APAC should be hogging most traders’ attention in the first half of the coming week. China and New Zealand take the spotlight up to Wednesday. A sprinkling of US and European data helps to round out the offerings.
*Please note; Author is working from UTC +13 when determining the timeline of data releases.
China opens the week and reveals its 1Y Loan Prime Rate. The People’s Bank of China (PBoC) has kept the 1Y Loan Prime Rate at 3.85% for the past 18 months. No change in the rate is expected on Monday. However, looking to a long-term change, China’s Premier Li Keqiang noted on Friday that China is facing “many challenges” in managing the downward pressure on its economic growth and rising commodity prices.
New Zealand releases data on Retails Sales (Q3) in the lead up to the country’s Central Bank Interest Rate decision on Wednesday. Retail Sales in the last two quarters rose 3.3% and 2.8% respectively. A projected -0.5% is expected in Q3 as the country’s largest city has been in lockdown for the entire Q3 period.
European and Great Britain Markit PMI Composite data (NOV) is also released on Tuesday. Aggregating the data from the economies’ Manufacturing and Service sectors, the PMI is a broad indicator of economic expansion or retraction. Although still firmly within an expansionary range, a slight pullback in the PMI values is expected for both economies.
US Markit PMI Composite data (NOV) is up next. Unlike Tuesday’s PMI data, US PMI is expected to lift ever so slightly from 58.4 to 58.8.
As mentioned above, the Reserve Bank of New Zealand (RBNZ) will be updating the market as to its Interest Rate decision. A 25 basis point hike to 0.75% is all but guaranteed at this point. Speculation of a 50 basis point hike has emerged in reaction to Inflation Expectation in the country, reaching 2.96% in two years. Although, such a significant hike is unlikely and deviates from RBNZ precedence.
Thursday is all about the United States. For October, durable Goods Orders, New Home Sales, and Personal Spending data are released in quick succession. Any beat or miss in the slightly optimistic forecasts for these data points should be pounced upon by traders.
The FOMC minutes are then released later in the morning. Fed representatives have been vocal about their stance on inflation, employment, and the need to keep a loose monetary policy for the short term, all last week. These notes should be reflected in the FOMC minutes.
A quiet Friday closes the week. South Korea’s Interest Rate decision should be watched closely. A 25 basis point increase is possible, which would bump the Interest Rate to 1% from 0.75%. Analysts are split as to its likelihood as the South Korean Government has other tricks up its sleeve to curb rising prices (such as removing fuel taxes).
Devising a strategy for trading the GBPUSD requires an intimate knowledge of the technical and fundamental variables that affect this fan favourite pair.
A perfect strategy is elusive for the GBPUSD, but a good or great strategy is within reach. Let's look at the technical and fundamental variables that will push and pull the GBPUSD this week and see what information we can fold into our decision making.
For an in-depth analysis of the technical perspective of the GBPUSD, my colleague has graciously prepared the following video. In the video, Anish Lal discusses the weekly view for GBPUSD and important touchstones for the pair.
The US is the first to deliver a significant report to the market. That being, the Monthly Treasury Statement (MTS) at midday, Monday (Canada Central Standard Time). The MTS typically wouldn't garner more than a moderate level of interest. This month the statement takes on a new gravitas as the US moves closer to reaching its government-mandated debt ceiling. Janet Yellen, US Treasury Secretary, has already begun warning Congress about the looming US debt ceiling. She has urged lawmakers to act (i.e., raise the ceiling) sooner than later to avoid a shutdown of Federal institutions, like what occurred in the past.
We might expect Yellen to use the MTS, which is set to report a budget deficit of USD 307 billion, to stress her previously made points. Apathy from lawmakers in this regard could be a bearish intimation for the USD.
The UK is next out of the gate, delivering its ILO Unemployment Rate report (July) on Tuesday morning. The Unemployment Rate is a broad indicator of the health of the UK economy. In July, the rate is expected to drop from 4.7% to 4.6%.
One problem with the report is that July is already a month and a half in the past. A lot can happen in six weeks, and thus more up-to-date reports should be considered in conjunction with the ILO Unemployment Rate report.
For one, I like to look at the British Retail Consortium (BRC) Retail Sales for August or Consumer Confidence indices. The Former example, released last week, indicated that retail sales grew 1.5% in August vs an expected 3.2% growth. The retail Sales miss may mean that the UK labour stats for July might not be as favourable as expected.
