Thursday 8th Sept in the spotlight

Hello - welcome back

Hello – welcome back – good to see ya

The traders are back at their desks with a triple espresso, the politicians are back from their hols, and the children are at school: big sighs of relief all round and let normal service resume… um, no, not quite.

September is a special month with a rare triple witching near the end of the month, the G20 summit and tonnes of other headline stuff for our players to trade on.

To start the week we will be riding the effects of the G20 summit in China as markets digest what the political heavyweights decided. And then there is Thursday. This week Thursday is a big day and here’s why.

  • CHY trade balance
  • AUD trade balance
  • Crude oil inventories
  • EUR central bank minimum bid rate and press conference
  • US unemployment claims

Well, well, well, it puts a twinkle in our eyes to see such a wealth of opportunity. That’s a lot of action for one day and we mean to make the most of it.

Starting off, the close trade relationship between Australia and China means the 2.30am GMT AUD trade balance will affect both currencies. We expect the Chinese figures to arrive within a few hours of the AUD announcement, though the time is not yet fixed. It could be a real rollercoaster for the CHY as well.

Later in Europe, the central bank minimum bid rate at 12.45pm GMT is important for interest rates but it’s been stable at 0.0% for months. The press conference 45 minutes later could be a lot juicier if some interesting questions get asked when they open the floor. Set up your position on the EUR going in and you could make a killing.

A busy day is one thing but chaps (and chapettes – TIQL is very equal opportunity) when you have two big events at the same time you need to be a very special player indeed. Or at least have set up your strategy in advance: so we advise you do that. Look at the charts, listen to the pundits, and make your punt. It could be a good plan to stay tuned to the EUR central bank press conference at 1.30pm GMT but the release of the US Unemployment Claims another massive hitter in the field, is at the same time. We’re getting a buzz on already. Two screens. Two big waves to ride.

Now that's just showing off

Now that’s just showing off

But it doesn’t end there. Keep riding the wave in the US as the Crude Oil Inventories are released at 4.00pm on Thursday this week, not the usual Wednesday of recent weeks.

Woohoo – get through all that and you deserve your favourite tipple in that little place you know. Get to it.

 

G20 – what TIQL players need to know

The 11th G20 summit is happening on Sept 4th/5th in Hangzhou, Zhejiang, China.

mountain summit

G20 – important but not as cool as this summit

The summit is one of the main forums for international economic cooperation. Countries attending include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United States and the European Union. So it’s clear traders will be watching closely and poring over any press releases sending potential shockwaves through the markets.

The leaders will be discussing many issues such as anaemic global growth, decline in potential for output, increasing volatility in financial markets, weakening global trade and investment, high levels of unemployment and inequalities. But they will all also have domestic agendas to push and their interests are not always aligned.

There’s a potential battle ahead as the US is pushing for a growth plan against the current popularity of austerity in places like the UK. Not sure how sporting it will be…

sword fight

An agreed change of policy by this powerful group of countries could send shockwaves through the markets. Some countries are already leaning in this direction with China itself, a number of EU countries, Canada, South Korea and others taking measures designed to boost their economies instead of focusing on reducing costs. Germany and UK look to be against this move as both still favour an austerity budget though post-Brexit May could be about to relax that stance.

The G20 finance watchdog the Financial Stability Board (FSB) headed by Mark Carney, governor of the Bank of England, has a direct steer on monetary policy throughout the year but it also feeds its advice in to the main summit this weekend so traders will be keeping a close eye on updates from the FSB and Carney.

According to Carney, the main market issue is the perceived effect on liquidity that regulations introduced post-Lehman collapse have had. This told banks to carry more capital to cover potential losses but there seems to be a backtrack happening as Carney says the regulators are committed to ensuring banks don’t have to significantly change the amount of capital they hold. So which is it then? More or not more?

On the plus side, rules already implemented showed their strength in the wake of Brexit when no institutions actually collapsed despite major hysterics. The fear now is that the banks influence will gradually undo the restrictions and allow them to put themselves at risk again.

So whether you are playing FOREX or other indexes, the G20 summit will rev up the markets. So roll up your sleeves, the holidays are over and the markets are back in business. September’s here.