Market news & insights

All eyes will be on the Jackson Hole in Wyoming this week, where the annual Jackson Hole Economic Symposium will be held by the Federal Reserve Bank of Kansas City. This years symposium will take place from 23rd until the 25th of August and the topic for the upcoming event will be “Changing Market Structure and Implications for Monetary Policy”. About Jackson Hole Economic Symposium The key feature of the meeting is the discussion that takes place between the participants.

Because of the high-profile participants and the topics that are discussed in the event, there is a considerable interest in the symposium, however, to help foster the open discussion that is critical to the event, the attendance is very limited. The event receives a large number of requests from media agencies worldwide, however, the press presence is also limited to a group that is selected to provide transparency to the symposium. Importance of the event The symposium is closely followed by financial markets participants around the world and over the past decade it has attracted more attention, this is mainly because what has happened in the past.

Some of the biggest monetary policies were initially revealed at the event, although they were not formally announced. During the event, any unexpected comment from any participants can influence the global financial markets. Here are some notable moments from the Jackson Hole Symposium: 2005 – Raghuram Rajan (then the professor at the University of Chicago and former governor of Reserve Bank of India) warned about risks that the financial system had absorbed throughout the years.

Three years later, the US subprime mortgage crisis erupted into the global financial crisis. 2012 – Michael Woodford (macroeconomist and monetary theorist, Columbia University) presented where he said that Fed’s stance on keeping its main interest rate near zero until a certain time would reflect pessimism about the speed of the economy’s recovery. Later that year, the Fed announced it would keep rates near zero until unemployment fell to 6.50% and inflation did not climb above 2.50%. 2014 – Mario Draghi (ECB president) hinted that the ECB was edging closer to embarking on its QE path. During the event, Mario Draghi said that ECB could use ‘all the available instruments’.

His announcement came just two months after ECB introduced negative deposit rates in the Eurozone, the financial markets rallied during his speech at the Jackson Hole. The symposium is a must watch financial market event and it is worth keeping an eye on the discussions and speeches during the event as we may see statements from some of the most influential people from around the world. This year, Federal Reserve Chairman Jerome Powell will headline the event in Jackson Hole with a speech about monetary policy in a changing economy, according to the Fed Board so it’s time to mark your calendars!

Klāvs Valters Market Analyst

People often ask me how they can get an edge over other traders in the currency market. My simple answer is this. Study financial market history and it will greatly enhance your profit opportunity because Forex markets will highly likely react the same way each time based on how they reacted last time.

Human beings are what drive all financial markets and as a whole the big money is reasonably predictable in what it will do. It will likely do the same is it did last time when a similar event occurred. Take for example the Yen, which has risen some 17% in 2016 as the BOJ has tried to lower its value by printing more money and putting interest rates into the negative.

Each time the BOJ announces more of the same (money printing & bond and stock buying) the forex market buys more Yen. This is one of the reasons why you have to be in this business for the long haul because the longer you are in the business the more you learn about the history of how the forex market behaves. The average trader often doesn’t want to do the time and they want the profits quickly without doing the forex trading apprenticeship that is required.

This does not mean sitting in front of a computer for hours a day it simply means reading for 15 or 20 minutes a day about why price is moving. The chart is NOT making the price move, the news is making the price move and the chart is simply a reflection of how traders have interpreted the news and bought up or sold off a currency. Join with me and become a detective of forex trading and you will highly likely enhance your profit making potential.

You can join me every Wednesday evening at 7pm AEST for a free one-hour live currency coaching session. Simply click on this link to join the session. http://gomarkets.webinato.com/room1 Andrew Barnett | Director / Senior Currency Analyst Andrew Barnett is a regular Sky News Money Channel Guest and one 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. Connect with Andrew: Email

Every day currency markets are being bought and sold by institutions and banks and large speculators based on economic news announcements that are released. But why do currencies react strongly to some news announcement and not to others? Let me explain.

Financial institutions, banks and large speculators often have access to a Bloomberg or Reuters terminal which allows them to receive the latest economic data announcements instantly upon release. Meaning they will see the economic data before the average mum and dad investor ever gets to see it on a website and react. Mum and dad investors usually have to wait for a journalist to type the news up on a computer and then publish it online which can take minutes.

