SMATS FX Weekly Market Report | Monday 05 October 2020

USD

The US Dollar’s short-term strength is expected to run out with the uncertainty surrounding the Presidential Debate following the announcement that the US President Donald Trump and the First Lady have tested positive for COVID-19. A surprisingly poor jobs data didn’t have much impact on the USD last week, this week we have the balance of trade for August which is expected to read US$-66.5 B. Progression on Donald Trump’s condition is also expected to drive the Dollar’s price as the timing of the Presidential election is in question.

Influences on HKD, SGD & AED

As the US Dollar wobbles our exotic currencies follow suite with the rollercoaster of volatility but we have some drivers of out Singapore to drive the SGD, on Monday the markit PMI for September is expected to climb from 43.6 to 48.0 as well as the retail sales should increase by 8%. Hong Kong will be releasing their markit PMI as well, it is expected to climb from 44.0 to 49.0 which shows significant improvement in the economy. The AED is likely to be unchanged by its CPI data that is due out on Tuesday, it is expected to rise from -2.14% to -2.1%.

AUD

Improving investor sentiment allowed the Australian Dollar to rally last week as the jobs data suggests that the Aussie labour market is improving. The Chinese data that was released on Wednesday last week hit expectations and showed that the Chinese economy continues to expand. The Reserve Bank will be making their rate decision on Tuesday, no change is expected but it could cause an intraday movement in the rate. Also, on Tuesday, Australia will be releasing their balance of trade which is expected to climb to A$5 B. On Monday, the NAB business confidence is expected to fall from -8 to -10 for September.

NZD

The Kiwi Dollar benefitted from improved risk sentiment, but the Reserve Bank of New Zealand are keeping a cap on things with rising expectations that they will be implementing negative interests at some point. This week, the only data report out of New Zealand will be the NZIER Business confidence for the 3^rd quarter, which the Central Bank uses as part of their decision-making, it is expected to have fallen by 60% in the 3^rd 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.

EUR

The Euro, which has been one of the best performing currencies in 2020 is took a hit last week as the European Central Bank warned that they are 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 non-monetary policy meeting on Wednesday. On Monday, the Euro area’s retail sales are likely to improve by 1.5% during August. ECB officials will 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.

GBP

The British Pound had an extremely volatile week last week, but it rallied on Friday thanks to increasing odds of securing a Brexit trade deal, but it is expected to remain unpredictable for the foreseeable future. The biggest driver for the GBP this week will continue to be Brexit updates but the balance of trade for August is expected to double from £1.1 B to £2.2 B and the GDP 3-month average is expected to climb to 6.5% on Friday, both are expected to improve the Pound’s strength.