The Week Ahead 9th – 13th November 2020

Biden defeats Trump to win the White House

Today’s Market Outlook 

The U.S. Presidential Election 2020 is finally over and the declared winner is Joe Biden

China, South Korea and Singapore led Asia’s trade-reliant stocks and currencies higher on Monday, after the U.S. presidential election result, boosting risk appetite and hopes of friendlier policy towards the region and Beijing. 

China’s yuan rose as much as 0.6% to hit a 28-month peak, while Indonesia’s rupiah, whose high interest rates make it one of the region’s most popular local bond markets for foreign investors, gained 0.7%. 

China’s imports grew 4.7% and exports rose by 11% year-on-year as its economy continued to recover from the coronavirus pandemic, according to October customs data released on Saturday. As a result, its October trade surplus widened to USD58.44 billion from September’s USD37.00 billion. 

China has largely managed to control the virus after a disastrous start to the year that saw Beijing lock down tens of millions of people and the economy contract 6.8% in the first quarter. The new figures from China’s General Administration are the latest sign of China’s economic recovery as consumption returns to normal levels. 

Japan’s Nikkei share average on Monday reached a high last seen almost three decades ago, after Joe Biden clinched the U.S. presidency, with Honda Motors leading gains among carmakers on strong earnings figures. 

The Nikkei rose 2.12% to 24,839.84, its highest close since November 1991, adding 8.1% in the last five sessions of gains. 

Investors, who had held off purchases last week due to U.S. political uncertainty, rushed to buy as they focused on Biden’s ability to expand fiscal stimulus and measures to reduce the spread of COVID-19. 

The broader Topix rose 1.41% to 1,6781.90, a level last seen in late February. 

Honda Motor gained 9.4% after the carmaker posted strong quarterly earnings and raised its earnings outlook. 

The U.S. dollar fell to a 10-week low after more states were called for Biden on Saturday after days of counting, helping South Korea’s won scale its highest since February 2019 and the Singapore dollar touch its strongest level since the start of the year. 

The tighter-than-expected election, which may leave Republicans in control of the Senate, appears to have doused some hopes for a large U.S. fiscal package, but leaves the door open to less combative relations with China, the region’s key growth driver.  

In the US on Friday, Wall Street ended mixed, with the Dow Jones Industrial Average down 0.2%, S&P 500 flat and Nasdaq Composite closing 0.3% higher. 

The pan-European STOXX 600 .STOXX had jumped 7% last week, ending Friday with one of its best weeks this year. 

Traders are also wary as coronavirus cases surge, with the global tally of infections topping 50 million on Sunday as cases in the United States surpassed 10 million – stoking worries of more lockdowns. 

Stock prices in London are seen opening higher on Monday as Joe Biden was declared the winner of the US presidential election over the weekend. 

The FTSE 100 index is to open 75.48 points higher at 5,985.50. The blue-chip index closed up 3.84 points, or 0.1%, at 5,910.02 Friday. 

The pound was quoted at USD1.3174 early Monday, flat from USD1.3172 at the London equities close Friday. 

UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen agreed during a phone call on Saturday to “redouble efforts” to reach a trade deal and signed off on talks continuing next week. 

Downing Street said the PM told his Brussels counterpart that there remained “significant differences” in the UK-EU negotiations, with the two sides continuing to be apart on their positions over fishing rights and a level playing field agreement. 

The euro was priced a USD1.1889, flat from USD1.1887. Against the yen, the dollar was quoted at JPY103.52, down from JPY103.71. 

Brent oil was trading at USD40.50 a barrel Monday morning, up from USD39.66 on Friday evening. Gold was quoted at USD1,960.72 an ounce, higher than USD1,952.40. 

Overview for the Week Ahead 

In the economic calendar this week, a quiet Monday is headlined by German trade balance data at 09.00 GMT +2, while China inflation data is due early Tuesday. On Thursday, there is the U.K. trade balance and German consumer price index data at 0700 GMT, followed by US consumer prices at 15.30 GMT +2. Friday is headlined by eurozone GDP data at 12.00 GMT+2 and US producer prices at 15.30 GMT +2.   

All these events and more have the potential to influence the markets which means there is plenty of trading opportunities. 

Today’s High Impact Events

The times below are GMT+2. 

Monda9th November 

  • 11.25 – ECB President Lagarde Speaks 

Potential instruments to Trade: EUR Crosses.  

  • 12.35 – BOE Gov. Bailey Speaks 

Potential instruments to Trade: GBP Crosses.  

Tuesday 10th November 

  • 03.30 – CPI y/y & PPI y/y 

Potential instruments to Trade: CNY Crosses.  

  • 12.00 – ZEW Economic Sentiment & German ZEW Economic Sentiment 

Potential instruments to Trade: EUR Crosses.  

  • 19.00 – FOMC Member Kaplan Speaks 

Potential instruments to Trade: USD Crosses & Gold.  

  • 21.00 – FOMC Member Quarles Speaks 

Potential instruments to Trade: USD Crosses & Gold.  

Wednesday 11th November  

  • 03.00 – New Zealand Official Cash Rate, RBNZ Monetary Policy Statement & Rate Statement 

Potential instruments to Trade: NZD Crosses.  

  • 04.00 – RBNZ Press Conference 

Potential instruments to Trade: NZD Crosses.  

  • Bank Holiday 

France, Canada & the U.S. have a national holiday today. 

Thursday 12th November 

  • 09.00 – U.K. Prelim GDP q/q 

Potential instruments to Trade: EUR Crosses.  

  • 10.00 – BOE Gov. Bailey Speaks 

  Potential instruments to Trade: GBP Crosses.  

  • 15.30 – U.S. CPI m/m, Core CPI m/m & Unemployment Claims 

Potential instruments to Trade: USD Crosses & Gold.  

  • 18.00 – Crude Oil Inventories 

Potential instruments to Trade: USD Crosses & Energies.  

  • 18.45 – ECB President Lagarde Speaks 

Potential instruments to Trade: EUR Crosses.  

  • 18.45 – BOE Gov. Bailey Speaks 

Potential instruments to Trade: GBP Crosses.  

  • 18.45 – Fed Chair Powell Speaks 

Potential instruments to Trade: USD Crosses.  

Friday 13th November 

  • 15.30 – U.S. Core PPI m/m 

Potential instruments to Trade: USD Crosses.  

  • 17.00 – U.S. Prelim UoM Consumer Sentiment 

Potential instruments to Trade: USD Crosses.  

  • 17.30 – Natural Gas Storage 

Potential instruments to Trade: USD Crosses & Energies.  

  • 18.00 – BOE Gov. Bailey Speaks 

Potential instruments to Trade: GBP Crosses.  

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