The Week Ahead 16th – 20th November 2020

Today’s Market Outlook 

Asian equities hit a record high on Monday as investors set aside fears about rising coronavirus cases and bought stocks, cheered by data showing a robust recovery in China and Japan. 

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 1.1% to hit its highest since its launch in 1987, with markets across the region making milestone peaks. 

Japan’s Nikkei .N225 rose 2% to a 29-year high. South Korea’s Kospi .KS11 hit its highest since early 2018 and Australia’s ASX 200 .AXJO hit an eight-month top, before jamming there when a glitch halted trade. 

S&P 500 futures ESc1 rose 0.9%, Nasdaq 100 futures NQc1 leapt 1% and European futures were up strongly with EuroSTOXX 50 futures STXEc1 up 0.9% and FTSE futures FFIC1 up 0.6% late in the Asia session. 

Japanese economic growth, which beat records and forecasts to pull the world’s third-largest economy out of recession and better-than-expected industrial output in China added to the enthusiastic mood. 

The announcement, a week ago, that Pfizer had developed a very effective vaccine has investors hoping for similar good news soon from rival Moderna (MRNA.O) and looking past a tough winter to a better spring and summer ahead. 

EUR/USD remains on the front foot near 1.1850 starting out a fresh week, extending its winning streak into the third straight day on Monday. From a technical perspective, the spot has confirmed an inverse head-and-shoulders breakout on the hourly sticks, which calls for a test of the 1.1900 level. 

Besides the virus, Brexit trade talks are chief among European investors’ concerns on Monday and hopes for a breakthrough have supported sterling against the dollar and the euro.  

The departure of hardline adviser Dominic Cummings from Downing Street is seen as a positive, perhaps allowing more British concessions, but chief negotiator David Frost said on Twitter that talks “may not succeed”. 

Despite this, London stocks are set to bounce into Monday picking up again on last week’s rally, propelled by some upbeat Chinese data. 

Elsewhere the Aussie and kiwi made small gains, much of which they handed back late in the Asian day. 

Bonds, which had sold off strongly on vaccine news last week, were steady with where they left off on Friday, with the yield on benchmark U.S. 10-year debt US10YT=RR at 0.8930%, down from last week’s high above 0.97%.  

Oil prices inched higher, with Brent crude futures LCOc1 up 1% at $43.26 a barrel but below last week’s two-month high of $45.30. U.S. crude CLc1 rose 1% to $40.55 a barrel.  

Gold XAU= rose 0.4% to $1,896 an ounce. 

Overview for the Week Ahead 

The economic events calendar is finally looking a little quieter. However, the ongoing Brexit negotiations, Trump refusing to go gently, COVID-19 case counts, and the vaccine status will be sensitive topics of interest this week.  

The sharp rates move following Pfizer’s better-than-expected efficacy report on Monday was a circuit-breaker for risk and markets are now searching for the next driver. 

US retail sales and sentiment data (UMich, Empire, Philly Fed) in the US, retail sales in Canada, unemployment data in Australia and retail sales data in China will be key. There’s a long list of central bank speakers taking the stage, in the US (Williams, Bullard, Clarida, Kaplan, Bostic, George), UK (Haskel, Bailey, Ramsden, Haldane, Tenreyro, Cunliffe), Europe (Villeroy) and Australia (Lowe, plus the RBA minutes) – though ultimately substantial announcements are not expected. 

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. 

Monday 16th November 

  • 11.00 – ECB Financial Stability Review 

Potential instruments to Trade: EUR Crosses.  

  • 15.00 – ECB President Lagarde Speaks 

Potential instruments to Trade: EUR Crosses.  

Tuesday 17th November 

  • 00.30 – RBA Assist. Gov Kent Speaks 

Potential instruments to Trade: AUD Crosses.  

  • 02.30 – RBA Monetary Policy Meeting Minutes 

Potential instruments to Trade: AUD Crosses.  

  • Tentative – OPEC-JMMC Meetings (All Day) 

Potential instruments to Trade: All Currencies.  

  • 15.30 – U.S. Core & Retail Sales m/m & Import Prices 

Potential instruments to Trade: USD Crosses & Gold.  

  • 16.00 – BOE Gov. Bailey Speaks 

Potential instruments to Trade: GBP Crosses.  

Wednesday 18th November  

  • 00.00 – RBA Gov. Lowe Speaks 

Potential instruments to Trade: AUD Crosses.  

  • 15.30 – Canada CPI m/m 

Potential instruments to Trade: CAD Crosses.  

  • 19.15 – FOMC Member Williams Speaks 

Potential instruments to Trade: USD Crosses.  

Thursday 19th November 

  • 02.30 – Australia Employment Change & Unemployment Rate 

Potential instruments to Trade: AUD Crosses.  

  • 15.30 – Canada ADP Non-Farm Employment Change 

Potential instruments to Trade: CAD Crosses.  

  • 15.30 – Philly Fed Manufacturing Index & Unemployment Change 

  Potential instruments to Trade: USD Crosses.  

  • 17.00 – ECB President Lagarde Speaks 

Potential instruments to Trade: EUR Crosses.  

  • 17.00 – U.S. CB Leading Index m/m & Existing Home Sales 

Potential instruments to Trade: USD Crosses.  

Friday 20th November 

  • 09.00 – U.K. Retail Sales m/m 

Potential instruments to Trade: GBP Crosses.  

  • 10.15 – ECB President Lagarde Speaks 

Potential instruments to Trade: EUR Crosses.  

  • 15.30 – Canada Core & Retail Sales m/m 

Potential instruments to Trade: CAD Crosses.  

Saturday 21st & Sunday 22nd November 

  • Day 1 & 2 – G20 Virtual Meetings 

Potential instruments to Trade: All Currencies. 

The G20 comprises the world’s largest and fastest-growing economies and accounts for 85 per cent of the global GDP and two-thirds of its population. The summit of the grouping is taking place in the midst of the worst economic downturn the world is witnessing since the Great Depression of the 1930s.  Will there be an economic stimulus programme to offset the impact of the pandemic? This will be an important event to watch! 

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