Institutions, banks and large currency speculators pay thousands of dollars a month to gain access to the economic data from Bloomberg because they know they will likely be first to see it and they can instantly trade the Forex market and get in and out before the balance of the currency herd. Gaining access to the news instantly is one thing, knowing whether to buy or sell the news is another thing entirely. As a general rule banks, institutions and large speculators will place their forex trades based on their interpretation of what “was expected” vs “what really happened.” Let me give you can example.

Let's say that at 11.30am the latest GDP growth numbers for Australia are due for release. Bloomberg, CNBC and other major financial news networks will have surveyed their favourite top economists and asked them for their consensus on what they think the GDP number will be. Bloomberg will come up with an average of all the economists and publish an “expected” GDP number on its terminal.

Let's assume that number is 2.1% but when the data is released the number comes in at 1.8%. This would immediately be seen as “out of line with expectation” and this is when banks, institutions and large speculators often trade and can move the forex market very swiftly. If the news came out and the GDP number was 2.1% as “expected” then it would be unlikely the same traders would bother trading the news event.

Those same traders before an economic data number is released will also be looking at the history books and thinking back to what happened previously when the data was out of line with expectations last time for this news event and they will also have a very good idea about how their colleagues in other banks will likely trade if the data number is “out of line with expectations.” So in a nutshell, the forex market reacts to economic data releases or comments made by Central Bank officials if the news is “in line” or “out of line” with expectations. Andrew Barnett | Director / Senior Currency Analyst Andrew Barnett is a regular Sky News Money Channel Guest and one 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. Connect with Andrew: Email

On GFC’s 10-year anniversary, one cannot help but wonder about the current dispersion in the financial markets. Developed Markets (DM) equities are now divided between US and non-US, with the US outperforming every other major market. S&P is hovering around its all-time highs whereas DM are still well below their 2018 highs.

S&P 500 (White Line) Vs DM (Orange Line) In the Emerging Markets (EM) space, a problem that began with a select few countries managed to end the golden performance of 2016-17, creating an emerging market rout. Based on MSCI EM index, emerging markets were down by almost 21.5% from February highs to the mid-lows in September. MSCI EM Index In line with EM equities, the EM currencies have seen some significant moves.

Argentine Peso, Turkish Lira and Brazilian Real are all down by 49.97%, 39.62% and 18.29% respectively against the greenback (year-to-date) at the time this report was prepared. EM Worst Performers Commodities have been interesting too. Whilst a higher USD pushed commodities down in general, oil has remained relatively strong and is now trading close to a 3-year high.

Thompson Reutters Core Commodity Index (White line) Vs WTI Oil (Orange Line) Given the above mix, in this article we take a look at the levels and catalysts traders need to watch. US Equities: In the past few weeks, prominent market timing indicators called for a correction in the US markets. The first was issued in late August by Tom Demark, whose indicators and analysis are closely watched by the institutional traders, and the second, which was released a couple of weeks ago by Jason Goepfert from Sentiment Trader, in which he drew attention to the emergence of the so-called Hinderberg Omen pattern.

This pattern gauges indecision in the markets and is designed to predict a market correction within 40 days. The yellow dots in the chart below represents the occasions when this indicator has issued warnings. Hinderberg Omen on NY Composite Index For S&P to decline, there needs to be a catalyst.

In our view, this catalyst will likely have something to do with Trump and his trade tariff war. JP Morgan has recently undertaken an interesting exercise - they used the latest text mining algorithm to scan through 7000 earning transcripts and conference calls. The exercise concluded that companies are now more worried about the trade war and its impact on their bottom-line rather than that the usual suspects: tax cuts, macro headwinds., etc.

Therefore, we would be closely following the US-China trade war developments now that China has announced an additional set of tariffs on $60b worth of US imports. For the time being, the trade war doesn’t seem to have had much impact on S&P 500. However, since there is a confluence of technical warnings (both fundamental and technical), we would be looking at the 2860 area in the S&P daily chart (below).

Should this level be broken in the next 2-4 weeks, prospects for a correction can increase significantly. S&P 500 An interesting point in the chart above is the abnormally high volume on last Friday’s close, which happened to be a down day. Volume spikes at the peak of a trend are traditionally signs of inflection points.

