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Week Ahead – Focus stays on COVID

Virus rages on, a wrath of Fed speak, US retail sales slower pace, 

Next week is filled with lots of Fed speak, an expected sixth consecutive increase with US retail sales, and possible COVID-1 vaccine results from Moderna.  Financial markets remain fixated on the coronavirus, with much attention falling on the US, which is consistently having fresh records with both daily new cases and hospitalizations, while averaging over 1,000 American daily deaths.  Economic activity in the short-term will certainly take a hit as lockdowns return and as parents prepare for schools to close, but financial markets are trying to look beyond the winter wave of the virus.

Outbreaks across almost all US states heating up as Biden extends his lead [1]

Another Brexit “deadline” nears [2]

Oil’s complicated demand outlook [3]





The focus in the US is all about the coronavirus.  All the COVID data points are heading in the wrong direction.  New coronavirus cases are rising exponentially, with many health experts fearing cases to reach the 200,000-daily level within the week and over 300,000 new infections by December.  Hospitalizations are already at the peak levels during the first and second waves, and the current trajectory could see it double in a month.  The harsh reality of lockdowns and school closures will cripple economic activity for possibly much of the winter and raise the need for fresh fiscal stimulus.

Risk appetite will likely take a strong queue from Moderna’s phase 3 vaccine results which are due any day. Expectations are high for Moderna’s vaccine, which uses mRNA technology just like Pfizer’s vaccine, to post a similar effective rate around 90%.

US Politics

The Biden administration begins the process of announcing key appointments.  President-elect Biden named Ron Klain as Chief of Staff.  Klain was the Ebola Czar in 2014 and signals Biden is making appointees that can hit the ground running.  Health officials embraced Biden’s decision to select Klain as he was successful in getting agencies to work together.

Wall Street will pay close attention to Biden’s Treasury Secretary pick as they will have the difficult task of supporting a labor market that is at risk of having permanent damage, bridging the wealth inequality gap, and pushing along climate change initiatives.  Current Fed Governor Brainard and former-Fed Chair Yellen are likely to be at the top of Biden’s list.


Not much has changed from the EU side. More stimulus is still expected in December as the lockdowns in Europe wipe out the economic recovery they had been enjoying. Vaccine news is a big positive but won’t help over the next few months.


While frustrations are starting to re-emerge as officials from both sides lock horns on the thorniest issues around a new deal, there is still clearly a desire on both sides to get something done. One thing has not changed, it would be a catastrophic error on both sides if talks were to fail now. Not only has enormous amounts of time and effort gone into this process but we’re in the midst of an economically ruinous pandemic and the two sides should be using this opportunity to emerge stronger as partners. I still think that is what will happen but maybe we have one more twist in this ridiculous soap opera to endure before we reach a happy ending.


The UK bounced back strongly in the third quarter but failed to make up fully for lost output in the second, with the economy still 8.6% smaller than in January. The fourth quarter isn’t going to get any easier which is why the BoE added £150 billion to its quantitative easing program. Not much is likely to change for the foreseeable future, with this aiming to see the central bank through to the end of 2021.


The Turkish lira has bounced back strongly after the central bank head was sacked and finance minister resigned. A new economic agenda sounds good on the face of it but the currency will quickly reverse course if this proves to be nothing more than talk.


China Industrial Production and Retail Sales Monday. October holidays will soften Industrial Production but not by much. Those holidays will lift the Retail Sales. Should  be market positive.

China PBOC rate decision Friday. 1 & 5-year loan prime rates to remain unchanged. Will maintain the strength of the Yuan with China having a significant yield advantage for international investors.

The regulations on how China’s big-tech conducts business will be finalised. Nearly $300 billion of market cap shed this week across Alibaba, JD.Com, Baidu etc. The significance of moves by the central government cannot be underestimated. The decision will weigh on China equity markets next week.

