Week Ahead – Election Time!

The week we’ve all been waiting for

What a week we have in store. The US jobs report is typically the headline act the first week of the month but next week it won’t even make the top three. Covid-19 is wreaking havoc once again, the Fed, BoE and RBA will look to reassure and, of course, the US election will be front and centre.

US election adds to market uncertainty

Brexit silence is bliss

Time for OPEC+ to act?


US Politics

Election Day is finally upon us.  A stunning total of early ballots are in and all early signs are pointing to a blue wave.  Democrats voted early, while many Republicans appear to be planning to vote on Election Day.  Some political pundits argue that President Trump could surprise everyone like he did in 2016, but it seems very unlikely.  Most public opinion polls have attempted to account for a significant portion of President Trump’s base and the number of undecided voters is considerably smaller.  

For many traders, the Senate Race is almost just as important as the presidency.  If Biden is victorious and Democrats win the Senate, he will be able to easily deliver higher taxes, tougher regulation, massive infrastructure spending and launch his clean energy initiatives.  A Biden presidency with Republicans keeping the Senate would derail sweeping changes and deliver a lot less stimulus to the economy.  If President Trump pulls off a big upset, the next stimulus package will be much smaller than the currently discussed $1.88 trillion package, but tax cuts and a lax stance on regulation should support risky assets.  


This FOMC rate decision could mirror the ECB rate decision that telegraphed further action in December.  The Fed will not cut rates and it is unlikely that they will increase their asset purchases just yet.  What could be on the table is the continued discussion of keeping rates lower for longer and adopting yield curve control.  The Fed will have to address the deterioration to the economic outlook due to the virus spread and the inability of Congress to deliver much needed fiscal support.  The Fed will keep nagging Congress to deliver aid and likely have to settle on increasing purchases at the December meeting.  

Lost in the madness of election week and central bank rate decisions is earnings results from many important pharmaceutical companies.  Updates from AstraZeneca, Bristol-Myers Squibb, and Regeneron could provide further insight into how certain critical COVID-19 treatment and vaccine trials are performing and when to expect updates. 


The EU is slowly going into lockdown, with France fully in and Germany currently opting for a lighter version. But the trend is clear and it seems only a matter of time until more countries follow. The ECB acknowledged this on Thursday as it laid the groundwork for more easing in December, warning that Q3 may have been better than anticipated but Q4 will be worse and risks remain tilted to the downside.

The move is understandable given it will have new projections, know whether there’s a Brexit deal or not and who the next President of the US will be, not to mention just how much damage the second wave is wreaking on the economy. More bond buying is a given, the scale is to be determined.


Silence is bliss. Not only because we’ve had four years of this fight being carried out in public, much to the annoyance of everyone who’s listened, but because it almost certainly means the hard work is now going on that will lead to compromises and a deal being reached. The bravado is over. The serious negotiations have started that will enable a deal to be reached that both sides can declare a success to their respective voters. 

Mid-November is now being talked about as the point at which a deal needs to be reached in order for it to be ratified before the end of the year and for the first time in four years, it’s a deadline I have faith in. The reason is simple, it’s now a target for both sides to agree to the details of their new partnership, rather than for one side to buckle. The narrative is important to both parties and it is now in place for a deadline to finally be achieved. 


The government is resisting going into a national lockdown as much as possible, despite others in Europe starting to do just that. It’s eerily reminiscent of earlier this year. Despite the resistance, more and more regions are seeing their tiers increase and it seems inevitable that at least most, if not all, of the country will be in tier three before we know it.

All the more reason why the BoE will be forced to ease monetary policy again before the end of the year. Bond buying will likely remain the preferred option, with the last top up running dry at the end of the year, but negative rates remain on the table, for some reason.

Still, the meeting next week could be when they pull the trigger, coming alongside new economic projections. The road ahead is clear for all to see, more restrictions and a double dip recession. The argument for waiting, similar to the ECB, is Brexit and the time to assess Covid damage, which may be enough to keep them on hold another month. 


The Turkish central bank is facing a crisis of confidence, as the lira suffered another torrid week, following the CBRT’s decision not to raise rates last week. The central bank claimed that financial conditions had tightened sufficiently but those in the markets clearly disagree, with the talk once again being centred around political influence in their decision making.

