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From Trump’s illness, to more Brexit talks and the global economy’s continued uphill battle – the markets are set for an unpredictable week.
Week starting 05-10-2020
- The US Dollar’s short-term strength is expected to run out, following a tumultuous Presidential Debate and the announcement that President Donald Trump and the First Lady have tested positive for COVID-19.
- Surprisingly poor jobs data didn’t have much impact on the USD last week.
- This week the balance of trade for August is anticipated to read USD 66.5 billion.
- Progression on Donald Trump’s condition is also expected to drive the Dollar’s price as the timing of the Presidential election comes into question.
- The Euro, which has been one of the best performing currencies in 2020, took a hit last week as the European Central Bank (ECB) warned that it is not comfortable with the speed at which the currency has rebounded.
- Brexit updates are likely to be the main driver for the Euro this week in addition to the ECB’s non-monetary policy meeting on Wednesday.
- On Monday, the Eurozone’s retail sales are likely to reveal a 1.5% improvement during August.
- ECB officials will also be giving speeches throughout the week, which could drop some hints as to how the Central Bank will be providing further stimulus to the economy.
- The British Pound had an extremely volatile week, but it rallied on Friday thanks to increasing odds of securing a Brexit trade deal. However, it is expected to remain unpredictable for the foreseeable future.
- The biggest driver for the GBP this week will continue to be Brexit updates.
- Furthermore, the balance of trade for August is anticipated to double from GBP 1.1 billion to GBP 2.2 billion and the GDP 3-month average is expected to climb to 6.5% on Friday – both are sure to improve the Pound’s strength.
- The South African Rand was on the backfoot last week as developed currencies benefitted from the news that Donald Trump contracted the Coronavirus.
- The markets are expected to remain shaky as we await further news on the President’s condition.
- In the absence of any major data reports this week, the ZAR will be driven by anti-dollar movements and investor sentiment as the world continues to grapple with Coronavirus.
- Improving investor sentiment allowed the Australian Dollar to rally last week, as jobs data suggests that the Aussie labour market is improving.
- Chinese data released on Wednesday last week matched expectations and showed that the Chinese economy continues to expand.
- The Reserve Bank will be making its rate decision on Tuesday. No change is expected, but it could cause an intraday rate movement.
- Also on Tuesday, Australia will be releasing its balance of trade, which is expected to climb to AUD 5 billion.
- On Monday, National Australia Bank’s (NAB) business confidence is expected to fall from -8 to -10 for September.
- The New Zealand Dollar benefitted from improved risk sentiment, but the Reserve Bank of New Zealand (RBNZ) is keeping a cap on things with rising expectations that it will implement negative interests at some point.
- This week, the only data report out of the country will be the New Zealand Institute of Economic Research’s (NZIER) business confidence for the third quarter, which the Central Bank uses as part of its decision-making. It is expected to have fallen by 60% in the third quarter.
- The Kiwi Dollar is expected to cling onto AUD movements as both higher yielding currencies will be hoping for improved global risk sentiment to increase their buying power.
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