No “new” news sends US Dollar lower.

Traders decided to sell the US Dollar post the December US Federal Reserve statement simply because the US Fed did not change its stance on monetary policy to become more hawkish on interest rates. The Fed did raise the official cash Rate in December but this was 100% priced into the value of the US Dollar and what buyers of the US Dollar were looking for was forward guidance on more interest rate hikes in 2018. Here is what the US Fed told the markets around 5am AEDT this morning.

– Raised the official cash rate by 0.25%.
– Left its previous interest rate outlook for 2018 unchanged. 3 rate hikes.
– Raised its expectations for GDP.
– Raised its expectations for inflation.
– Said unemployment would remain low.

Being this close Xmas, many investment banks and hedge funds may elect to simply wait until the new year before deciding on whether they will back the US Dollar. Donald Trump’s tax bill is still yet to be signed into law and it will be something fundamental like this that will drive the US Dollar in early 2018. Volumes will gradually begin to disappear out of financial markets next week as traders take annual leave over the Xmas period, however, history does show that when financial markets reopen for trading in the first week of January there is usually a substantial lift in volatility and volumes as new money comes for the new year.

The Pound dipped between 8am and 9am this morning but just as quickly recovered after it was revealed the UK Parliament will have a say in Brexit negotiations. Brexit will still happen but a decision on Wednesday to allow the parliament to have a say as to how deals are done was not initially part of the Brexit plans when David Cameron sent the UK to the ballot box to cast their Brexit vote in 2016. The Bank of England will be next to have its say on the short-term direction of the Pound when it releases its December statement this evening at 11.00am AEDT. If recent economic data is anything to go by I could hardly see the BOE being downbeat about the UK economy heading into 2018. This week saw inflation data beat the market’s estimates and whilst the unemployment rate did skip up to 4.3% from 4.2% weekly earnings offset this by beating economist’s expectations. The market does not expect the BOE to raise the official cash rate today from 0.5% but what the market will be keen to see is how many committee members voted for a rate hike and if Governor Mark Carney gives forward guidance in his statement on how many times and when the BOE will lift rates in 2018.

The European Central Bank will also release its December statement 45 minutes after the Bank of England so expect to see plenty of volatility on the Euro and Pound around midnight tonight. The ECB won’t adjust the official cash rate from 0% however just like the BOE the market wants to hear when the ECB will raise rates in 2018. If there is any indication the ECB will raise rates from 0% in the first quarter of 2018 then expect to see a sizeable rally on the Euro.

The Ltg Goldrock office is closed tomorrow for the 2018 LTG GoldRock Xmas Golf Classic. Stay tuned for some snaps and video clips from the event in Monday’s Goldrock Insider Report. Friday’s GoldRock Insider Report and any TIA trade alerts or updates will be sent before the first ball is struck (into the bushes). The LTG GoldRock team will be taking a break from Friday, December 22nd until Monday, 8th January. The GoldRock Insider Report, Live Trading Room, Trade Time Trades, Support Services and Daily Trading Plan updates will recommence on Monday 8th January.

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).

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The post Today’s Key Market Drivers: 14th December 2017 appeared first on LTG GoldRock.