President Erdogan has been very clear in his opinion on the link between interest rates and inflation and it doesn’t exactly align with the consensus view. With the lira in freefall, the central bank will need to act. An emergency rate hike may be on the cards prior to the next meeting on 19 November.


China PMI released tomorrow (Saturday), Caixin on Monday. Underperformance risks Asia markets sell-off Monday morning. Pan-Asia PMI’s also released. Expected to outperform. 

Ant Financial starts trading on Nov 5th. If it doesn’t immediately rally then Chinese stocks could suffer.

US election results cloud Asia picture next week. Asia stocks and currencies have been resilient on the back of strong China performance. Poor data as above could threaten a sudden correction if the US election result is also messy.

Hong Kong

All eyes will be on the Ant Financial IPO. Bullishness on IPO should mollify any risk based selling ahead of the US election.

USD/HKD remains at the bottom of its trading band with heavy buying from the HKMA. The demand for HKD is due to the Ant Financial IPO this week.

No important data but a Biden win should be positive for HK equities.Highly leveraged retail buyers of Ant Financial IPO could exit rapidly if prices do not rise on the day, Hang Seng negative.


Manufacturing and services PMI’s expected to strengthen into expansionary territory this week. The domestic economy remains in a deep recession due to Covid-19.

Indian Rupee continues to weaken after appalling GDP data. Rampant Covid-19 continues to crush economic activity and India’s potential recovery.  Weak BoP, monetary and fiscal positions with stagflation potentially India’s biggest headache. Continues to be Asia’s weakest link along with Indonesia.

An uncertain US election will add downward pressure on the INR.

New Zealand 

No significant data. NZD/USD threatened by dollar-bloc risk reduction and uncertain US election results risk next week. Strongly bearing NZD/USD. NZD/USD threatened support at 0.6600, suggesting further losses to 0.6500 soon. Ramp up in the risk environment next week could extend the NZD/USD fall to 0.6400.


Australia PMI’s and Balance of Trade expected to show further strong recoveries, boosted by domestic activity and China iron ore exports. China/Australia trade conflicts have died from the headlines.

RBA rate decision on Tuesday 3rd, 50/50 on another cut to 0.10% from 0.25%, or more QE. RBA is extremely dovish and if not Tuesday, the next meeting will be live. Bearish AUD, bullish Australian stocks.

AUD vulnerable to any China PMI underperformance tomorrow and Monday. AUD underperforms as global investors unwind dollar-bloc risk into the US election. Uncertain results in the US are strongly negative. 

AUD/USD is threatening major support at 0.7000 with 0.6800 the next target, possibly extending to 0.6600 on a risk meltdown next week.


Japan PMI’s and Household Spending are expected to show the domestic economy remains weak. Policy vacuum from new government with BoJ holding this week in typical possum in headlights style.

USD/JPY volatile and will be bounced around on the risk environment of the US election. Yen should outperform as a haven currency leading to downward pressure on USD/JPY. USD/JPY is threatening support at 104.00, and could quickly collapse to 102.00, possibly 101.00 if the risk environment internationally intensifies into Wednesday Asian time. 



Oil saw some profit taking after falling back to its lowest level since late May, as Europe increasingly adopts new lockdowns and hits the demand outlook for crude. With WTI back around $35 and Brent coming close to $37, OPEC+ is going to start getting a little anxious. The next JMMC meeting is in a couple of weeks time; should the group hold out that long, I expect the January increase will be pushed back in order to support prices and rebalance the market.

Until then, barring any more verbal intervention, crude prices could broadly remain under pressure, with $40 providing a ceiling for any Brent rallies. The Saudi Energy Minister has previously warned against shorting the market, suggesting that it will be a painful exercise. Traders aren’t deterred just yet but it may provide some support to the market and stop it falling as far as it otherwise would. $35 will be an interesting psychological test for Brent.


The dollar is firmly back in favour as traders seek out safety at the expense of riskier assets. It still feels strange to put gold in that category but the evidence is there for all to see. The dollar has surged in recent days, although it is seeing some profit taking today, while gold has tumbled out of the lower end of its range and is testing its late summer lows, around $1,850.

