Week Ahead – What next after election mayhem?

One to remember

I think it’s safe to say, last week more than lived up to expectations. We may never see a US election like it again. What is remarkable is how relaxed traders have been throughout. And to think, this was only one of a number of major risk events between now and year-end. It’s going to be a fascinating couple of months in the markets.

A US election for the ages

UK in lockdown as Brexit talks hit critical point

Is gold heading back above $2,000?


US Politics

It’s been an unforgettable week and Joe Biden is closing in on victory as he takes the lead in Pennsylvania and Georgia. Victory may even be declared late Friday. Donald Trump isn’t going down without a fight; lawsuits are being launched in many of the swing states – mostly unsuccessfully – and Trump is continuing to make allegations of fraud. Recounts in numerous states are likely to be called as the Trump campaign continues to build its case for a Supreme Court challenge, where Conservatives outnumber Democrats six to three.


The Federal Reserve unsurprisingly kept its powder dry this week and announced no more easing but it did raise concerns about the economic outlook and the lack of fiscal stimulus. Many expect the central bank to announce further easing measures in December, once the election is resolved and with new economic projections to guide them. They’ll also have a better idea of how bad the Covid situation has got by then and whether any needed stimulus is forthcoming.

The jobs report was strong with 638,000 jobs added and unemployment falling to 6.9% although this would have been 0.3% higher if workers classified correctly. Next week is mainly made up of tier two and three data, with the election hangover likely continuing to dominate the headlines.


It’s been a low key week for the EU and next week will be no different, with a number of tier three economic data and very little else. The ECB has pushed back any stimulus to December so it’s simply a case of waiting and watching. 


Covid aside, this remains the number one issue for the UK and EU. Talks have intensified and it’s been pretty quiet in public which is promising. Both sides clearly agreed to stop fighting this out in public and focus on finding a compromise in private. It does seem we’re edging closer to a deal, it’s just a case of when. The next week could be crucial. A collapse at this late stage would be a terrible failure from all concerned and I don’t think it’s likely now.


With the country in lockdown for the next month, the economy is going to struggle. The extension of the furlough scheme until the end of March will help but with the announcement coming so late in the day, it will be too late for some. 

Still, the BoE did revise down the end of year unemployment forecast this week to 6.25% from 7.5% in August, although it also revised down growth for this year (-11% from -9.5% in August) and next (7.25% from 9%), with 2022 expected to be better (6.25% from 3.5%). It also increased its asset purchase program by £150 billion, 50% more than the market anticipated, and suggested more could come if needed, possibly reducing the prospect of negative rates.


Immense pressure on the CBRT to hike interest rates at its next meeting on 19 November with the currency spiralling out of control, down 30% this year and 20% in the last three months alone. The central bank’s stealth tightening hasn’t gone down well and without an intervention, the pressure on the currency isn’t going to ease. 


China Trade Balance and FX Reserves released tomorrow. Both may slow due to the long October holiday, but it will take a big downward surprise in exports to trip up the bullish China story on Monday morning.

Ant Financial IPO forgotten within days of cancellation.

PPI Wedensday expected to fall 2.0% YoY, likely due to holiday distortions. No market effect.

Sentiment in China markets driven by the evolution of the US election situation. 

Hong Kong

ANT Financial IPO cancelled. No noticeable fallout as stocks rally on further expected easing by Fed and Presidential/Senate stalemate. 

USD/HKD remains at the bottom of its trading band with heavy buying from the HKMA. With FOMC in play in December, yield carry will keep HKD there despite unwinding of Ant Financial IPO funds by offshore investors.

GDP Friday, wide range but no direct market effect..


India CPI, Balance of Trade and Industrial Production on Thursday. CPI will show inflation remains high at over 7.0%. BoT will show exports falling but imports collapsing by 20%. Industrial Production remains contractionary at -3%.

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 

The RBNZ meeting on Wednesday poses a serious threat to the NZ Dollar rally. RBNZ expected to cut from 0.25% to 0.10%. There is a possibility that RBNZ will go NEGATIVE rates though. RBNZ Governor Orr is an uber-dove and has publicly stated he is not afraid to use negative rates. 

Very negative NZD if RBNZ goes negative, exercise caution tracking Kiwi higher with AUD until RBNZ is done. 


NAB and Westpac Consumer Confidences expected to ease slightly as Covid-19 reopening peace dividend fades.

