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15 days to go before the November 3 election

USD

With 15 days to go before the November 3 election, Joe Biden is slightly ahead of President Donald Trump by 9% nationally, according to polling averages. Both candidates will have another opportunity to score some points in the second and final U.S presidential debate set to take place on Thursday, 22, in Tennessee. On the U.S data front, the initial claims could receive a little more attention after a poor outcome last week. Also, the Federal Reserve will issue its Beige Book - a collection of economic and business activity assessments within each of the central bank’s 12 regions. Key figures coming up:

  • On Monday (19/10): monthly budget statement (Sep)
  • On Tuesday (20/10): Housing start and building permits (Sep)
  • On Wednesday (21/10): EIA crude inventories (w/e 16 October) | Fed beige book
  • On Thursday (22/10): Initial jobless claims (w/e 17 October) | Existing home sales (Sep) | 2nd U.S Presidential Debate

EUR

Last week, European countries continued to record increases in the number of new cases of Covid-19 infections. Thus, multiple European countries were forced to implement new lockdown measures in their major cities to contain the spread of Covid-19. Hence, broadening lockdowns across Europe have taken some of the steam out of the EUR. Over the coming week, market participants will pay attention to October PMIs on Friday, where it might offer more evidence of the eurozone’s fading recovery. There is a whole host of ECB speakers due again this week. Key figures coming up:

  • On Monday (19/10): Euro area construction output (Aug) | Spain trade balance (Aug) | ECB President Lagarde speech
  • On Tuesday (20/10): Euro area and Italy current account (Aug)
  • On Wednesday (21/10): ECB's Guindos speech
  • On Thursday (22/10): Germany consumer confidence (Nov)
  • On Friday (23/10): IHS Markit Flash PMI for Eurozone (Oct) 

GBP

Last week, the UK Prime Minister not only did not call for the end of negotiations but also said it is time to “get ready” for an “Australia-style solution” to the post-Brexit trade talks with the European Union. This solution means that the UK would trade on World Trade Organization terms: as a country without an EU trade agreement, like Australia, tariffs would be imposed under WTO rules. UK-EU trade negotiations are likely to continue throughout the week, suggesting a limited downside to GBP. Aside from Brexit headlines, attention in the UK this week will be focused on UK inflation and retail sales data. The inflation is set to rebound after the expiry of the government’s Eat Out to Help Out restaurant support program, which targeted VAT reductions for restaurants. Key figures coming up:

  • On Tuesday (20/10): Inflation (Sep)
  • On Thursday (22/10): Consumer confidence (Oct)
  • On Friday (23/10): Retail sales (Sep)

JPY

With global growth showing signs of fading in September amid rising Covid-19 infection cases, flash October PMI data, scheduled on Friday, will provide early insights into economic trends at the start of the fourth quarter. Furthermore, the financial support provided by Japan’s government had started to look small compared to other large economies but Prime Minister Yoshihide Suga last week hinted that more spending is forthcoming. On the economic data front, it will be a quiet week, with the Consumer Price Index (CPI) scheduled on Thursday. The CPI should culminate in another negative year-on-year reading, confirming very little progress in Japan’s multi-decade battle against deflation. Key figures coming up:

  • On Thursday (22/10): Japan inflation (Sep)
  • On Friday (23/10): Au Jibun Bank | IHS Markit Japan Flash PMI (Oct)

CAD

The market participants will be watching for Monday’s release of the central bank’s business outlook survey, which may underline how the Canadian economy regained momentum in 3Q. Also, the Consumer Price Index and August Retail Sales on Wednesday might bring a positive read. Some downside risk may derive from the OPEC+ Joint Ministerial Monitoring Committee meeting, where there are indications of a further unwinding of output cuts, which could lead West Texas Intermediate crude oil to struggle to keep firming at US$40/barrel-mark. Key figures coming up:

  • On Monday (19/10): BoC Business Outlook Survey | Wholesale Sales (MoM) (Aug)
  • On Wednesday (21/10): Core CPI (MoM) (Sep) | Retail Sales (MoM) (Aug)

MXN

Last week, investors saw uncertainty return to the markets and the Mexican Peso losing its winning streak against the USD as U.S stimulus hopes fade given the political stalemate in Congress. On the economic data front, it will be a quiet week, with market participants watching the Unemployment report on Thursday, which might show a third month of marginal improvement after joblessness rose to a near decade-high in June. Also, the market’s attention will turn to Economic activity and Retail Sales on Friday. Key figures coming up:

  • On Thursday (22/10): Unemployment Rate (Sep)
  • On Friday (23/10): Economic Activity | Retail Sales (Aug)

CNY

The Popular Bank of China (PBOC) announced last week a lowering of the risk reserves ratio for financial institutions on certain FX forward trading activities from 20% to 0%, to cap the CNY’s strong gains. This week starts with China releasing Q3 GDP numbers, which is likely to show that its economy is pulling further out of the chasm created by the Covid-19. Also, September updates to economic data, including jobless numbers and fixed investment are expected to be released over the week. Market participants will also pay attention to the Popular Bank of China’s meeting on Tuesday, which will set to decide on its policy rate.

  • On Monday (19/10): China GDP (Q3) | Industrial output | Jobless rate | Retail sales | Fixed asset investment (Sep)
  • On Tuesday (20/10): PBoC policy rate decision

BRL

In the absence of economic data, the real was mostly driven by external factors, as a result, the BRL decreased against the USD by 2% last week, year to date, it has weakened approximately 37%. However, the latest economic data show that Brazil’s economy is recovering, but its restoration still looks quite dependent on public-sector stimulus. This week, investors will be watching for Foreign Exchange Flows on Wednesday and the Current Account balance report on Friday.

  • On Monday (19/10): Federal Tax Revenue (Aug)
  • On Wednesday (21/10): Foreign Exchange Flows
  • On Friday (23/10): FGV Consumer confidence (Oct) | Current Account (USD) (Sep)   

Quick Insights

USD: Initial claims could receive a little more attention after a poor outcome last week

USD: Initial claims could receive a little more attention after a poor outcome last week

EUR: October PMIs on Friday

EUR: October PMIs on Friday

GBP: “Australia-style solution” for Brexit deal

GBP: “Australia-style solution” for Brexit deal

JPY: The CPI should culminate in another negative year-on-year reading

JPY: The CPI should culminate in another negative year-on-year reading

CAD: Some downside risk may derive from the OPEC meeting

CAD: Some downside risk may derive from the OPEC meeting

MXN: Market participants watching the Unemployment report on Thursday

MXN: Market participants watching the Unemployment report on Thursday

CNY: This week starts with China releasing the Q3 GDP number

CNY: This week starts with China releasing the Q3 GDP number

BRL: The latest economic data show that Brazil’s economy is recovering

BRL: The latest economic data show that Brazil’s economy is recovering

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