On the same day, but separated by a good fourteen hours, the US will release its Consumer Price Index (CPI) report. This CPI will be particularly interesting because of its enormous relevance to the US Federal Reserve and how it judges when it should taper its Asset Purchasing Program. The Fed has always maintained that the inflation pressure the country has seen in 2021 is transitory. Thus, the idea of tapering its spending has been put off for a great deal of time. If certain goods in the upcoming report retract in price, those that disagree with the Feds position on inflation might be convinced of its transitory nature.
The UK will be delivering its own Consumer Price Index report on Tuesday midnight/ Wednesday morning. Inflation in the UK is expected to arrive at 2.9%, above the 2% threshold desired by the Bank of England (BoE).
Talk emanating from the Old Lady suggests that interest rate rises will materialise much sooner than the previously scheduled late 2022. Although we won't hear from the BoE when the CPI report is released, much can be gleaned from the report that might indicate how a change in the BoE's position regarding rate rises.
Fast forward to Thursday, and we are now looking at the US Retail Sales report for August. This report should be of interest because of the huge disappointment the Non-farm payroll delivered a couple of weeks ago. Will Retail Sales take a similar path, falling far short of expectations, or will they beat the forecast and inject a little bit of optimism into the USD? Retails sales are expected to drop 0.7% for August so there is a bit of wiggle room for the actual value to report stronger than expected.
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With the new strain of the Coronavirus causing concern across the world, many countries that continue to battle the Coronavirus hope that the vaccine gives them a head start before the strain does any more damage. This week will also see a new President take office, Democrat Joe Biden, on the 20th January US Local time. Here is your week ahead.
It seems like China was on their home run. Cases were initially squashed due to their strict lockdown earlier in 2020. The vaccine's advancement last year was the final factor in cementing China's success against the virus. However, a sharp outbreak in Nangong and Shijiazhuang shows the world that no matter how well your initial response is, only continuous and strict restrictions can keep the Coronavirus out of the community. Five days ago, a plot of land in Nangong, Hebei, laid flat. Now, it has become a 1500 room hospital for Covid-19 patients.
This may be an overreaction by the Chinese government – however, they may just be preparing for the worst. This does give a sign of what the future may hold for countries like the United Kingdom and the United States, where cases are still at record highs. With that said, GDP and Retail Sales are predicted to increase on the back of a boost in the manufacturing sector alongside consumer spending the income they saved during the past lockdown. GDP is expected to rise to 6.1% in Q4, up from 4.9% in the previous quarter. Furthermore, retail sales are predicted to grow. 5.5% in the month of December, ahead of Chinese Near Year.
The Coronavirus situation in many countries highlights the importance of implementing a strict lockdown and following it through. The benefits of a lockdown only work if community transmission is eliminated. However, many countries apart from a small handful tried to balance economic damage alongside the Coronavirus spread, which meant deescalating Coronavirus restrictions too early, rendering the lockdown useless.
Germany is one of the nations that deescalated too quickly, causing massive spikes in their Coronavirus figures. Their total cases now stand at 2.04 Million, with German Chancellor Angela Merkel urgently trying to rush in more stringent restrictions to dampen the virus's spread. However, the recent spike is unlikely to affect analysts' expectation of Germany's CPI,s expected to print at -0.7% for the month of December, the same as a month before.
With just under 3.6 Million initial doses having been handed out to the UK public, the United Kingdom's dire situation looks like it's starting to make a turnaround. The daily Coronavirus rate has slowly decreased in the past couple of days - however, Britons do not seem to be adhering to lockdown and social distancing rules.
The third lockdown in the past 12 months, UK citizens have been seen gathering around beaches with no mask on. The UK government is banking on the vaccine to help control the virus's spread, as hospital beds continue to be filled with Coronavirus patients. The CPI is expected to rise by 0.5%, up from 0.3% a month before.
Canada seems to be avoiding the limelight – however, their Coronavirus cases are continuing to skyrocket after a semi-successful, non-strict lockdown. However, like all countries that did not eliminate community transmission, their cases soared as the latter part of 2020 approached. Coronavirus cases in Canada surpassed 700,000 yesterday.
