SMATS FX Weekly Market Report | Monday 26 October 2020

USD

The US Dollar is currently undergoing a rollercoaster of volatility with the US Presidential elections at the forefront of the news with the 3^rd November election date fast approaching. This week, the durable goods order for September is expected to improve by 0.4% after gaining by the same amount last month. Then on Thursday, the GDP growth rate advance for the 3^rd quarter is expected to recover by a staggering 30% after falling by 31.4% last quarter. On Friday, personal income and spending is likely to improve, the former should climb by 0.4% after a 2.7% decline in September while the latter looks set to increase by 0.8%.

Influences on HKD, SGD & AED

This week Hong Kong will be releasing their balance of trade for September on Tuesday, it is expected to increase from HK$-14.6B to HK$-5B. At the same time, the yearly exports and imports are also set to be released but no official estimates have been made. On Friday, the GDP growth rate for the 3^rd quarter is expected to check in at 1.5% after a contraction of 0.1%. Things don’t look too good for Singapore as it looks like their unemployment rate will increase from 2.8% to 3.2% for the 3^rd quarter (on Tuesday) and business confidence for the 3^rd quarter is set to fall from -7 to -22.

AUD

The Aussie Dollar will be printing a few high-impact reports this week as they print their quarterly inflation numbers for the 2^nd quarter of the year. Consumer prices dropped by 1.9% in the 2^nd quarter thanks to the pandemic related restrictions. This week analysts see price growth of 1.4% in the 3^rd quarter and annual prices climbing by 0.6%. The Reserve Bank of Australia will be printing its policy statement next week with large expectations of a November rate cut, this week’s data is likely to influence the RBA’s decision. This week will be the 5^th Plenum of the Communist Party of China gathering this week in China as they are expected to lay out the social and economic development plan for 2021-2025. Optimistic tones will alleviate concerns of the global pandemic and encourage investor risk-taking.

NZD

The Kiwi Dollar took big hits in the first part of last week but recovered well in the second half of the week thanks to counter-currency flows. This week, there are no major data reports scheduled for New Zealand, meaning traders will have to take the New Zealand Dollar as a high-yielding risk-on trade for the next few days. On Monday, the trade balance is expected to show a deficit of NZ$800 M for September. Then on Thursday, the ANZ business confidence is expected to improve from -28.5 to -14.5 in October on the back of Jacinda Arden’s re-election.

EUR

The European Central Bank will be making their policy announcement on Thursday, along with Q3 preliminary GDP releases for the major European economies. On Thursday, the European Central Bank is expected to maintain its ‘wait and see’ tone as a second wave of infections begins to fly through the continent. Analysts expect Lagarde to hint at more easing in December to assist with growth in the Eurozone. On Friday, GDP readings are due out, any significant misses are expected to have a significant impact following the PMI disappointments last week.

France: Expected 15.1%, Previous -13.8%.

Germany: Expected 7.2%, Previous -9.7%.

Spain: Expected 13.5%, Previous -17.8%.

Eurozone: Expected 7.5%, Previous -11.8%.

Italy: Expected 11.0%, Previous -12.8%.

GBP

The UK are set to print some low-tier data this week which is expected to take the backseat should there be any Brexit related updates. This week, nationwide house prices, CBI realized sales, mortgage approvals, BRC shop price index and net individual lending are all due out, none are expected to make an impact on their own but a consistent positive or negative tone will lead to a shift in the Pound’s value. The continuation of the Brexit negotiations are expected to be priced into the market, the Pound will likely take cues from overall risk sentiment with big GDP releases coming from the US and Eurozone as well as the BOC, BOJ and ECB policy statements this week.