Week Ahead – Time running out for Trump

Stimulus needed before the election

The next couple of weeks are critical for the US ahead of the election on 3 November. The final Presidential debate on Thursday will naturally be one to watch but it’s arguably what happens next week on Capitol Hill that’s more important. And this is only two of many major risk events facing markets at the moment which will make the next few weeks so important.

Stimulus stalemate a major risk for US economy

London and Brussels defiant as another Brexit deadline missed

China risk front-loaded next week



After constant negotiations, House Speaker Pelosi and Treasury Secretary Mnuchin were unable to break the stimulus stalemate.  Talks are not completely dead, but it seems unlikely a comprehensive deal will be reached before election day.  

The virus spread in the US is disconcerting as cases continue to increase across 40 states.  Hospitalizations are also rising and that could become a bigger issue if the winter wave of the virus comes early.   

It will be a busy week with US economic data, but leading indicators suggest it will confirm strength in the housing sector, elevated jobless claims and that the manufacturing recovery is slowing. 

The second week of earnings season could be accompanied with major job cut announcements.  The upcoming wrath of earnings results will come from Lockheed Martin, UBS, Tesla, Verizon, Biogen, Intel, AT&T, Southwest Airlines, American Express, Daimler, Netflix, IBM, Coca-Cola, Abbott Labs, Philip Morris, Union Pacific, and Texas Instruments.  

US Politics

The US presidential election is just around the corner and the polls continue to suggest former-VP Biden is poised for a big night.  A blue wave is being priced by many, but the confidence in the Democrats taking control of the Senate is a lot less than it is for winning the presidency.  The final debate on 22 October is President Trump’s last chance to make up a lot of ground. 

Since President Trump’s COVID-19 diagnosis it has been all downhill with his number in the polls.  This election appears to be more of a referendum on Trump’s handling of the coronavirus and with cases rising across most of the country, now the red states, it seems like a tall task for the president. 

Over 17-million Americans across 44 states and Washington DC have already casted their ballots.  This election is poised to have record turnout and early signs are showing the Democrats are the ones behind early voting.  


Surging Covid cases and more restrictions, this is the path of travel now for the coming weeks and months. The EU had been an enjoying a decent recovery before the second wave hit and it’s only going to get worse. No-deal Brexit may be worse for the UK but it won’t be nice for the EU either, all the more reason why leaders will do anything to avoid it, regardless of what they say publicly about being prepared. PMIs next week will further highlight the difficulties facing businesses as we head into the winter, all the more reason why we should see a dovish shift from the ECB at the next meeting in a couple of weeks.


I could probably have copy and pasted last week’s Brexit update and no one would have noticed, which tells you everything about how talks have gone this week. This was meant to be the week a deal was agreed by leaders today backing the agreement and beginning the process of it being ratified before year end. Unfortunately, we’re still talking about fishing rights, state aid and dispute resolution. The EU have agreed to extend talks, as expected, and Boris Johnson will today lay out the UK’s plans. Will he say something that could be a breakthrough in talks? Or am I just too hopeful. The eleventh hour is creeping ever closer and I remain confident a deal will be struck. But I wouldn’t write off another twist and turn along the way.


Winter is here and the UK is slowly locking down. Liverpool was the first city to be put in tier three, forcing many businesses to close their doors again and restricting social interactions, Manchester could be next, while London has been lifted to level two meaning businesses can remain open, not that they’ll be very busy as households are not allowed to meet indoors. The weeks ahead will be grim and come with a significant economic cost, pushing businesses over the edge and leaving many hard up. No-deal Brexit would be a bitter blow.

The CBRT is expected to raise interest rates again on Thursday, after its 200 basis point hike at the last meeting. Expectations vary but an increase of at least 150 basis points is expected. As we’ve seen in the past though, the central bank is averse to doing more than the market is pricing in. The bank recently raised to rate on currency swaps with local lenders by 150 basis points, in effect signaling to the market that a rate hike is coming. The lira remains very weak despite these efforts and continues to trade around 8 against the dollar, an all time low.


