Macroeconomic/ geopolitical developments
- Republicans and Democrats have still been unable to come to an agreement on a new economic relief package, but hope remains, which has helped the “risk on” theme this past week.
- This was despite President Trump at one point stating that a deal would NOT be done before the election.
- The other significant geopolitical development last week President Trump leaving hospital in recovery, having previously tested positive for COVID-19.
- This has thrown the US Presidential election into some further unrest, with the next Presidential debate now cancelled.
- However, Joe Biden continues to show well in the polls and financial markets seem more and more at ease with a Biden victory and even for a Democrat clean sweep at the November vote.
- A strong Biden victory would ease the threat of a difficult transition of power.
- COVID-19 cases continue to grow at a high rate across Europe and in the U.K., as many nations have instigated new national and regional lockdown measures.
- Despite no tangible progress between the EU and UK in their trade talks, there appears to be some improvement in the chances of a deal being done.
Global financial market developments
- Global stock markets pushed higher through the week, with US averages leading the more positive outlook.
- In addition, market breadth has been supportive with the small-cap Russell 2000 a strong performer from late September.
- In the major Forex markets, the theme has further shifted to “risk on” with the Japanese Yen and US Dollar weakening still further against most major currencies
- The “risk currencies”, notably the Canadian Dollar, have particularly benefited.
- GBPUSD broke above a notable barrier at 1.3007 for a more positive tone, from hopes of a EUR-UK trade deal.
- EURUSD has further shifted to a more positive outlook short-term.
- In the commodity world, Oil, Copper and Gold have all rallied as the US Dollar has again weakened, again echoing the “risk on” theme.
Key this week
- Central Bank Watch: Some Central Bank speakers through the week, but no meetings or release of minutes to note.
- Macroeconomic data: A very quiet week on the data front too.
- Earnings season: Earnings season kicks off in earnest this week, with the spotlight on major US banks, Johnson and Johnson, Delta Airlines, United Health and Walgreens.
|Date||Key Macroeconomic Events|
|12/10/20||Nothing of note|
|13/10/20||Chinese trade data; UK Employment report; German CPI and ZEW; US CPI|
|15/10/20||Australian Employment report; US Jobless Claims|
|16/10/20||US Retail Sales|