The Final Quarter of 2020

Investors are cheering fresh hopes for an upcoming coronavirus vaccine and upbeat Chinese PMIs. Eurozone CPI figures and end-of-month flows are set to move markets.

Stephen Hahn, head of the US Food and Drug Administration, said he is willing to fast-track vaccine approval if benefits outweigh the risks. China has approved the Sinovac COVID-19 vaccine candidate for emergency use, starting with high-risk groups.

Overall, Asian markets are on the rise and S&P 500 futures are pointing to new record highs. Gold is moving higher as well.

Below are thumbnail sketches of the events and data that shape the macro picture.

Country

US

• The prepared remarks from Chairman Jerome Powell suggest the FOMC will continue to rely on its emergency tools to support the US economy as the “new Statement on Longer-Run Goals and Monetary Policy Strategy conveys our continued strong commitment to achieving our goals, given the difficult challenges presented by the proximity of interest rates to the effective lower bound.”
• It seems as though the FOMC is in no rush to alter the path for monetary policy as the committee votes unanimously to push back “the expiration of the temporary U.S. Dollar liquidity swap lines through March 31,” and the Chairman Powell and Co. appear to be on track to retain the current policy at the next interest rate September 16 as the central bank vows to “increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace.”

EUROZONE

• The surge in French coronavirus cases – joining Spain’s worrying situation – is somewhat weighing on the euro. Preliminary eurozone inflation figures for August are due out on Monday.

UK

• The UK government is mulling £30 billion in tax hikes to plug a hole in the deficit and cause anger within the Conservative Party. Brexit talks remain deadlocked and Chief UK Negotiator David Frost said Britain is ready to walk away from talks.

CHINA

• Chinese purchasing managers’ indexes for August came out above 50, pointing to expansion. The Services PMI beat estimates with 55.2 points, showing that consumers are catching up as life in the world’s second-largest economy is broadly returning back to normal.
• China may block the sale of TikTok to an American company, potentially adding to Sino-American tensions. The short-video application is considered a security threat by Washington and Beijing is reportedly worried about the export of artificial intelligence technologies.
• The latest report from the China Banking Association showed Monday, the demand for the Chinese currency, the Yuan or Renminbi (RMB), rose in cross-border transactions in the first half of this year.

AUSTRALIA

• Meanwhile, the Reserve Bank of Australia (RBA) may sound more upbeat compared to its US counterpart as “the Bank’s policy package was continuing to work broadly as expected,” and Governor Philip Lowe and Co. may continue to tame speculation for additional monetary support as the central bank persistently rules out a negative interest rate policy (NIRP).
• In turn, the RBA may stick to the same script at the September 1 meeting as “a recovery was under way in most of Australia,” but Governor Lowe and Co. may gradually alter the forward guidance over the coming months as the central bank insists that “it would be appropriate to remove the yield target before the cash rate itself is raised.”
• Daniel Andrews, Premier of Australia’s second-most populous state, Victoria, said on Sunday that he will unveil a road map out of lockdown.
• However, at Monday’s press conference, Andrews said that it was too early to ”settle that road map” and that health authorities would be analyzing data throughout the week.

JAPAN

• Japanese stocks are advancing; recovering after Warren Buffet’s Berkshire Hathaway announced an investment in local firms.
• Moreover, the Japanese press reports that economic policy will likely remain on course after the resignation of Prime Minister Shinzo Abe. The safe-haven yen is paring its gains.

Market

OIL

• CME Group’s flash data for crude oil futures markets noted traders scaled back their open interest positions by nearly 4K at the end of last week, reversing three builds in a row. In the same line, volume prolonged the choppy activity and shrunk by around 55.4K contracts.

GOLD

• Gold prices stay mildly bid while keeping Friday’s break of monthly falling trend line.
• Bearish MACD, 21-day SMA question the bulls targeting $2,000.
• A six-week-old ascending trend line, 50-day SMA restrict short-term downside.

Here’s a look at all the important market-moving factors for the week:

Week Ahead

All times listed are EDT

Monday

21:45: China – Caixin Manufacturing PMI: seen to edge lower, to 52.7 from 52.8.

 Tuesday

00:30: Australia – RBA Interest Rate Decision: forecast to remain steady at 0.25%.

3:55: Germany – Manufacturing PMI: anticipated to remain flat at 53.0.

3:55: Germany – Unemployment Change: predicted to have surged to 1K from -18K.

4:30: UK – Manufacturing PMI: seen to stall at 55.3.

5:00: Eurozone – CPI: forecast to retreat to 0.2% from 0.4%.

10:00: US – ISM Manufacturing PMI: expected to have pushed to 54.5 from 54.2.

21:30: Australia – GDP: the contraction last quarter is predicted to have deepened in Q2, to -6.05% from -0.3%.

Wednesday

8:15: US – ADP Nonfarm Employment Change: forecast to have vaulted to 900K from 167K.

Thursday

4:30: UK – Services PMI: seen to hold steady at 60.1.

8:30: US – Initial Jobless Claims: disappointed last week at 1,006K.

10:00: UK – BoE Gov Bailey Speaks

10:00: US – ISM Non-Manufacturing PMI: anticipated to decline to 57.0 from 58.1.

21:30: Australia – Retail Sales: expected to climb to 3.3% from 2.7%.

Friday

4:30: UK – Construction PMI: probably edged higher to 58.3 from 58.1.

8:30: US – Nonfarm Payrolls: forecast to dip to 1,400K from 1,763K.

8:30: US – Unemployment Rate: to taper to 9.8% from 10.2%.

8:30: Canada – Employment Change: seen to fall to 300.0K from 418.5K.

10:00: Canada – Ivey PMI: likely to have dropped to 57.5 from 68.5

Based on the above factors and the events lined up for the week, the analyst at RvR Ventures suggests you  to trade responsibly; invest only as much as you can lose. All the profits and losses due to the above data are your own personal responsibility. Kindly practice money management & risk mitigation while trading.

Chat with us to know more: https://wa.me/971581958582

Register to open your account: http://bit.ly/OpenFxAccount

Join Our Telegram Channel: https://t.me/ForexFundManagers

Subscribe to Our YouTube Channel: https://youtu.be/AnTlQd-FQxc