This may well play into their interest rate decision this week ahead. With the second wave all but destroying any optimism in Canada's economic recovery, analysts predict a rate cut of less than 0.25%, currently at 0.25%. Andrew Kelvin, Chief Canada Strategist at TD Securities, stated that "The fact that the Bank of Canada has kept the door open to ( a rate cut) in the recent month hasn't gone unnoticed by markets."
The news many Australian citizens wanted to hear – "There are no remaining hotspot definitions," Federal Health Minister Greg Hunt stated at a press conference, with only one community transmission in the past couple of days. However, he warned that their not out of the woods yet, stating that "invevitably, there will be days of new cases. There will be days where there may be a requirement for Commonwealth hotspot definition to be reintroduced. But they'll be done on a the basis of that, and cases". This may indicate that Australia is finally able to start its economic recovery – alongside the implementation of the Trans-Atlantic bubble between Australia and New Zealand. Employment Change is expected to decrease from +90,000 in November to +50,000 in December.
Similar to Canada, Japan did not implement a proper lockdown. Instead, they opted for an increase in social distancing measures alongside confidence in their citizens to continue to wear face masks. Just like Canada, initial results were promising. However, as the year passed, it was evident that community transmission is inevitable if it was not thoroughly squashed out. Currently, Japan sits on 325,000 Coronavirus cases, with daily cases reaching an all-time high of 8,000 just a couple of days ago. With negative rates in Japan, monetary policy moves to the downside are rare as not to dig a hole the Bank of Japan can not come out of. Chances are, the BoJ will opt for other tools for yield control, such as asset purchases. However, analysts at Bloomberg Economics forecast the BoJ to keep rates as is not only this week ahead but for the whole year.
Busy week ahead. Trade safe, and most importantly, stay safe.
Hello! I hope you guys had a good Christmas and a Happy New Year, refreshed for the trading year. Before your week ahead, here is what you may have missed over the break.
Let's hope this year we can go past the Coronavirus and onto more positive things. Here is your week ahead.
Australia has been able to recover from their second spike of the Coronavirus well. However, they had not entirely eradicated community transmission amid an outbreak in Sydney's northern beaches just before Christmas last year. After a two-week lockdown for New South Wales, citizens anxiously wait on whether they will be released from lockdown. With Australia taking part in one of the longest lockdowns of any nation, many employed citizens during the lockdown have amassed an increase in savings, which "saw a large rise, up 21% as retail stores experienced a full month of trade" in the last quarter. Analysts predict an increase in Retail sales this week ahead.
The United Kingdom has not been able to keep a cap on the Coronavirus. Deaths are set to overwhelm the NHS's hospital beds if the rate of cases continues to rise. At this point, Prime Minister Boris Johnson is betting on the rollout of the vaccine will help dampen the spread of community transmission. Governor Bailey is set to touch on the continued spread and its effect on monetary policy.
A buzzword that I have heard recently – the "reflation" trade. Many analysts predict a strong bounce back in the American economy, enabling the Federal Reserve to kick its foot off the gas a little bit, as the consumer starts to become the backbone of the United States economy once again. The Coronavirus in the United States is in dire shape, with cases touching 300,000 per day, with deaths at 373,000. Analysts predict CPI year over year to stay the same at 1.6%. However, they also expect CPI Month over Month to drop slightly to 0.1%, from 0.2%. Furthermore, Retail Sales is set to rise from -1.1% to -0.2% this week ahead.
With his last speech three weeks citing market-moving comments, it is a reminder that Powell's words still weight it. His market-moving comments about inflation, stating that "you have to be honest with yourself about inflation these days. There are significant disinflationary pressures around the world.." have analysts' eyes on his speech coming later this week ahead.
It is good to be back. Stay safe, and trade safely.
All eyes will be on the UK’s rollout of the Pfizer-BioNtech vaccine this week ahead, as the first western country to approve a Coronavirus vaccine starts to vaccinate front line workers. However, the NHS medical director warned the vaccine distribution would be a “marathon, not a sprint” and that it will take “many months” to vaccine everybody who needs it. Is this the beginning of the end? Here’s your week ahead.
Japan’s Coronavirus graph symbolizes the problem of loosening coronavirus restrictions when community transmission has not thoroughly be wiped out. Japan has, in essence, entered its third wave of the Coronavirus. Japan recorded over 2,497 new Coronavirus cases on Saturday, alongside 13 deaths.
