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The Week Ahead – The Presidential Election, COVID-19, and Brexit to Drive the Markets

Bob Mason
·6 min read

On the Macro

It’s another busy week ahead on the economic calendar, with 62 stats in focus in the week ending 6th November. In the week prior, 62 stats had also been in focus.

For the Dollar:

It’s another busy week ahead on the economic data front.

At the start of the week, the manufacturing sector PMI numbers for October will influence. With both the Markit’s finalized and the market’s preferred ISM Manufacturing PMI due out, expect the ISM figure to have the greatest influence.

The focus will then shift to a busy Wednesday.

ADP nonfarm employment change figures are due out along with the all-important ISM Non-Manufacturing PMI.

Factory orders, trade data, and finalized Markit PMI numbers will likely have a muted impact in the week.

On Thursday, the weekly jobless claims figures will also draw plenty of interest ahead of labor market figures on Friday.

With concerns over the labor market recovery lingering, expect plenty of sensitivity to the NFP numbers and unemployment rate.

Away from the stats, the U.S Presidential Election will be a key diver in the week. To add to a likely pickup in market volatility is the FOMC monetary policy decision and press conference on Thursday.

The Dollar Spot Index ended the week up by 1.37% to 94.038.

For the EUR:

It’s also another busy week ahead on the economic data front.

On Monday, Manufacturing PMIs for October are in focus. PMIs include those for Italy and Spain and finalized PMIs for France, Germany, and the Eurozone.

On Wednesday, Services PMIs are due out, which will likely draw greater interest. The surge in new COVID-19 cases across the EU is likely to further derail the service sector recovery.

The market focus will then shift to German factory orders and industrial production figures due out on Thursday and Friday.

While we can expect plenty of influence from the numbers, expect COVID-19 and U.S politics will be the key drivers. News from the weekend of plans to lockdown England for 4-weeks will test support for the Pound at the start of the week.

The EUR/USD ended the week down by 1.80% to $1.1647.

For the Pound:

It’s a relatively busy week ahead on the economic calendar.

On the economic data front, finalized October private sector PMIs on Monday and Wednesday will draw interest.

Expect any revisions to influence ahead of October’s construction PMI on Wednesday.

The main event of the week, however, is the Bank of England monetary policy decision on Thursday.

We’ve heard the talk of negative rates and the UK continues to get hit by the 2nd wave of the COVID-19 pandemic.

Will the BoE hold off until there is clarity on Brexit or make a move? The markets are expecting the BOE to stand pat on interest rates this time around…

Away from the economic calendar, there’s Brexit and the U.S Presidential Election. Expect a Joe Biden victory to be Pound negative.

The GBP/USD ended the week down by 0.71% to $1.2947.

For the Loonie:

It’s a relatively quiet week ahead on the economic calendar.

Economic data include September trade figures and October employment numbers and Ivey PMI.

Expect October employment figures to have the greatest impact in the week.

From elsewhere, private sector PMIs from China, the Eurozone, and the U.S, the U.S Presidential Election, and COVID-19 will also be in focus.

The Loonie ended the week down by 1.49% to C$1.3321 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a relatively busy week ahead on the economic calendar.

In the early part of the week, manufacturing and building approval figures are due out on Monday.

We don’t expect too much influence on the Aussie Dollar, however.

Retail sales and trade data, due out on Wednesday and Thursday will provide direction, however.

While the stats will influence, it is all eyes on the RBA on Tuesday. The markets are expecting a rate cut to 0.1%.

Forward guidance accompanying the rate cut will be key on the day.

At the end of the week, the RBA Statement of Monetary Policy should provide few surprises…

From elsewhere, private sector PMIs from China, COVID-19, and U.S politics will also influence.

The Aussie Dollar ended the week down by 1.55% to $0.7028.

For the Kiwi Dollar:

It’s a relatively quiet week ahead on the economic calendar.

September building consents and 3rd quarter employment figures are due out in the week.

Expect the employment numbers to have the greatest impact in the week.

Inflation expectation numbers due out on Friday will also provide direction.

From elsewhere, China’s private sector PMIs, COVID-19 news, and U.S politics will also influence.

The Kiwi Dollar ended the week down by 1.14% to $0.6615.

For the Japanese Yen:

It is a relatively quiet week on the economic calendar.

Key stats include October’s finalized services PMI ahead of household spending figures for September.

We would expect the numbers to have a relatively muted impact on the Yen, however.

COVID-19, U.S politics and, market sentiment towards the global economy will be the key drivers.

The Japanese Yen ended the week up by 0.05% to ¥104.66 against the U.S Dollar.

Out of China

It’s a relatively quiet week ahead on the economic data front.

Key stats include October Manufacturing and Service PMI numbers due out on Monday and Wednesday.

The markets will be looking for continued momentum in the economic recovery at the start of the quarter.

Away from the calendar, COVID-19 and geopolitics will be in focus. A surprise Trump victory would raise the prospects of extended friction between the U.S and China…

The Chinese Yuan ended the week down by 0.07% to CNY6.6915 against the U.S Dollar.

Geo-Politics

UK Politics:

October came and went with both sides failing to close out an agreement. With just a couple of weeks likely remaining before talks would have to end, the markets will be looking for progress.

Failure by the EU to shift on its demand for UK fisheries will likely weigh on the Pound. We could see the U.S Presidential Election in the early part of the week also influence how both sides will continue in talks…

A Trump victory would be considered a positive outcome for Boris Johnson and the Brexiteers.

U.S Politics

It’s the week of the U.S Presidential Election and we can expect plenty of market volatility.

The markets had been hoping for a blue wave that would ensure further stimulus to support the economy.

A Biden Presidential Election victory, however, may not be enough should the Democrats fall short in the senate rate.

If Trump does fall short, we can expect him to contest the outcome… It could be a long drawn out affair that would also be considered a “risk-off” event.

This article was originally posted on FX Empire

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