After tanking many equities at the end of last week, the new coronavirus variant out of South Africa will likely be of primary interest to investors leading to the end of 2021. Nonetheless, the show must go on, and several vital data reports from the world’s major players are released this week.
*Please note; The author is working from UTC +13 when determining the timeline of data releases.
Freshly re-elected Federal Reserve Chair Jerome Powell is scheduled to speak (pre-recorded) on Tuesday morning. However, Powell won’t touch on US inflation, interest rates, and bond-buying issues. Investors might glean more critical information from the speeches of Fed representatives Richard Clarida (Vice-Chair), John Williams, and Michelle Bowman, who all speak Tuesday morning.
The Europeans Union’s Inflation Rate YoY for November is released Tuesday night. A rise from 4.1% the previous month to 4.5% is expected. Even so, It would be a shock for the European Central Bank to pull away from its ultra-accommodative stance in reaction.
We are graced with another Fed Chair speech on Wednesday. This speech should be more closely watched than Tuesday’s.
Powell will testify before the US senate in a speech tilted Coronavirus and CARES Act. It will be interesting to see if Powell’s tone on the transitory nature of inflation has changed to match that of US Treasury Secretary Janet Yellen.
Closing the week will be employment data from the US. First up is the US ADP Employment Change for November. ADP employment is forecast to rise by more than 500K, marking a third straight month of such rises if actualised.
The November Unemployment Rate and Non-Farm Payroll (NFP) are released early Saturday morning. A value in the Mid-500K is expected for NFP, while Unemployment is expected to fall one percentage point to 4.5%.
With employment being a more significant factor for the Fed under Powell’s tenure than previous Chairs, a solid report should help strengthen investors current understanding of the Feds position and timeline on rate hikes and tapering.
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.