There are over 161,618 confirmed cases in Japan. Osaka Governor Yoshimura Hirofuki stated, “It’s getting harder to provide treatment to people with serious symptoms. This is the right timing to issue a red alert. It’s a declaration of an emergency in medical care. Our first priority will be protecting life. “This is on a warning to all Osaka residents to refrain from leaving their homes for any non-essential reason until the middle of this month. Note that this is not a strict requirement. Analysts predict a GDP quarter over quarter figure of 5%, identical to that last quarter.
Similar to Japan, Europe paid the cost of reopening early when community transmission was not thoroughly squashed. A second wave has come all across Europe, forcing governments to place their citizens back into lockdown. The attempt to balance economic damage and human lives had backfired. Any optimism on a successful summer had disappeared. This GDP report is likely to show the effects of the premature reopening on the European economy.
Furthermore, the ECB has signaled that they are willing to provide more stimulus coming into 2021 for the European Union. Whether this comes through as further cuts or quantitative easing is unsure. However, a cut this week ahead will be less surprising after the effects of a second have on Europe.
Unfortunately, it will sound like this article is a record on repeat. However, this is the environment around the world due to the premature lifting of restrictions. Canada did not enforce a strict lockdown; however, the government recommended citizens stay at home during the Coronavirus peak earlier this year. Initially, they were praised for their low Coronavirus cases earlier on, like Japan. However, time affirmed that this method was not effective. They’re currently at the peak of their Coronavirus daily cases, with Canada’s Chief Public Health Officer Dr. Theresa Tam stating that it is “unknown” when Canada will reach heard immunity from the Coronavirus. Bank of Canada is set to hold interest rates at 0.25%.
Unlike the previous countries stated above, China went for a hard and fast tactic, restricting citizens’ movements drastically, under police supervision. This has seemed to work, with community transmission staying put in China. With that said, China’s CPI figures are expected to come a little bit softer than the previous month, at 0% growth.
Lighter week ahead. Eyes on the vaccine rollout in the UK. Stay safe and Trade safe.
As Europe enters into the late stages of their respective lockdowns, it looks like the Coronavirus story may be starting to reach its end. Worldwide cases have started to plateau, with only a couple of countries where the Coronavirus cases continue to rise. For example, the United States broke the grim record of 200,000 cases per day, and Brazil's cases continue to increase. This week ahead contains a plethora of data releases from various countries, so stay tuned.
After essentially stamping out the virus, China continues to excel in its recovery. For the right part of 6 months, China's Coronavirus cases have stayed relatively flat, showing their strict Coronavirus strategy's effectiveness. While their politics has remained relatively tame, geopolitical pressures with other countries have started to simmer, most notably with Australia. China recently slapped Australia with a 200% tax on Australian wine as Australia ramps its probe on where the Coronavirus originated in China. This is on top of tariffs on beef, coal, barley, seafood, sugar, and timber. China's PMI's are expected to drop to 52.1 from 56.2 the month before.
Merkel's summary of Germany's near future portrays how the Coronavirus has played out in Germany in the past couple of weeks. She stated, "We're in for a tough winter, but it will come to an end.,.. My wish for us all is that we act responsibly and stand up for each other." Coronavirus cases in Germany, like many in countries in Europe, have skyrocketed. A premature de-restriction in lockdown measures, alongside summer travel, have pushed Coronavirus cases further higher. That said, analysts predict no change in CPI growth, with a predicted figure of -0.5%.
With the ECB offering over 1.8 Trillion euros of Stimulus alongside 0% interest rates to help support the European Union, the central bank is looking for additional ways to push the bloc out of the recession. The ECB President, Christine Lagarde, continues to stress that the bank's role is to ensure that "the financing conditions are stable, and are conducive to economic recovery is it comes." With two consecutive speeches, traders and investors should watch out for wild whipsaws in the Euro this week. Furthermore, the European Union is set to release the CPI figures this week, with analysts predict the CPI to fall at a slower rate at 0.2%, as suppose to 0.3% the month before
The Reserve Bank of Australia has pumped over 100 Billion Australian Dollars into the Australian economy. So far, it seems like it's been working, signaled by dampened currency appreciation and lower bond yields. Analysts predict that the Australian dollar will outperform the New Zealand dollar, with Martin Whetton, head of fixed income and currency strategy, and Commonwealth Bank of Australia stating that "New Zealand exports are more exposed to the U.K., the eurozone and the U.S. than Australia,." With the recent success Australia has been having to the Coronavirus, alongside positive responses from the quantitative easing the RBA has been implementing, analysts predict the RBA will keep rates as is at 0.1%. Retail sales are also going to be released this week ahead.
