Despite hopes of a continued upward trend, the market remains volatile on the back of a heavy economic data week.
Week starting 07-12-2020
- US Dollar traders are in a bearish mood following negative economic updates and drawn-out hopes of stimulus.
- The USD also continues to be unpredictable as Biden slowly announces his administration.
- Jobs data came out worse than expected last week.
- Non-farm productivity for the third quarter is expected to climb by 5% when it is released on Tuesday. The inflation rate is also anticipated to increase by 1.2% year-on-year on Thursday.
- The Euro benefitted greatly from counter-currency flows and upbeat business sentiment data out of the larger European countries last week.
- It could be an exciting week for the Euro as we fast approach deadline day for Brexit.
- The European Central Bank (ECB) will also be announcing its policy decision on Thursday at 14:30 GMT. No changes to the interest rate are expected, but there could be an expansion of the Pandemic Emergency Purchase Programme.
- Stimulus is anticipated to be bullish as the economy desperately requires a boost.
- Increased optimism on vaccine development could keep risk appetite in play.
- The British Pound had mixed results last week, but ended in the green as sentiment on a potential Brexit deal seemed to be more optimistic.
- Brexit talks will be the main driver for the Pound this week in the absence of any major catalysts.
- While Brexit negotiations have appeared to sour over the past week, a last-minute deal is not impossible.
- The South African Rand continued its rally as it rode a wave of risk sentiment.
- Fortunately for the Rainbow Nation, no further restrictions in the Western Cape means that the economy can continue to recover despite stricter lockdowns in Nelson Mandela Bay.
- The GDP growth rate for the third quarter is expected to climb by 50% after falling by 51% in the second quarter and 7.5% on the year.
- Retail sales for October is due out on Wednesday. It should rise by 2.6% after a 1.1% gain the month before.
- Vaccine updates should influence the Rand and ZAR traders should monitor the potential increased lockdown restrictions as cases begin to surge once more.
- Improving GDP and retail sales data seemed to lift the Aussie Dollar last week, but counter-currency flows saw the AUD fall in the first half of the week.
- Developing trade tensions with China resulted in a shaky AUD in the last couple of weeks.
- Market traders should keep an eye out for any developments as Australia rumbles with its biggest trading partner.
- China is set to drop a load of data this week, which is anticipated to have an impact on the Aussie Dollar’s strength.
- Trade surplus is due on Monday, along with the imports, exports, consumer and producer prices on Wednesday.
- A turn in risk sentiment saw the NZD tumble last week despite positive trading updates.
- Another week short of data should see the Kiwi Dollar take cues from counter-currency action and general risk sentiment.
- With the New Zealand Dollar gaining over the last few weeks, the NZD could be vulnerable to some profit taking.
- Chinese data is expected to have an impact on the Kiwi Dollar due to the close trade ties.
- Market traders should keep their eyes out for any results that miss their forecasts.
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