Hong Kong

Hong Kong CPI Friday expected to rise slightly into positive territory, but highlight the domestic economy remains in deep recession.

Hong Kong equities well placed to benefit from further cyclical rotation if new vaccine announcements appear.

Markets are ignoring the ongoing erosion of Hong Kong’s democracy.


WPI on Monday to hold steady at 1.50%. No other data.

In other words India is in the grip of stagflation as it wrestles with the Covid-19 pandemic/recession. INR gained little benefit from Dollar weakness and will remain a regional underperformer. Credit quality concerns and banks persist.


New Zealand

New Zealand Dollar the week’s outperformer after RBNZ left rates unchanged. Very little chance of negative rates now.

No significant data, but new community cases of Covid-19 in Auckland could potentially signal a new lockdown there and be NZ equity and NZD negative.


Employment Wednesday is expected to ease as initial post-lockdown gains in the domestic economy start to wane. Potentially equity and currency negative if the number misses badly.

AUD/USD eases versus the US Dollar and the Kiwi on China exports fears and after the RBA cut rates to 0.10%.

China appears to be waging a silent trade war with Australia. Effectively blocking all key exports except Iron Ore and Gas, but verbally telling importers to source elsewhere. If officially confirmed, strong negative for Australia equities and AUD, as Australia has let itself become a one trick pony.The story is finally gaining more traction in the press and appears to be weighing on sentiment at last.


Japan data releases this week expected to be mostly market positive, reinforcing an acceleration of the modest recovery. GDP will rebound 19% for Q3 as will Sep Industrial Production. October Inflation YoY to rise to 0.20%, an excellent job when you are Japan. PMI’s to rise above 49.0 on Friday, close to neutral from contracting.

The Yen has fallen heavily on vaccine hopes this week, delivering a positive boost to the Nikkei which has outperformed. That should continue with a long-term top on Yen appreciation probably in place.

Government said to be planning an extra budget, markets positive.



Crude prices will likely remain rangebound until the crude demand outlook can have better certainty as to how many vaccines will get the greenlight and when they will be readily available for mass distribution.   In the short-term, oil won’t be able to shake lockdown fears as coronavirus continue to skyrocket across the US.  The US situation is very bleak as cases, hospitalizations, and deaths continue to rise sharply, likely raising expectations that they will follow the path of Europe and see regional lockdowns.

Yesterday, the US had 163,402 new cases, 1,172 deaths, and over 67,000 hospitalized. Oil prices are finishing the week on a down note but are still holding onto Pfizer’s positive vaccine news from earlier in the week.  All eyes remain on Moderna’s vaccine results which should happen any day now.

The crude demand outlook will be terrible for the next few months, but very optimistic for the second half of 2021.  OPEC+ continues to do their part to try to bring the oil market to balance after reportedly having 101% compliance with October’s production cuts. WTI crude has been through worse this year and will likely remain trapped around the $40 level until Europe is on the other side of their current COVID wave.  The US is a few weeks behind Europe, but regional lockdowns in America will not completely be devastating to the demand as Asia leads the way and Europe nears the easing of restrictions.


Gold prices are surging on safe-haven flows as coronavirus cases grow exponentially across the US.  The economic challenges are growing as US states and cities tighten restrictions, which should continue to put pressure on Congress to provide more aid.  Russia’s sovereign fund reportedly is considering investing into precious metals, a sign they see it as a more sustainable investment in the long-term.

Gold has steadied following the ‘right hook’ it took after the surprisingly positive data from Pfizer’s experimental vaccine.  The vaccine news triggered the biggest weekly outflow for gold ETFs since March. Yesterday, three of the world’s top central bankers welcomed the vaccine news but highlighted the short-term risks to the global outlook should force them to provide more support.  The virus spread across the US will force Congress to provide more accommodation, but right now it doesn’t seem House speaker Pelosi and Senate Majority Leader McConnell are anywhere close to breaking the impasse.

