Macroeconomic/ geopolitical developments
- A fairly quiet week on the macroeconomic and geopolitical front, with the holiday shortened session in the US on Thursday and Friday because of Thanksgiving.
- The main development was on the US political side, as the Presidential transition of power has started properly, and although the Trump administration continues dispute the election result, they have allowed Biden’s team to start the transition.
- Also, Joe Biden announced that Janet Yellen would be his Treasury Secretary, which buoyed financial markets.
- Although some of these Astra Zeneca/ Oxford University vaccine trail results were questioned in the week, the vaccine outlook remains buoyant with the prior November positive trial results from Pfizer and Moderna.
- In Europe, the number of cases continues to either fall, plateauing or rise less quickly across the continent, with recent lockdown measures having an impact.
- COVID-19 cases are still surging in the US with the Thanksgiving holiday potentially seen as a “super spreader” event.
- However, concerns that recent lockdowns will damage the global economic recovery, seem to be priced into markets.
- The UK and EU has restarted their trade talks, with rumours slightly on the positive side.
Global financial market developments
- Global stock indices were positive last week with new cycle highs posted by European and US equity averages as the Dow Jones Industrial Average hit the 30K level.
- The “risk on” phase extended in the Forex space with “risk currencies” still higher as the Australian, New Zealand and Canadian Dollars all strengthened, with the NZDUSD Forex rate hitting yet another new multi-year high.
- The “risk on” environment saw the safe haven US Dollar weakening across the board.
- GBPUSD advanced, with continuing optimism of an EU-UK trade deal.
- In the commodity space, Copper and Oil were again significantly higher, with Gold plunging lower, resuming its role as a safe haven.
Key this week
- Geopolitics:
- There is an OPEC meeting on Monday and Tuesday.
- Markets will monitor for vaccine announcements and possible approvals.
- COVID-19 cases, hospitalisations and deaths stay in focus in Europe and particularly for the US.
- Watching for new lockdown measures, particularly from the US
- Further developments in the transition of US Presidential power.
- Central Bank Watch: The Reserve Bank of Australia (RBA) make their interest rate decision and statement on Tuesday; Jerome Powell testifies to Congress on Tuesday and Wednesday.
- Macroeconomic data: A very busy data week with the standouts being the global manufacturing and services PMI data Tuesday and Thursday respectively, then the US Employment report Friday.
Date | Key Macroeconomic Events |
30/11/20 | OPEC meeting; Chinese manufacturing and non-manufacturing PMI; German CPI |
01/12/20 | OPEC meeting; Global Markit manufacturing PMI; RBA interest rate decision and statement; German Unemployment report; US ISM manufacturing PMI; Jerome Powell testifies to Congress |
02/12/20 | Australian GDP; German Retail Sales; US ADP Employment change; Jerome Powell testifies to Congress |
03/12/20 | Global Markit services PMI; weekly Jobless Claims; US ISM services PMI |
04/12/20 | US Employment report; Canadian Employment report |