Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Week Ahead: What Next After Election Mayhem?

By MarketPulse (Craig Erlam)Market OverviewNov 06, 2020 04:27PM ET
www.investing.com/analysis/week-ahead-what-next-after-election-mayhem-200543791
Week Ahead: What Next After Election Mayhem?
By MarketPulse (Craig Erlam)   |  Nov 06, 2020 04:27PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

I think it’s safe to say, last week more than lived up to expectations. We may never see a US election like it again. What is remarkable is how relaxed traders have been throughout. And to think, this was only one of a number of major risk events between now and year-end. It’s going to be a fascinating couple of months in the markets.

US

The Federal Reserve unsurprisingly kept its powder dry and announced no more easing but it did raise concerns about the economic outlook and the lack of fiscal stimulus. Many expect the central bank to announce further easing measures in December, once the election is resolved and with new economic projections to guide them. They’ll also have a better idea of how bad the Covid situation has got by then and whether any needed stimulus is forthcoming.

The jobs report was strong with 638,000 jobs added and unemployment falling to 6.9% although this would have been 0.3% higher if workers classified correctly. Next week is mainly made up of tier two and three data, with the election hangover likely continuing to dominate the headlines.

EU

It was a low key week for the EU and next week will be no different, with a number of tier three economic data and very little else. The ECB has pushed back any stimulus to December so it’s simply a case of waiting and watching.

Brexit

COVID aside, this remains the number one issue for the UK and EU. Talks have intensified and it’s been pretty quiet in public which is promising. Both sides clearly agreed to stop fighting this out in public and focus on finding a compromise in private. It does seem we’re edging closer to a deal, it’s just a case of when. The next week could be crucial. A collapse at this late stage would be a terrible failure from all concerned and I don’t think it’s likely now.

UK

With the country in lockdown for the next month, the economy is going to struggle. The extension of the furlough scheme until the end of March will help but with the announcement coming so late in the day, it will be too late for some.

Still, the BoE did revise down the end of year unemployment forecast this week to 6.25% from 7.5% in August, although it also revised down growth for this year (-11% from -9.5% in August) and next (7.25% from 9%), with 2022 expected to be better (6.25% from 3.5%). It also increased its asset purchase program by £150 billion, 50% more than the market anticipated, and suggested more could come if needed, possibly reducing the prospect of negative rates.

China

Ant Financial IPO forgotten within days of cancellation.

PPI Wednesday expected to fall 2.0% YoY, likely due to holiday distortions. No market effect.

Sentiment in China markets driven by the evolution of the US election situation.

Hong Kong

USD/HKD remains at the bottom of its trading band with heavy buying from the HKMA. With FOMC in play in December, yield carry will keep HKD there despite unwinding of Ant Financial IPO funds by offshore investors.

GDP Friday, wide range but no direct market effect..

India

India CPI, Balance of Trade and Industrial Production on Thursday. CPI will show inflation remains high at over 7.0%. BoT will show exports falling but imports collapsing by 20%. Industrial Production remains contractionary at -3%.

In other words India is in the grip of stagflation as it wrestles with the Covid-19 pandemic/recession. INR gained little benefit from Dollar weakness and will remain a regional underperformer. Credit quality concerns and banks persist.

New Zealand

The RBNZ meeting on Wednesday poses a serious threat to the NZ Dollar rally. RBNZ expected to cut from 0.25% to 0.10%. There is a possibility that RBNZ will go NEGATIVE rates though. RBNZ Governor Orr is an uber-dove and has publicly stated he is not afraid to use negative rates.

Very negative NZD if RBNZ goes negative, exercise caution tracking Kiwi higher with AUD until RBNZ is done.

Australia

NAB and Westpac Consumer Confidences expected to ease slightly as Covid-19 reopening peace dividend fades.

AUD/USD one of world’s best FX performers as the FOMC easing, China commodity story reasserts itself as per before the US election.

China appears to be waging a silent trade war with Australia. Effectively blocking all key exports except Iron Ore and Gas, but verbally telling importers to source elsewhere. If officially confirmed, strong negative for Australia equities and AUD, as Australia has let itself become a one trick pony. Surprisingly ignored over the past week, but will remain a major downside risk.

Japan

Reuters Tanken survey, Machinery Orders and PPI will show that Japan’s domestic outlook remains in recession and that Japan is grappling with deflation again. GDP Friday will show an improvement to -3.50% YoY but still anchored in negative territory.

Yen has rallied impressively over the last 48 hours, with USD/JPY breaking long-term support at 104.00, targeting 102.00 and 101.00. That will exacerbate deflationary pressures and will have the Government/MoF and Boj nervous. Expect a ramp-up in currency comments as USD/JPY approaches 102.00. No intervention though unless USD/JPY breaks 100.00. If the rest of Asia FX also rallies strongly, that likelihood lessens.

Week Ahead: What Next After Election Mayhem?
 

Related Articles

Jeffrey Halley
Over To You Jerome By Jeffrey Halley - Jul 28, 2021 1

Wait-and-see ahead of FOMC meeting Asian markets are likely to spend the day in wait-and-see mode with a slight downward bias today, as the street moves into a pre-FOMC holding...

Week Ahead: What Next After Election Mayhem?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
Boyoung Schang
Boyoung Schang Nov 07, 2020 2:35PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Did Joe Biden say he will lockdown Coronavirus but not economy?? Nobody asks him how
Mike Spike
Mike Spike Nov 07, 2020 2:35PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
By enforcing mask, social distancing and hygene practices. In Asia they are behaving like this for years.
Brandon Olds
Brandon Olds Nov 07, 2020 2:10PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
3 more months of capitalism before the Socialist Bear market, economy *****comes to power
Pawan Kumar
Pawan Kumar Nov 07, 2020 1:13PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
sweet opinion....But I feel that without Mr Trump...No Stock Market....it means....full negative zone start...next week
Mike Spike
Mike Spike Nov 07, 2020 1:13PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Melt up will start no mather ifBiden won or not
Rodrigue Osirus
Rodrigue Osirus Nov 07, 2020 5:42AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks for this short and sweet economic news digest.
Chris Poulos
Chris Poulos Nov 07, 2020 5:41AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
remember when the usd/jpy was down in the 70s? back then the japanese government was openly selling huge amounts of yen to try & compensate. it didnt work. theyre not thinking of doing that again are they? what kinds of intervention do they have at their disposal? rates are already negative.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email