If gold can hold onto the $1,890 level in the short-term, prices should continue to consolidate higher.  The path to record high territory will be a bumpy one for gold, but it is still there because the reflation trade is not going away anytime soon.

Economic Calendar

Saturday, November 14th

– US Secretary of State Michael Pompeo begins a 10-day trip to France, Turkey, Georgia, and the Mideast.

Sunday, November 15th

Turkish President Recep Tayyip Erdogan visits northern-Cyprus

Brazilians vote over 5,500 mayors and 57,000 city council members in an election that is viewed as a referendum on President Bolsonaro’s government.

Monday, November 16th

China October Industrial Production Y/Y: 6.7%e v 6.9% prior; Retail Sales Y/Y: 5.0%e v 3.3% prior

Hedge funds disclose Q3 investments in 13F filings

Brexit talks continue in Brussels

Fed Vice Chair Richard Clarida will take part in an online discussion hosted by the Brookings Institution.

Rapid testing schemes are being rolled out across over 60 local authorities across England

United Airlines starts program that offers rapid COVID-19 testing on flights to London from Newark, New Jersey. Program runs until December 11th.

Economic Data

US Nov Empire manufacturing: 13.8e v 10.5 prior

Canada manufacturing sales

Japan GDP, industrial production, capacity utilization

Turkey budget balance

Tuesday, November 17th

Fed presidents Bostic of Atlanta, Daly of San Francisco, Kashkari of Minneapolis and Rosengren of Boston take part in a virtual conference on racism and the economy

Facebook CEO Zuckerburg and Twitter CEO Dorsey will testify before a Senate panel about their decision to restrict an article about the son of President-elect Joe Biden.

OPEC+ Joint Ministerial Monitoring Committee meeting

US retail sales to post sixth straight monthly increase in October.  Total retail sales are now well above pre-pandemic levels.

Economic Data

US Oct retail sales advance M/M: 0.5%e v 1.9% prior, industrial production M/M: 1.0%e v -0.6% prior, Net TIC flows

Canada housing starts

Singapore non-oil domestic exports, electronic exports

New Zealand non-resident bond holdings

Hungary rate decision: Expected to keep rate unchanged at 0.60%

Norway Q3 GDP Mainland Q/Q: 5.2%e v -6.3% prior

Hong Kong composite interest rate, unemployment

Wednesday, November 18th

New York Fed President John Williams takes part in a webinar hosted by the Society for Advancing Business Editing and Writing.

Dallas Fed Kaplan moderates a virtual discussion hosted by his bank.

St. Louis Fed President Bullard speaks to the Rotary Club of Hot Springs National Park.

Atlanta Fed President Bostic takes part in a Fed-hosted webinar about how diverse perspectives improve economics.

Economic Data

U.S. housing starts, building permits

EIA crude oil inventory report

Canada CPI

New Zealand PPI

Australia Westpac leading index, wage price index

Japan trade

South Africa retail sales

Singapore GDP Final Q3 GDP readings

Thursday, November 19th

European Union leaders hold a summit to discuss the current strategy being used to contain the coronavirus.

Economic Data

US initial jobless claims, leading index, existing home sales

Australia unemployment, RBA FX transactions, participation rate

Japan metropolitan condominium sales

South Africa rate decision: Expected to keep interest rate unchanged at 3.50%

Turkey rate decision: Expected to raise One-Week Repo Rate 400 basis points to 14.25%

Friday, November 20th

The US and Taiwan hold economic dialogue in Washington.

Kansas City Fed President George gives a speech on energy and the economy.

Dallas Fed President Kaplan also speaks.

Economic Data

Canada retail sales

Japan CPI, Jibun Bank PMI

New Zealand credit card spending

Taiwan export orders

Hong Kong CPI

Sovereign Rating Updates

Portugal (Fitch)

South Africa (S&P & Moody’s)

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.

Ed Moya

Ed Moya [9]

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya