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Week ahead - Trump, Uncertainty and Volatility

Week ahead - Trump, Uncertainty and Volatility

It is officially five weeks out until the United States Election. Expect an increase in volatility in the markets as we get closer to the official election dates. It is interesting to note that New Zealand's elections will be held two weeks after the US elections – throwing an extra spanner in the works. Here is your week ahead.

Trump and Biden are set to clash it out

Dates are in NZDT.

Wednesday, 30th September – First U.S Presidential Debate

Usually hosted in front of a crowd, the Coronavirus has put this tradition on top of its head like many other in-person events. There will only be one moderator, with Joe Biden and President Donald Trump going at it for one hour. A crowd? Possibly, Possibly not. If so, it would be strictly limited. The first moderator will be Chris Wallace, the anchor of "Fox News Sunday." It is predicted that the topics will revolve around the financial record for both Trump and Biden, the Supreme Court, the Pandemic, the economy, race and violence in cities, and the election's integrity. Both candidates will have 15 minutes to answer each question. Traders and Investors should be careful trading around this time, as markets are bound to shift either direction depending on the topic in question.

Wednesday, 30th September – China's Non-Manufacturing PMI

After flattening the curve, China has set an example of how a large population deals with the Coronavirus. (I'm assuming they're not lying about their results.) This has enabled the country of almost 1.4 Billion to start restarting their economy a lot earlier than their peers. For comparison, India continues to rack up daily Coronavirus cases with a population similar to China. They currently sit at around 6m Coronavirus cases, in contrast to China's stated 85k cases. China's Non-Manufacturing PMI is set to soften, from 55.2 last month to 52.1. Look for movements in the offshore USD-CNY pair in the week ahead.

Wednesday 30th September – UK's GDP Quarter over Quarter

UK's Coronavirus cases

If there is an example of a "second wave" of the Coronavirus, The United Kingdom exemplifies it. With Prime Minister Boris Johnson forcing drastic measures to stop the Coronavirus, including forcing pubs to close at 10 pm, urging workers to work from home, and many limits regarding groups. GDP is expected to drop -20.4%, similarly in the last quarter. Boris insists that there will not be a second lockdown.

Wednesday 30th September - Europe CPI

Europe has had a relatively valiant effort with regards to the Coronavirus. Although many countries have seen spikes in cases in the past couple of weeks, government and central bank stimulus have supported the European economy as much as possible. With fears of a strengthening in the Euro slowing the recovery, it is to be seen whether the ECB or Government will weaken the Euro. The CPI is set to rise this month from 0.4% last month, to 0.7% this month.

Wednesday, 30th September and Friday 2nd October – United States GDP Q2 and Non-farm payroll

US Coronavirus cases

We talked about the United Kingdom having a second wave – it seems like the United States hasn't even finished its first one. Cases continue to pile up, with total cases at 7.1 Million. Furthermore, it looks like the President has fully put the Coronavirus on the side as he focuses on the upcoming debates and elections. Furthermore, with his tax returns being released by the New York Times, more pressure is being placed on the President to answer – diverting even more of his attention away from the mounting deaths in the United States. GDP in the second quarter is set to contract 31.7%. Furthermore, even as citizens in the United States slowly go back to work, Non-farm payrolls are set to fall from last month, with a 1.371 Million Non-Farm Payroll's previous month to an estimated 875k this month.

Friday, 2nd October – Australian Dollar Retail Sales Month over Month

Australia, too, experienced a second wave just like the United Kingdom. However, Australia's second wave was larger than the first, as the State of Victoria saw a massive spike a couple of weeks ago. This forced the state to go into a second lockdown, which brought daily numbers down to more manageable levels. Their swift control of the second wave has the Trans Tasman bubble between it and New Zealand revived, with reports stating that it could be just weeks before Australians and New Zealanders can travel to either country. Total Coronavirus Cases in Australia is 27,040, with 872 deaths. With the Australian Government provided 80% wage subsidies, Retail Sales should not take a massive hit this week ahead as citizens continue to online shop. A surprise uptick in retail sales should see a spike in the Australian Dollar against the greenback.

An exciting week ahead. Stay Safe, Trade Safe.