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Week ahead – United States Election!

With over 93 Million US Citizens voting early, surpassing two-thirds of all 2016 and consisting of 43% of registered voters, the United States election is finally two days away this week ahead. Many regard this as one of the most important Presidential Elections in history, possibly changing society's fabric in the United States for the foreseeable future.

Although the Presidential Election will probably get most of the attention, this week continues to be eventful with a lot of data being released. Here is your week ahead.

Dates are in NZDT.

FiveThirtyEight predicts in 20 out of 22 scenarios Biden will win the Presidency

Monday, 2nd November – US ISM Manufacturing

A key point in Trump's campaign in 2016 was his promise to bring jobs back to America. However, an amended NAFTA agreement, alongside many more amendments to foreign policy, has lost many manufacturing jobs. For example, over one in four Michigan manufacturing jobs have been lost since the NAFTA agreement amendment.

The Coronavirus has just brought more pain to the sector, with an estimated 381,000 manufacturing workers in Michigan, Ohio, Wisconsin and Pennsylvania were laid off or furloughed – with all, but one (Pennsylvania) states being in the midwestern part of the USA. These states were one of the key reasons why Donald Trump was elected in 2016.

As states slowly open up, the Coronavirus continues to run rampant, affecting workers employed in the manufacturing sector. Unlike the tech and finance sector, manufacturers can not work from home. With that said, the US's ISM is predicting to increase slightly from last month to 55.6 this week ahead, as suppose to 55.4 last month.

Tuesday, 3rd November and Wednesday, 4th November – RBA Interest Rate decision and Australian Retail Sales

Australia reached a positive milestone yesterday – zero community transmission. The country has a long road to recovery ahead of them, and the Reserve Bank of Australia acknowledges that. With dovish tones in the previous RBA minutes, analysts predict a 150 point basis cut, from 0.25% to 0.1% tomorrow. However, Insight Manager at Finder, Graham Cooke believes that further cuts will not make dramatic changes to the finances of ordinary Australians, stating that "a further 10-15 point basis cut us unlikely to have much of an impact on the economy –however, our experts seem to think that the RBA is in "every little bit helps" mode."

Furthermore, Retail Sales will also be released a day after the decision. Analysts predict a further 1.5% decline in Retail Sales as the Coronavirus continues to take a longer-term toll on employment.

Wednesday, 4th November – US Presidential Election.

The event everyone and I mean everyone, including your mother, will be watching.

There is nothing much to say about this other than to buckle in. Many polls state that Biden is likely to win. FiveThirtyEight predicts that in 20 out of 22 scenarios, Biden is stated to win. Other polls from firms such as RealClearPolitics see Biden leading over 9%.

Judging by the polls, the only way Trump can win is if he wins all of the swing states. The popular vote in NYC and California have Biden to win anyways, which means the popular vote will be absorbed within the Electoral college (tl:dr, the RealClearPolitics poll may be closer than is stated).

However, the polls showed Hillary winning in 2016. And we all know what happened then.

Friday, 5th November – Bank of England Interest Rate Decision

The UK struggling with lackluster leadership

The UK has finally imposed a stricter lockdown (however, not a full lockdown) on citizens for one month, with analysts predicting that the lockdown may be extended further to allow the UK to have their Christmas not under lockdown. The Bank of England is set to inject over 100 Million pounds buying back bonds to fight the second wave.

However, this may not be enough, with analysts at HSBC predicting that the BoE's bond-buying regimes are "running out of room," which may leave the central bank with no choice but to implement negative rates. Governor of the Bank of England, Andre Bailey, has not ruled negatives rates but has described evidence of their effectiveness as "pretty mixed" and that negative rates might be most effective when an economy is in a recovery phase for the economy to take full advantage of the negative rates. Analysts predict rates to stay at 0.1%.

Saturday, 5th November – US Non-Farm Payroll

A key indicator showing how well the US economy is recovering, Non-farm payrolls is predicted to print 700,000 new jobs, up from 661,000 the month before.

This week ahead is going to be a turbulent one. Strap yourself in, and brace for the ride.

Stay safe, Trade safe. Have a good week!

GBP/USD falls on a key support after 10 day streak

GBP/USD falls to 1.2563 on the back of relative strength over the past 2 weeks. General risk sentiment fueled the rally. However, fears of a second wave abruptly stopped the rally.

With the recent safe haven characteristics, the USD has been exhibiting over the past, it is not surprising that the USD has been strengthening across the board. Pair this with little substantial news on Brexit, and the drop in the GBP/USD is substantiated.

Strength in the USD also came from Retail consumer data from the commerce department posting record numbers, jumping 17.7% in May – with analysts originally forecasting an 8.5% increase. This shows that the backbone of the US economy, the consumer, is again providing optimism for the US markets.

This is on the back of Jerome Powell testifying to congress that the US government will likely need to spend more money to ensure the US can reach a full economic recovery. However, he maintained a cautious stance about the economy. This may be advantageous for Trump, as he may quote Powell for being supportive of an $1 Trillion Infrastructure bill the President is trying to pass through congress.

GBP/USD may still be under pressure due to Brexit and second wave fears

Weakness in the GBP may be attributed to Brexit talks progressing slowly, with Prime Minister Boris Johnson saying that the EU and the UK were “not far apart” relating to the country and the Unions relationship. The Brexit saga has been ongoing since 2016, and has pushed the GBP/USD has been ranking lower since the announcement.

Traders should watch the key psychological 1.255 level, as it may provide an entry point for a reversal.