China risk is front-loaded to the start of the week. GDP and Industrial Production Monday, with PBOC Loan Prime Rates decisions on Tuesday. GDP and Ind.Prod expected to outperform inline with recent China data. That should give China no reason to lower the LPR’s which would be a huge surprise. CHina stimulus is targeted fiscal and monetary.

Presidential campaign and tweet risk remains but China data should be supportive of currency and China equities.

Hong Kong

Market anticipation building for Ant Financial IPO date but Mainland authorities holding up final approval. HK brokers offering 20-1 leverage to retail investors in the IPO means volatile trading once launched. IPO price could well jump  and then head south rapidly.

Worries over Evergrande continue dampening the property sector. Banks remain under pressure, notably HSBC and Standard Chartered negotiating twin demands from China and the US. 

Covid-19 restrictions easing next week should be positive consumer discretionary. 


NI significant data after RBI left rates unchanged this week. Concerns continue about the stability of the finance sector and NPL’s. RBI announced stimulus but markets are looking for more from the government on the fiscal side..

Covid-19 continues to crush economic activity and India’s potential recovery. Otherwise a quiet week.

New Zealand 

Election tomorrow should see the incumbent Labour Party set for a landslide victory. Neutral to slightly positive for New Zealand Dollar and equities.

The flip side is the increasing risk aversion sentiment seen in financial markets globally is threatening recent NZ Dollar gains as a pro-cyclical currency. Technical picture suggesting increasing potential for a material fall in the NZD.


China is now allegedly blocking cotton imports from Australia, Adding it to the list of verbally blocked Australian exports, thus avoiding being taken to the WTO. Relations between Australia and China are clearly deteriorating although iron ore is as yet untouched. Not reflected in Australian markets but potentially a major negative for the currency and local equities.

Copper and iron ore remain near year highs supporting the resource sector. Covid-19 restrictions set to be eased in Victoria next week. Consumer discretionary positive. RBA loosening lending requirements is boosting banks.

The rise in risk aversion tensions is threatening to flip the Australian Dollar into a potentially large downward technical correction. This remains the major risk factor next week.


Heavy data week starting with Balance of Trade Monday and Inflation and PMI’s on Friday. Data expected to show weak domestic consumption, improving exports with inflation missing in action, as it has been for over 25 years. In other words, operations normal. Market neutral.

Japan has signalled it will allow Chinese companies to participate in Japanese telco networks ie 5G. Potentially sets up a collision course diplomatically with the US. Potentially equity negative if Trump reacts.

USD/JPY had a false breakout last week. Yen safe haven buying could push USD/JPY lower.  



It’s been a very interesting week for oil. It started on a very negative note, with Norweigen strikes ending – keeping 966,000 barrels of oil equivalent per day in the market – and Hurricane Delta passing without major problems for producers in the Gulf. Yet, despite some selling, prices have been well supported, with inventory data, combined with Trump seemingly throwing his support behind a much larger stimulus package, lifting sentiment and crude.

Unfortunately for oil prices, the medium term risks are tilted to the downside. Global growth is likely to take another hit as Covid cases spike and restrictions are imposed, which will once again take its toll on demand. With Libyan output on the rise and OPEC+ pondering another reduction in cuts early next year, the bullish case for oil looks a little weak. 


Gold has been in consolidation for a number of weeks now, floating around $1,900 as the number of major risk events pile up. With so many coming to a head in the next few weeks, I don’t expect it to last much longer. The walls are closing in, with the yellow metal seeing support around $1,880 and resistance around $1,930 but that could continue a little longer yet.

Gold has aligned itself with riskier assets this year so a number of things could be the catalyst for an explosion higher, be it a Covid vaccine, US stimulus deal, perhaps even a smooth uncontested election. The downside risks remain considerable though which is why we’re increasingly seeing this fence sitting. No stimulus or vaccine announcement – or further setbacks in trials – and a contested election in the coming weeks at a time when Covid cases are rising fast could be very negative for risk appetite and hit gold hard. 