A break below here could be a psychological blow for the yellow metal but I don’t think it will be devastating. The next couple of years should be very kind to gold so any big drops are always going to pique the interest of traders. The next test will come around $1,800, should $1,850 fall, which I expect it probably will.  

Key Economic Events

Saturday, Oct. 31

-ECB Executive Board member Fabio Panetta participates in the online conference “Festival dell’ottimismo 2020.”

-Brexit trade-deal talks between the UK and EU continue.

Economic Data

China Oct Manufacturing PMI: 51.3eyed v 51.5 prior

Sunday, Nov. 1

– The US and Canada return to standard time, moving clocks back one hour at 2:00 a.m. ET.

Monday, Nov. 2

– ECB Governing Council member Olli Rehn speaks at a webinar on the central bank’s strategy review.

Economic Data

US Markit manufacturing PMI, ISM Oct Manufacturing PMI: 55.6 eyed v 55.4 prior, construction spending

Canada Markit manufacturing PMI

New Zealand building permits

Australia AiG performance of manufacturing index, Melbourne Institute inflation, building approvals, ANZ job advertisements

Markit PMI India, Turkey, Czech, Poland, Euro-area, UK

Japan Jibun Bank PMI, vehicle sales

China Caixin PMI manufacturing

Hong Kong retail sales

Manufacturing PMI: South Africa, Hungary

Tuesday, November 3rd

– Election Day for the US.  The presidential election race is widely expected to be won by Democrat Joe Biden.  Senate races appear to be much tighter and are expected to shift the power balance to the Democrats.  

– Euro-area finance ministers meet to discuss Covid-19, the digital euro, and the banking union. Through Nov. 4.

– Bank of Sweden Governor Stefan Ingves delivers a speech online and participates in a panel discussion on the Riksbank’s response to the coronavirus crisis and monetary policy.

Economic Data

US factory orders, durable goods, Wards total vehicle sales

Mexico Markit PMI manufacturing

Turkey CPI

Australia rate decision: Expected to cut Cash Target Rate 15bps to 0.10%

Singapore purchasing managers index

Wednesday, November 4th

– President Xi Jinping will deliver the keynote address via video at China’s third International Import Expo in Shanghai.

– EIA Crude Oil Inventory Report

Economic Data

U.S. ADP employment change, trade balance

Brazil industrial production

Canada international merchandise trade

Australia retail sales

New Zealand ANZ commodity prices, unemployment

Japan monetary base

Services PMI: Euro-area, U.K.

Poland rate decision: Expected to keep Base Rate unchanged at 0.10%

Spain unemployment

Markit PMI: Hong Kong, Singapore, Mozambique

PMI: South Africa

Philippines trade

China Caixin services PMI

Thursday, November 5th

The FOMC is expected to pave the way for an increase with the pace of asset purchases at the December meeting.  Fed Chair Powell will reiterate the urgency for Congress to deliver fiscal support.   

Bank of England expected to keep rates steady, update forecasts for economic growth and inflation and possibly increase in bond purchases to provide more stimulus as unemployment rises.

– European Commission publishes updated economic forecasts.

– ECB Governing Council members Muller and Holzmann speak at an online conference organized by Austria’s central bank.

Economic Data

US initial jobless claims

Germany Sept Factory Orders M/M: 2.0%e v 4.5 prior

New Zealand ANZ business confidence

Australia trade

Japan Jibun Bank services PMI

Norway rate decision: Expected to keep Deposit Rates steady at 0.00%

Czech rate decision: Expected to keep Repurchase Rate steady at 0.25%

Hungary rate decision: No changed expected with the One-Week Deposit Rate

Singapore retail sales

Friday, November 6th

– Bank of Canada Governor Tiff Macklem and Deputy Governor Lawrence Schembri deliver opening remarks at a BOC event

The US hiring is expected to deliver 610,000 new jobs in October, down from the prior reading 661,000, and confirming the labor market recovery has stalled.

Economic Data

US unemployment, wholesale inventories

Canada unemployment

Australia AiG performance of services index

Japan cash earnings

New Zealand two-year inflation expectation

Industrial production: Germany, Spain

Foreign reserves: Switzerland, Hong Kong 

South Africa gross/net reserves

Sovereign Rating Updates

– Germany (Fitch)

– Greece (Moody’s) 

– Italy (Moody’s)

– Finland (DBRS)


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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