As the President's transition from Donald Trump to Joe Biden gets underway, this week ahead will be a busy week regarding the data coming out from the United States. With Coronavirus cases continuing to rise with no end in sight, analysts predict a drop in the U.S. ISMs from 59.3 to 57.5. NFP figures are also coming out this week ahead, with analysts predicting a decline from 638k last month to 520k this month. Furthermore, expect Chairman of the Fed, Jerome Powell, to reiterate his support for the United States economy.
A lot of data coming out this week. Stay safe, Trade safe.
When all is well and good, Joe Biden is most likely to be the 46th President of the United States. We can finally put the election behind us and focus on the recovery of the economy stemming from the effects of the Coronavirus. Here is your week ahead.
The elections drew our attention in the past week. However, the Coronavirus continues to run rampant in many countries, including the United Kingdom. They recorded over 25,000 new cases on the 7t November, even after Boris Johnson implemented a 4-week lockdown. Bank of England Governor Andrew Bailey stated that the Central bank is considering other policy tools such as a path of policy and negative rates – however, it has no fixed order and time frame on when they will use them. He stated that “It will always be dependent upon the state of the world and the state of the economy.” Alongside Bailey’s speech, the UK is set to release its unemployment rate the day after, with analysts predicting an increase of the unemployment rate to 4.8%, up from 4.5% a quarter before. Furthermore, Brexit talks will continue this week, making the Cable an interesting pair to watch.
After beating the Coronavirus, China is well on its way to recovery. Economists polled by the WSJ protect the consumer price index will rise 0.75% from a year earlier, predicting a number that would be the weakest inflation reading in the past ten years. China has implemented strict Coronavirus rules in order to make sure the outbreak does not resurface. For example, schoolchildren in China must wear masks during the day, re-apply hand sanitizer, and have temperature checks three times a day. Ali Mokdad, a professor of Global Health at the University of Washington and a former official with the international health program at the Centers for Disease Control and Prevention, stated that china “have done an amazing job of controlling the virus.”
With Jacinda Ardern being elected Prime Minister, there is a general consensus that public debt will be set to increase as the government rampantly borrows in order to control the economic effects of the Coronavirus. New Zealand has generally been touted as one of the most successful countries in trying to eliminate the Coronavirus – however, it came at a great economic cost. The IMF forecasts that New Zealand’s economy is expected to fare much worse than most advanced economies, with GDP per capita is predicted to be lower in 2025 than in 2019. However, with most restrictions in New Zealand removed, many local businesses are back and operating. In October, a survey of 700 global business leaders by Bloomberg ranked New Zealand as the nation that has the best handled the pandemic and the market they would most confident investing in.
Many Central Bank leaders believe that negative interest rates are the most beneficial when the economy is recovering – and that’s what is currently happening in New Zealand. The average house price in Auckland sold for over $1 Million NZ, which means a surprise negative interest rate this week ahead; however, will most definitely send the NZ dollar downwards, which may boost economic activity.
With Joe Biden most likely taking the spot of the Presidency, markets can return back to a relative normal. It is a long recovery ahead for the United States, with Biden promising to prioritize eliminating the Coronavirus. Cases in the United States continue to run rampant, with cases reaching an all-time high at 126,000 on 7th November. It is to be seen whether Biden’s plans will materialize. With that said, the US CPI is stated to say the same at 1.7%.
The UK, Italy, France, and Germany are all experiencing second waves in their respective countries. This has forced many of them to enter a second lockdown, essentially locking in a “double-dip” recession, as CNN puts it. The European Unions GDP surged 12.1% between July and September, as restrictions eased all around the bloc. However, with restrictions coming back, these gains may be short-lived. Andrew Kenningham stated that “It is difficult to think of another occasion when such ‘good news’ will have so little to cheer” and that “the second wave of Coronavirus restrictions is about to push the single currency area into a double-dip recession”. With that said, analysts predict GDP figures to stay relatively equal at around 12.1%
Relatively quiet week ahead in comparison to previous weeks. Don’t forget to stay safe, and trade safe.
Congratulations, Joe Biden.