Thankfully, this is the least likely outcome, although that doesn’t mean there won’t be a nasty surprise or two along the way. For example, a stimulus deal before the election looks very difficult now, the economic consequences of which could be significant. Does the Fed have the firepower to make it all better?

Key Economic Events

Saturday, Oct. 17

– Treasury Secretary Steven Mnuchin is scheduled to visit the Middle East this week. This would be his first trip since the pandemic and possibly a sign that stimulus chances before the election are over.

– New Zealand holds a general election. Prime Minister Jacinda Ardern and her Labour Party are expected to win a second term. 

-Brexit trade talks to continue

Sunday, Oct. 18

– The weapons embargo on Iran ends

China 3Q GDP YoY is expected to improve from 3.2% to 5.5%, September Retail Sales YoY to rise from 0.5% to 1.7%, and Industrial Production YoY increases from 5.6% to 5.8%.

Monday, Oct. 19

– IMF Managing Director Georgieva, Fed Chair Powell, and BIS General Manager Carstens participate in a virtual cross-border payments panel at the IMF/World Bank meetings.

– ECB President Lagarde delivers the opening remarks at the bank’s “Conference on Monetary Policy: bridging science and practice.”

– BOE Deputy Governor Broadbent speaks before Parliament’s Public Accounts Committee on the production of cash.

– Bank of Canada releases its business outlook survey and the Canadian survey of consumer expectations.

– Norges Bank Governor Oystein Olsen speaks in Fredrikstad, Norway.

OPEC+ alliance is scheduled to have their monthly Joint Ministerial Meeting (JMMC).

Economic Data

Canada wholesale trade sales

Japan trade data

UK Rightmove house price index

Tuesday, Oct. 20

– New York Fed President Williams makes opening and closing remarks at a webinar series on culture hosted by his bank. Chicago Fed President Charles Evans discusses Covid-19 and the future of the economy in a virtual event hosted by the Detroit Economic Club.

– BOE’s Vlieghe speaks on the UK economic outlook.

– The US housing market continues to be the one bright spot of the economy.  Housing starts and building permits are expected to modestly improve. 

Economic Data

US building permits, housing starts

Australia central bank minutes

China home prices, loan prime rate

South Africa leading indicator

Japan machine tool orders

Taiwan export orders

Hong Kong jobless rate

Wednesday, Oct. 21

– Cleveland Fed President Mester speaks to the Money Macro and Finance Society, via videoconference.

– BOE Deputy Governor Ramsden speaks at a Society of Professional Economists event on post-Covid policy challenges.

– EIA crude oil inventory report

Economic Data

US Fed Beige Book

Mexico unemployment

Canada retail sales, CPI

Australia leading index

New Zealand credit card spending


Thursday, Oct. 22

– The final presidential debate before the US election, between President Donald Trump and former Vice President Joe Biden, will be live from Nashville, Tennessee.

– Dallas Fed President Kaplan leads a discussion at a Global Perspectives speaker series.

– BOE Governor Andrew Bailey speaks on finance and climate change at an online event.

– Norges Bank Oystein Olsen speaks in Stavanger, Norway.

Economic Data

US initial jobless claims, leading index, existing home sales

Australia business confidence

France: manufacturing confidence

Turkey rate decision: Expected to raise One-Week Repo Rate by over 150 bps

Friday, Oct. 23

Economic Data

US Preliminary Markit manufacturing PMI: 53.4e v 53.2 prior; Services PMI: 54.6e v 54.6 prior

Mexico retail sales

CPI: New Zealand, Japan, Singapore

UK retail sales, manufacturing PMI

Flash Manufacturing PMI: Germany, Euro-area (both expected to post declines)

Sovereign Rating Updates

– Iceland (Fitch)

– Netherlands (Fitch)

– Greece (S&P & DBRS)

– EFSF (S&P)

– Italy (S&P)

– U.K. (S&P)

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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