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Week Ahead - Markets rebound out of correction territory, Further clarity needed

George Walker, Friday, 2 October 2020

MKT-6963_WA-Markets_blog

Last week saw major trading events galore as we had the first US Presidential debate take place, updates regarding the new stimulus bill from the US government and the Nonfarm Payroll figures which rounded off an exciting but difficult trading week. Big data releases are slightly down on the impact scale compared to last week, however, further announcements on the stimulus bill as well as other events could make for an equally busy week ahead.

With US markets rebounding out of correction territory, here’s what to watch!

As we start the week traders will be focusing on Services PMI data throughout Monday released from Germany and the Euro Zone, the UK and the United States. Although Service PMI does not influence GDP as much as Manufacturing PMI, it still measures the overall condition of sales and employment in the services sector and in the current economic climate, nations will want to see positive numbers to indicate an economic recovery.

Australian Interest Rates

Australia dominates the early hours of Tuesday morning. Import and Export data precedes an update from the Reserve Bank of Australia regarding their latest stance on interest rates. The Interest Rate decision is expected to remain unchanged at 0.25% however, the main focus for those who trade the AUD will be on the accompanying statement. Many of the world’s major economies have contemplated negative interest rates recently, so it will be interesting to see if the RBA follow the same pattern of thinking. If language in the statement leans towards the need for a rate cut, this could see the AUD decline as currencies typically strengthen from higher interest rates.

For traders of Oil, storage inventory data will need to be monitored this week. At 21:30 on Tuesday and 15:30 on Wednesday the weekly crude oil stock numbers have become ever more important in contributing the recovery in the oil price which has almost close the gap to the dramatic drop seen in March. Drawdowns are becoming more regular recently as less oil in storage indicates a higher demand. Will the amount in storage continue to fall or start to rise once again?

Midweek is relatively light on high impact macro data with only Industrial Production figures during Wednesday morning.

FOMC Meeting Minutes

One of the focal points of the week for traders will be latest minutes from the Federal Open Market Committee (FOMC) released in the early evening. The FOMC is the decision-making body for the Federal Reserve and are responsible for monetary policy in the US. The Federal Reserve has the full attention of financial markets who continue to be one of the main drivers of investor sentiment. Continued US economic progression with the possibility for further fiscal support if needed could be the sort of language that markets might want to hear in order to justify the stock market recovery ahead of corporate earnings later this month.

Vice-Presidential Election Debate

We saw the excitement surrounding the first US Election debate last week and this coming Wednesday, we see the second in command of both party’s bump heads in Utah. Although the outcome might not carry as much impact as Trump and Biden, the vice-presidential debate could still cause a stir and will be worth a watch for subsequent market influence.

Overnight data into Thursday sees Services PMI data out of China as well as the Unemployment data from Switzerland ahead of the European market open.

Initial and continuing jobless claims hit the wires from the US on Thursday afternoon which since the pandemic took hold have been increasingly important when painting a picture of the health of the US employment market, so traders of US indices and the USD will need to take note of these figures.

GBP could be in for a volatile start to Friday’s trading session as we get Industrial and Manufacturing Production as well as Gross Domestic Product numbers from the UK. Along with the Brexit negotiations with EU, GDP data is one of the most influential contributors to price action in GBP so traders will need to pay attention to this release.

All times indicated are BST.


ECONOMIC CALENDAR (all times are BST)

Monday, 5th October

01:00 AUD TD Securities Inflation
08:55 GER Markit Services PMI
08:55 GER Markit PMI Composite
09:00 EUR Markit Services PMI
09:00 EUR Markit PMI Composite
09:30 GBP BoE’s Haldane Speech
09:30 GBP Markit Services PMI
09:30 EUR Sentix Investor Confidence
10:00 EUR Retail Sales
14:45 USD Markit Services PMI
15:00 USD ISM Services PMI
15:00 USD ISM Services New Orders Index
15:00 USD ISM Services Employment Index
15:00 USD ISM Services Prices Paid
22:00 NZD NZIER Business Confidence
22:30 AUD AiG Performance of Construction Index

UK Company Announcements:

N/A

US Company Announcements:

N/A

Tuesday, 6th October

01:30 AUD Imports
01:30 AUD Exports
01:30 AUD Trade Balance
05:30 AUD RBA Interest Rate Decision
05:30 AUD RBA Rate Statement
07:00 GER Factory Orders
08:00 EUR EcoFin Meeting
09:30 GBP Markit Construction PMI
13:30 USD Trade Balance
13:30 CAD Imports
13:30 CAD Exports
13:30 CAD International Merchandise Trade
13:55 USD Redbook Index
21:30 USD API Weekly Crude Oil Stock

UK Company Announcements:

N/A

US Company Announcements:

N/A

Wednesday, 7th October

06:00 JPY Coincident Index
06:00 JPY Leading Economic Index
07:00 GER Industrial Production
08:00 EUR Non-Monetary Policy ECB Meeting
08:30 GBP Halifax House Prices
15:00 CAD Ivey Purchasing Managers Index
15:30 USD EIA Crude Oil Stocks Change
19:00 USD FOMC Minutes

UK Company Announcements:

Tesco

US Company Announcements:
N/A

Thursday, 8th October

02:45 CNY Caixin Services PMI
06:45 CHF Unemployment Rate
07:00 GER Imports
07:00 GER Exports
07:00 GER Trade Balance
07:00 GER Current Account
12:30 EUR ECB Monetary Policy Meeting Minutes Accounts
13:30 USD Initial Jobless Claims
13:30 USD Continuing Jobless Claims
15:30 USD EIA Natural Gas Storage Change

UK Company Announcements:

CMC Markets

US Company Announcements:
N/A

Friday, 9th October

09:30 GBP Industrial Production
09:30 GBP Manufacturing Production
09:30 GBP Goods Trade Balance
09:30 GBP Trade Balance non-EU
09:30 GBP Total Trade Balance
09:30 GBP Gross Domestic Product
13:30 CAD Unemployment Rate
13:30 CAD Net Change in Employment
13:30 CAD Participation Rate
13:30 CAD Average Hourly Wages
18:00 USD Baker Hughes US Oil Rig Count

UK Company Announcements:

N/A

US Company Announcements:
N/A

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