SMATS FX Weekly Market Report | Monday 19 October 2020

USD

It was a rather volatile week for the USD last week as it bounced around with ongoing uncertainty surrounding the Presidential debate, which is set to continue Thursday. In a week that is rather light on trading data, the USD will take cues from general market sentiment and any progress on the COVID-19 vaccine. Flash PMI figures are due out on Friday with the manufacturing figure set to remain at 53.2 and the services PMI looks set to decrease from 54.6 to 54.1.

Influences on HKD, SGD & AED

Hong Kong are set to have a busy week this week, they will be releasing their unemployment rate for September on Tuesday, it is expected to inch lower from 6.1% to 6.0%. On Thursday, their inflation rate is expected to rise to 0.3% for September (year-on-year). Finally, on Friday, it is expected that their Q4 business confidence will fall from -11 to -28. Singapore will be releasing their CPI data on Friday, their month-on-month rate for September is expected to check in at 0.5% while the core inflation rate should remain at -0.3%.

AUD

It looks like it is going to be a busy week for the AUD with the Reserve Bank of Australia releasing their meeting minutes and a dump of data coming out of China could stir up the AUD pot. RBA Deputy Governor Guy Debelle is set to give a speech on Wednesday, in that, he could provide clues as to how soon the central bank will implement its policy changes after Governor Lowe hinted at extending its bond purchasing program. On Thursday, Australia will be releasing their PMI numbers for October which should give insight as to how the economy has faired under lockdown. The AIG manufacturing index is expected to climb from 55.4 to 55.6 while the markit services PMI should climb to 51.0 from 50.8.

NZD

The New Zealand Dollar has been kept back by ongoing interest rate speculations and economic recovery concerns. This week, the NZIER business confidence is expected to show a sharp drop for the 3^rd quarter with market experts predicted a fall of up to 60%. New Zealand’s quarterly inflation is expected to increase by 0.9% for the 3^rd quarter of the year which will follow a drop of 0.5% in the 2^nd quarter of the year. Jacinda Ardern’s Labour party scored 49% of the votes as 64 of the 120 seats of parliament as she takes reign for the second consecutive term.

China

Chinese data is expected to impact the AUD and NZD due to the trade ties between the countries. Chinese GDP is expected to slow down to 3.3% for the 3^rd quarter of the year after an increase of 11.5%. Fixed asset investment is also expected to rise by 0.7% after dropping by 0.3%. Chinese retail sales are expected to climb by 1.7% in October after a measly improvement of 0.5% in August. The Chinese unemployment rate is expected to fall by 0.1% to 5.5% for September.

EUR

The European Central Bank’s Governor Christene Lagarde will be giving the opening remarks in this afternoon’s ECB Conference later today. She is expected to hint on the fiscal and monetary support plans going forward. On Thursday, Germany will release their Gfk consumer climate which is expected to worsen from -.16 to -3.0 in October, while consumer confidence for the Eurozone is expected to fall from -13.9 to -14.6 later that day. Any progress on Brexit negotiations is expected to support demand for the Euro while market catalysts like the US Presidential debates and vaccine updates will continue to drive market prices.

GBP

The British Pound was largely driven by Brexit news last week after UK PM Boris Johnson said that negotiations had effectively ended last week. This week, the UK will be releasing their inflation data on Wednesday, it is expected to climb by 0.4% YoY for September. On Thursday, we expect a sharp decline in the Gfk consumer confidence for October with analysts expect to see the headline figure check in at -26. Finally, on Friday, September’s retail sales are expected to climb by 0.5%. Any progress on Brexit negotiations is expected to move GBP pairs while market catalysts like the US Presidential debates and vaccine updates will continue to drive market prices.