Who else feels like this year has gone by so quickly? Each week ahead article, I have been talking about how the election is coming and how volatile times are coming ahead. Now we are neck-deep into election season, with the first one in New Zealand granting Jacinda Ardern and her party a landslide victory, enabling them to govern themselves. All eyes now are on the Presidential Election in the United States and the Brexit outcome between the UK and the EU. Here is your week ahead.
Note that Jerome Powell is set to speak on Monday – however, this is regarding digital currencies that may provide good information on his stance on digital currencies, but is unlikely to move the market much unless he provides other viewpoints on the future of the economy.
Everyone likes to talk about how well New Zealand handled the Coronavirus, with the nation opting for an elimination strategy rather than a suppression strategy. However, not many talks about China's statistics. They, too, went with an elimination strategy rather than a suppression strategy and have achieved results similar to that of New Zealand.
Coronavirus is all but a memory in Mainland China, especially in Wuhan, where the virus originated. A Bloomberg Poll of economists expects China to a third-quarter economic growth rate of 5.5%, which is near pre-Coronavirus levels. Morgan Stanley believes this is due to "very strong exports and the gradual improvement in domestic consumption," citing higher exports in the previous month.
Furthermore, China's central bank is set to release its decision on interest rates later this week. Unlike the rest of the world, which cut rates at the start of the Coronavirus pandemic, China opted to restrain in cutting rates in favor of the fiscal policy. Ma Jun, a PBoC adviser, stated earlier this year that "the PBOC doesn't use its bullets all at once. China has plenty of room in monetary policy". And it seems like analysts predict to keep it that way, with the consensus being that the PBOC will keep rates unchanged at 3.85% this week ahead.
With a second wave of the Coronavirus hitting Europe as they enter into their winter seasons, Christine Lagarde is expected to reiterate further support for the economy and the central bank's relatively bearish stance. With lax lockdown measures in the UK and Spain, alongside many partial reopening's around the nations in Europe, has wreaked havoc as the second wave in many countries nearly doubles or even triples the new daily cases seeing the first wave.
Furthermore, PMI's are set to come out for both the EU as a whole and Germany. Analysts predict EU PMI's to drop below 50, to 49.5, showing a consensus of contraction in manufacturing in October.
Australia has tamed its second outbreak of the Coronavirus, providing the opportunity for a quasi "trans-tasman" bubble that has been talked about between them and New Zealand. As things return to relative normality in Australia, many cities in Melbourne, Victoria, continue to be in a state of lockdown, which may weigh on the Retail Sales figure, which is predicted to drop by 4% this month.
The mismanagement of the Coronavirus by Prime Minister Boris Johnson has put the UK in a terrible position. Even with a second lockdown, the Coronavirus continues to post double-digit new cases each day, way more than the first wave. With Boris keen to get business back on track, his focus became on ensuring economic downfall was minimized as much as possible. However, as shown by countries that opted for a full elimination strategy rather than a suppression strategy, the first step in an economic recovery is eliminating the virus.
The UK seems to have skipped that bit and opted to recover without fully squashing the virus. This has lead to disastrous consequences, with England's deputy chief medical officer Professor Jonathan Van-Tam resorting to hopes that the UK can roll out a Coronavirus vaccine "soon after Christmas" A restriction in demand in the UK alongside many subsidies has forced business in the UK to raise their prices – therefore, analysts predict an increase in the CPI this month by 0.5%.
Another country that opted for a relatively loose lockdown – who encouraged, but did not enforce, citizens to stay at home is facing the consequences. A second wave has hit many Canada regions, with 80% of the cases having stemmed from Ontario and Quebec, its two most populated provinces. However, the government still has not ordered a complete lockdown, with Ontario closing certain establishes like gyms, movie theatres, casinos, and restaurants. Analysts predict the rate of CPI increase to drop slightly by 0.7%.
New Zealand has been the poster child for how the world wishes they initially handled the Coronavirus. As I stated many times already, New Zealand opted for an elimination strategy, and has seemed to work. "Hard and Fast," the Motto Prime Minister Jacinda Ardern went by, seemed to work, with New Zealand back to a relatively normal. The Coronavirus success has also won many voters' hearts this weekend, with elections giving her and the party a second term with a landslide victory. They retained 49% of the votes, enabling them to govern alone. With that said, there are mixed thoughts regarding CPI figures this week ahead, with last month's print showing a 1.5% increase.
