Are We Due For A Hold?
Markets are cautiously optimistic and the US dollar is edging lower amid fresh hopes that the US agrees on a stimulus deal before the elections. Chinese Q3 GDP missed estimates but includes several positives. Concerns about eurozone coronavirus cases and Brexit talks is weighing on sentiment.
Fiscal stimulus: US President Donald Trump has said that he is willing to go for a larger stimulus deal than Speaker of the House Nancy Pelosi’s $2.2 trillion package ahead of the elections. He would have to convince hawks among Senate Republicans to back a large relief package.
Here are the key market moving factors for the week:
The US
- US Retail Sales beat estimates with a leap of 1.9% in September, showing the resilience of the economy and potentially reducing the need for additional support from the government. Pelosi set Tuesday as a deadline to conclude talks while Senate Republicans are focused on the Supreme Court nomination.
- US elections: Challenger Joe Biden continues leading Trump in national and state polls, with forecasts pointing to around 90% chance of winning according to FiveThirtyEight and The Economist. The race for the Senate is significantly closer, with only a 74% probability for the Democrats according to these websites.
EUROPE
- The options in our toolbox have not been exhausted,” the European Central Bank (ECB) President Christine Lagarde said in an interview with Le Monde, published Monday.
- “I hope that there will also be a debate about a common budgetary tool for the euro area, she added.
- According to the latest coronavirus statistics released by Germany’s Robert Koch Institute (RKI), the European powerhouse reported 4,325 new infections on Monday, highlighting the weekend effect.
The UK
- Amid a relentless surge in the coronavirus cases in Britain, the government’s scientific adviser Jeremy Farrar said that a three-week period of national lockdown restrictions needs to be imposed immediately to contain the COVID-19 spread.
- Prime Minister Boris Johnson said that the UK should prepare for a no-trade-deal Brexit in January after expressing disappointment from the EU decision not to intensify talks nor make sufficient concessions, according to London.
JAPAN
- According to the latest Bloomberg survey of analysts, the Bank of Japan (BOJ) is unlikely to make any changes to its monetary policy settings when it meets next week.
- Although the central bank could extend the duration of its measures to counter the coronavirus pandemic by January.
AUSTRALIA
- The latest Reuters poll of 25 economists revealed that the Reserve Bank of Australia (RBA) is seen cutting the Official Cash Rate to an all-time low of 0.10% at its monetary policy meeting due on November 3 while expanding its quantitative easing (QE) program.
NEW ZELAND
- The Reserve Bank of New Zealand is open to digital currencies. Still, the Assistant Governor, Christian Hawkesby, says that there are no imminent plans to issuance a central band digital currency (CBDC). Hawkesby was talking at the Royal Numismatic Society of New Zealand conference, where he acknowledged, “cash is being used less as a means of payment and access to cash is declining.”
- The Reserve Bank of New Zealand, alongside other central banks worldwide, is diving into research for retail CBDCs.
- Nonetheless, Hawkesby clarified that there were “no imminent plans” to issue a CBDC. He added that the Reserve Bank is “well-connected and considering these developments very closely.
CHINA
- Foreign trade’s contribution to Q3 GDP growth was 0.6 percentage points.”
- “Capital formation’s contribution to Q3 GDP growth was 2.6 percentage points. “
- “Domestically speaking, most indicators are yet to be back to normal.”
- China reported its economy grew by 4.9% annualized in the third quarter of 2020, worse than expected. However, the Gross Domestic Product was hobbled by an increase in exports, which is a sign of growing consumption in the world’s second-largest economy.
Market Overview:
Gold
- Gold is on the rise, trading above the $1,900 level it has been battling in recent weeks.
Oil
- WTI crude oil prices face a key resistance in the US$ 41.00-41.50 area
- China Q3 GDP slightly missed, despite stronger retail sales and industrial production growth
- Oil traders may struggle to strike a balance between falling US stockpiles and weaker demand outlook
Below are the major market moving events for the week:
The Week Ahead
All times are EDT
Monday
8:00: US – Fed Chair Powell Speaks
8:45: Eurozone – ECB President Lagarde Speaks
21:30: China – PBoC Loan Prime Rate
Tuesday
8:30: US – Building Permits: seen to be 1.505M from 1.476M
Wednesday
2:00: U.K. – CPI: expected to rise to 0.5% from 0.2%
3:30: Eurozone – ECB Presidet Lagarde Speaks
8:30: Canada – Core CPI
8:30: Canada – Core Retail Sales: forecast to climb to 0.9% from -0.4%
10:30 – Crude oil inventories: to advance to -2.835M from -3.818M
Thursday
5:25: U.K. – BoE Governor Bailey Speaks
8:30: US – Existing Home Sales: forecast to rise to 6.30M from 6.00M
Friday
2:00: U.K. – Retail Sales: to recede to 0.4% from 0.8%
3:30: German – Manufacturing PMI: expected to step back to 55.1 from 56.4
4:30: U.K. – Manufacturing PMI: seen to edge up to 54.3 from 54.1
4:30: U.K. – Services PMI: to decline to 55.0 from 56.1
6:30: Russia – Central Bank of Russian Federation Interest Rate Decision: consensus keeps rates unchanged at 4.25%
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.
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