: 8th October 2018
“Traders continue to sell down stocks and buying fixed income bonds.”
Today is Columbus Day in the USA which is a Federal Holiday so US financial markets will lack some liquidity but Asian and European trading sessions will trade as per normal and start on the back foot. European and US markets were bearish on Friday as the US 10 Year Treasury Yield touched 2.3% and traders continue to move money from stocks into fixed income. The US unemployment rate is now at a 49 year low of 3.7% even after the US jobs number for September disappointed at just 134,000. What helped support the US Dollar was the revised August job creation numbers which were adjusted to 270,000 and the continued strong wages growth across the USA. Ordinarily, we would have seen the US Dollar weaken on the back of such a “miss” on the jobs number but with the US 10 Year Treasury Yield continuing to rise the AUD v USD and NZD v USD continued to fall.
Today marks a new week and I’m eager to see if we see a third consecutive day of selling pressure across global stock markets. We won’t likely know until US markets open on Tuesday what mood Wall Street traders are in but if Monday trades bearish as I am anticipating it will the safe haven currencies will continue to likely rise in value. When stocks pull back the Yen rises and even though the US Dollar is a safe haven currency in itself it won’t be able to avoid weakening against the Yen if stocks continue to correct this week.
The economic calendar is bare of any significant high impacting news until later in the week although there is plenty of low and medium impacting news that always has the potential to create some spikes if the data is out of line with expectations.
I noted the Pound was well supported on Friday, however, the currency is still suffering from Brexit concerns with recent reports showing the UK and European Union leaders are no closer to resolving immigration and trade deals. My expectation was a deal would be done before Xmas with the UK set to officially leave the EU on March 19th next year. If a deal looks imminent then I won’t hesitate to buy back into the Pound as my long-term view is that once the issue of Brexit is dealt with the upside for the Pound in the coming 2 years could be significant. Both the Bank of England and European Central Bank want to be in a tightening cycle with interest rates and the longer the UK and Europe leave rates at historically low levels the bigger the danger is they have no wiggle room if global economic conditions took a turn for the worse.
I thought I would share with you my journey for the past 9 months without Alcohol and the impact it has had on my life. I recorded a video on Saturday morning that you can view by clicking on the link below.
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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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