Despite a winner being declared, continued US election uncertainty will dominate market movements in the coming week.
Week starting 09-11-2020
- Former US Vice President Joe Biden was elected the 46th President of the United States over the weekend.
- Donald Trump has since launched a barrage of legal campaigns and accusations claiming that the vote was rigged and demanding recounts.
- The USD soured throughout last week as the world braced for what would be a bumpy election.
- Federal Open Market Committee (FOMC) members will be giving speeches throughout the week, with Tuesday playing host to Robert Kaplan, Randal Quarles and Lael Brainard.
- Election news will continue to roll out throughout the week and any contested results are likely to aid risk aversion.
- The Euro took its cues from overall risk sentiment last week.
- As a bunch of European countries go back into lockdown this week, investors will focus on the region’s recovery trends.
- Speeches from the European Central Bank (ECB) will likely hint at further easing in December as emphasis has been put on downside risk for the Euro.
- UK and European representatives will meet this week to look for compromises in the key issues of British fishing waters and environmental protection.
- Germany and the Eurozone will be releasing their ZEW economic sentiment, both of which are expected to plummet.
- Brexit updates are likely to drive the Pound’s value as representatives from both the United Kingdom and Europe resume their Brexit talks in London this week.
- With the UK now in a hard lockdown, data reports will be significantly more important as we assess how the economy copes with the restrictions.
- Labour market numbers are due out on Tuesday. The unemployment rate is expected to rise from 4.1% to 4.5% which will be a net of 140,000.
- Preliminary GDP numbers are due out on Thursday and the economy is expected to have grown by 15.5% in the third quarter after dropping by 19.8% in the second quarter. Strong numbers here could have a subdued impact as they reflect pre-lockdown figures.
- The South African Rand rode the wave of risk sentiment last week, strengthening against all major currencies as the US election delivered a risk-on bias.
- In the absence of any domestic data reports, the ZAR will be influenced by global risk trends and updates on the US elections could move Rand pairs.
- President Cyril Ramaphosa is set to address the nation this week which has been described as a “family meeting” – he is expected to raise concerns of a second wave starting in the Rainbow Nation.
- The Aussie Dollar had a stellar performance last week as it benefited from a risk-on sentiment and anti-Dollar movements while the US elections took centre stage.
- Risk sentiment is likely to be a theme of the week as the markets settle down following Joe Biden’s win in America.
- The NAB business confidence index and the Westpac consumer confidence index are both expected to improve this week, the former from -4.0 to -3.0 and the latter to inch up to 108.00 from 105.00.
- China will be releasing its CPI and PMI numbers on Tuesday, both of which are expected to fall. The movement could also impact AUD pairs.
- Much like its AUD counterpart, the Kiwi Dollar strengthened substantially throughout the last week.
- In the upcoming few days, however, the Reserve Bank of New Zealand (RBNZ) will be making its policy decision. This after adopting a no-changes stance last month, despite hinting at further easing.
- On Wednesday, market analysts expect the central bank to keep rates at 0.25% but Governor Orr is expected to unveil funding for a programme that will allow for lower retail lending rates.
- US election news will continue to influence the NZD as the demand for higher-yielding currencies will be affected.
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