Emerging Markets: Still a Concern Given that EM economies are often interdependent and share the same attributes, analysts did not see the EM developments in isolation and were quick to talk about a contagion risk when Turkey followed Argentina only three months later. Today, a problem that began with a select few countries has turned into an overall EM issue. The combination of a higher USD (driven by higher rates in the US) and issues such as the trade war, sanctions and domestic matters in EMs have created a vicious cycle.

On one hand, risk-averse investors are selling their emerging market assets due to economic downgrades, slower growth and trade war risks. On the other hand, by repatriating their investments back to the funding currencies (mainly USD), they force emerging market currencies to go lower, which in turn would intrigue more EM assets sales as investors fear their EM asset returns to be diminished by currency depreciation. Emerging Market Index (Orange Line) Vs US dollar index White Line) EM Short Term Rebound: Emerging markets, along with most risk assets, have recovered somewhat over the past couple of weeks.

However, we believe this recovery is mainly due to profit taking as opposed to a change of fundamentals. For the trend to reverse, we want to see the EM index to stabilise above 1100. MSCI EM Emerging Markets and Risk currencies The reason FX traders need to be aware of the EM developments is that the EM rout has a direct negative impact on high beta DM currencies such AUD and NZD.

This is shown in the chart below, where the orange line is the EM index, the blue line is AUDUSD and the red line is NZDUSD. Emerging Market index (Orange and AUDUSD (Yellow) and NZDUSD (Blue) Therefore, as long as the EM rout exists, one should expect further depreciation in the price of AUD and NZD against the USD, and other safe-haven currencies such as JPY and CHF. NZDCHF in particular looks very interesting, with a clear medium-term downward trend.

NZDCHF Commodities: While commodities in general will be heavily affected by USD, oil may remain the exception. Many analysts previously believed that cutting Iran out of the production line (as Trump’s deadline is approaching) would only have a minimal impact on the markets – this is because Iran’s relative oil production was deemed to be “just a drop in the ocean”, with Saudi Arabia and other oil-rich countries promising to pick up the shortfall immediately. However, we’ve now seen that these analyst estimations were only good on paper, where what actually is happening is far from theory.

The story went like this: Saudi Arabia announced to the world back in April that they could increase their output to 12.5 million barrels a day to fill in Iran’s gap. The reality is different: Saudi Arabia is presently only producing 10 million barrels a day. To get to the 12.5 million barrels mark, they’ll need to do a lot more drilling, and sooner rather than later.

Elsewhere in Russia, production has gone up by 250,000 barrels a day, but this won’t be enough to fill in the 2 million barrels a day gap which would be created when Trump’s sanctions on Iran becomes fully functional. Production in other OPEC countries hasn’t yet increased much either. Therefore, purely from a basic supply-demand point of view, risks seem to be on the upside rather than the downside.

From the technical point of view, oil is now in a strong and healthy bullish channel, which if it remains intact (a likely scenario), an $80 WTI won't be out of sight. WTI Crude

MELBOURNE, AUSTRALIA – 18 April 2019. GO Markets is pleased to announce its expansion into the Middle East and Northern Africa (MENA) region, operating as GO Markets MENA DMCC in Dubai, UAE. Located within the economic ‘free zone’ of the Dubai Multi Commodities Centre (DMCC), GO Markets MENA DMCC has obtained its membership with the Dubai Gold and Commodities Exchange (DGCX).

GO Markets CEO Christopher Gore said: “Establishing a presence in the MENA region has been on our wish list for some time, so I’m very happy to see things finally coming together. What we’re trying to achieve here is somewhat different to what we’ve done elsewhere, and I believe we’ve got the technology and talent on the ground to make it happen. The DMCC and DGCX have given us a great opportunity and we hope to be a strong contributor and innovator for them in the years ahead.” GO Markets MENA DMCC is applying for its Securities and Commodities Authority (SCA) license and in the process of establishing a physical presence in the UAE to service its new and existing clientele.

GO Markets has established a solid global reputation as a trusted and reliable CFD provider, and this expansion will help traders access a wider range of quality instruments with competitive rates. About GO Markets GO Markets is a provider of Forex and CFD trading services, offering Margin FX, Commodities trading, Indices and Share CFDs trading to individuals and wholesale clients globally. GO Markets holds an AFSL (Australian Financial Services License) with the Australian Securities and Investments Commission (ASIC).

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