A lot has happened since the last Presidential Debate. President Donald Trump contracted Coronavirus, a new stimulus bill has been proposed, and Biden's son Hunter Biden has been in the news for leaked emails. Personally, I do not think the debate will provide much insight into future policies. It will be more comedic than anything. If anything, I believe this is a period where traders and investors should keep trading at a low, as both candidates' comments may whipsaw the market – as shown by the previous debate.
Stay safe, Trade safe.
Earnings season! As we end another quarter, public companies worldwide will start to open up their books to the market, showing us how well (or not well) they did during the Coronavirus. Here's your week ahead.
With the ECB signaling that they are ramping up measures to meet their mandate of 2% by slashing their already negative rates and broadening their lending requirements, Investors and Traders should expect extreme volatility in Euro currency pairs as Christine Lagarde further elaborates on these measures. Currently, Interest rates are at 0%, with real rates being in the negatives. Any more hints confirming a move for interest rates to go lower by Lagarde, and expect the Euro to weaken dramatically.
The UK was in a position to flatten squash the curve – but they blew it. Fully in their second wave, Prime Minister Boris Johnson has put the country in lockdown too late. Their first wave saw them get around 6,000 new cases per day at its peak. Now they get upwards of 12,000 cases per day. This puts Governor Bailey in a difficult position. He states that "we are by no means out of firepower, not out of luck in terms of policy tools." However, the second wave may deplete the firepower. However, Governor Bailey is for Boris Johnson and the European Union to agree, stating that he thinks "it is in the interest of both sides – lets be blunt – to get an agreement."
The UK publisher "The Mail" disclosed that representatives from Britain's largest lenders have talked to central Bank Officials to prepare for interest rates to plunge below zero. It is stated that Lloyds Bank and NatWest have drawn up plans to invest over 100 Million pounds into upgrading their computer systems to cope with the negative interest rates change. Currently, the UK's interest rates sit at 0.1%.
On UK's unemployment rate – 3 months ago, The Guardian posted an article stating, "If a second wave of Covid can be avoided, the UK's Unemployment Rate is likely to rise to 11.7% by the end of the year…" As we know, the second wave is in full swing meaning unemployment most definitely going to rise further than the 11.7% predicted. Market consensus expects the three month unemployment rate to be 4.3%, slightly higher than the 4.1% print the last time.
The United States experienced a mostly expected curveball last week, with its President, Donald Trump, contracting the Coronavirus. With election season coming up, Trump has vowed to reopen the United States Economy as fast as possible in hopes for a Hail Mary. However, his reopening may have cost many American lives, as the Coronavirus continues to ravage the economy. With that said, analysts predict CPI to increase slightly to 1.4%, from 1.3% print previously.
Australia has done something that the UK has not been able to do - recover from a second wave. The outbreak in Victoria has largely been controlled, although they have continued to stay in lockdown. However, it seems like geopolitical issues have come to hinder their economy. China has reportedly sent out orders to several state-owned steelmakers and power plants to stop coal imports with immediate effect.
Alongside the government's 98 Billion dollar stimulus plan, the market is pricing in a 75% chance that the Reserve Bank of Australia will cut interest rates from 0.25% to 0.1%. This was from the RBA's deputy governor Guy Debelle hinting at imminent further easing. See moves in the Australian Dollar if Governor Lowe continues to give hints to crate cuts.
On Thursday, expect a drop of around 50,000 Jobs in Australia. This is a far cry from the 111k positive employment change in the previous print.
On the Commission on Presidential Debates' recommendation that Trump and Biden debate virtually due to Trump testing positive for the Coronavirus, Trump says no. Now both candidates are scrambling to find venues to reach their voters in the last stretch of the election. The debate on 22nd October, set to be held in Nashville, will likely be the final face-off between the two candidates before election day.
With people in the United States moving freely, it's a surprise that Retail Sales are predicted to be slightly down this month at 0.5% as suppose to 0.6% the month before. However, this may be due to the employment figures last week being worse than expected.
A busy week ahead as we approach earnings season, and crucial election periods creep up. We have the new iPhone release coming out on Wednesday (Tuesday in America), and banks the likes of Citibank and JP Morgan releasing earnings this week. Stay safe, Trade safe.
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.
Dates are in NZDT.
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.
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.
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.
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.
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.
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.