Market focus will be on the first US presidential debate ahead of the November election while investors will be closely watching UK-Europe post-Brexit trade talks.
Doubts about economic recovery persisted before a barrage of economic data and political developments in the United States. Investors are turning more cautious ahead of the Nov. 3 U.S. elections.
U.S. presidential elections in November caused investors to re-evaluate their expectations for a global economic recovery. The Nov. 3 presidential election could have dramatic effects across markets.
President Donald Trump will face the Democratic nominee Joe Biden on stage for the first US presidential debate. Among others, they will argue on the pandemic, the Supreme Court and the nation’s reckoning on race.
The final scheduled round of Brexit talks gets underway on Monday. A final agreement must be reached by the end of December. But both sides have set a preliminary deadline as it would take some time to sign off any deal. Markets are pricing in a 40%-45% chance of Brexit without any alternative arrangements at the end of 2020.
Investors hope that Britain could secure a Brexit trade deal with the EU by the October deadline; or at least avoid a cliff-edge exit. The European Union says the U.K. needs to accept some of the bloc’s key demands.
Meanwhile, worries are growing that the economic recovery is slowing. Many stimulus programmes have expired, curbing consumer spending.
Attention will turn firmly to the European Central Bank. ECB President is due to take part in a European Parliament hearing on Monday. Investors will scour for clues on a possible extension of the pandemic bond-buying program. Market focus will also be on progress on a new fiscal support package in the United States.
START TRADINGLQDFXperts – First US presidential debate, Brexit set the tone
EUR/USD suffered its worst week since March, as the pair fell 1.7%. The pair is trading just above 1.16, its lowest level since late July. Τhe dollar had its best week in six months. The greenback measured its biggest weekly gain since early April while the euro had its largest weekly fall against the dollar. Covid-19 has shown a resurgence in Europe, and the Brexit saga could further weigh on the euro.
GBP/USD reversed directions last week, as the pair declined 1.3%. Sterling has fallen 5.8% this month from $1.3481 on Sept. 1 to $1.27, reversing August’s gains. Investors are increasingly worried about further drops in the British currency. The outlook remains bleak as looming risk of a no-deal Brexit and new lockdown measures also weigh down the currency.
USD/JPY reversed directions last week, as the pair declined close to 1%. With five straight days of gains against Japan’s yen, the greenback showed its strongest weekly gain since early June. The US dollar’s upward momentum could translate into gains for USD/JPY this week.
Last week, AUD/USD collapsed. Australian dollar was down around 3.6% for the week in its biggest weekly decline since the week ending March 20. The US dollar returned to the offensive, so it could be another winning week for the greenback.
USD/CAD jumped 1.4% last week, its best week since March, participating in general US dollar recovery in the major pairs. Covid-19 continues to hamper economic activity. Investors remain cautious, which could weigh on minor currencies like the Canadian dollar.
UK GDP, eurozone inflation, manufacturing PMIs, US non-farm payrolls
Investors eye UK GDP, eurozone inflation, manufacturing PMIs and US non-farm payrolls, the final before Election Day on Nov. 3.
- Investors now look to the first U.S. Presidential debate on Tuesday (29.09). Although the US presidential debate is not strictly an economic event any unexpected development or cancellation would roil markets. Also, the week provides markets with more U.S. data including consumer confidence on Tuesday.
- Preliminary September euro zone inflation data as well as UK and Canada GDP are out Wednesday (30.09).
- Apart from the debate, global manufacturing PMIs and a US manufacturing survey and consumer data on Thursday (31.09) will also set the tone.
- U.S. jobs data on Friday out on Friday, will be watched even more closely than usual. Concern on lawmakers’ failure to agree on fresh fiscal stimulus to protect the economy is growing. This will also be the final monthly gauge of the U.S. jobs market before Election Day on Nov. 3. Analysts expect payrolls rose 875,000, after growing by 1.371 million in August.
Follow this week’s economic calendar.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, CNBC, BBC, The Guardian