AUD/USD one of world’s best FX performers as the FOMC easing, China commodity story reasserts itself as per before the US election. 

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. Surprisingly ignored over the past week, but will remain a major downside risk.


Reuters Tanken survey, Machinery Orders and PPI will show that Japan’s domestic outlook remains in recession and that Japan is grappling with deflation again. GDP Friday will show an improvement to -3.50% YoY but still anchored in negative territory.

Yen has rallied impressively over the last 48 hours, with USD/JPY breaking long-term support at 104.00, targeting 102.00 and 101.00. That will exacerbate deflationary pressures and will have the Government/MoF and Boj nervous. Expect a ramp-up in currency comments as USD?JPY approaches 102.00. No intervention though unless USD/JPY breaks 100.00. If the rest of Asia FX also rallies strongly, that likelihood lessens.



The crude comeback has run out of steam. It’s been a phenomenal rebound this week, just as oil prices were falling to very tricky territory but with dialogue seemingly underway to push back planned increases of two million barrels per day in January, downside pressures have significantly eased.

It’s time for OPEC+ to follow words with action though as statements earlier this week from Alexander Novak bought the group time but that will waver as Covid wreaks havoc and forces more lockdowns, weighing heavily on economic activity and demand in the coming months.

The key support levels for Brent and WTI now are once again $39 and $37, respectively. When this broke last week, the sell-off gathered pace. If it holds this time around, bulls may be encouraged. There may not be enormous upside but Brent did previously hit $44 on the expectations of delayed production increases so this level remains key. With WTI, $42 is key to the upside, but $40 could be an obstacle itself.


Gold has been really interesting over the last couple of days, bursting through near-term support and surging back above $1,950 today. The moves have been driven by a plunge in the dollar, as risk appetite has improved over the course of the week and we face the prospect of more Fed easing. 

Barring a shock twist in the election, gold may remain a favourite in the near-term as central banks turn on the taps again. The downside risk for gold is Covid and with countries going into lockdown, it remains significant. The next key levels remain unchanged, $1,980 and $2,000 to the uspide, $1,930 and $1,920 below.


Another good day for bitcoin which broke back above $15,000 on Thursday for the first time since January 2018, falling just short of $16,000 today. These are remarkable gains in a very short space of time and feels reminiscent of what we were seeing late 2017 when the hype around bitcoin was incredible.

Clearly not an enormous amount has changed on that front. Central banks going back into easing mode may be the justification for some for the move, or the uncertainty around the election, but I’m not convinced. This feels like another highly speculative move and we’ve seen before, it can rise very far very fast, but the drop can be very painful indeed.

Key Economic Events

Monday, November 9th

– More Brexit trade-deal talks occur between the U.K. and EU.  Prime Minister Johnson hopes his Internal Market Bill has a satisfactory result in Parliament.

– ADIPEC, the world’s largest gathering of oil and gas industry players set to convenes for four days virtually: speakers include Saudi Energy Minister Prince Abdulaziz bin Salman; Russian Energy Minister Novak; UAE Energy Minister Mazrouei; and OPEC Secretary General Barkindo.

– Bank of England Governor Andrew Bailey speaks at the Corporation of London Green Horizon Summit, in London.

– BOE Chief Economist Haldane speaks on a webinar on “The economic impact of coronavirus and long-term implications for the UK”

– ECB’s Rehn speaks with students on the Bank’s Strategy Review. The ECB’s Mersch speaks during an online event.

– Cleveland Fed President Mester speaks at a fintech conference hosted by the Philadelphia Fed.

– The World Trade Organization to appoint a new leader.

– Political discussions occur between Libya’s rival parties.

– China Trade and Reserve Data released this week

Economic Data

Mexico CPI

Malaysia industrial production

Germany trade balance

Euro-area Sentix investor confidence

Japan leading index

Tuesday, Nov. 10

– Fed Vice Chair for Supervision Quarles speaks with the Senate Banking Committee to discuss oversight of the SEC. Dallas Fed President Kaplan speaks to the Council on Foreign Relations.

– EU targets the imposition of nearly $4 billion in tariffs on US goods in retaliation over illegal aid to Boeing Co.

– ECB’s Knot and Boston Fed President Rosengren speak at a UBS conference

– Apple hosts “One More Thing” event. Reveals processors designed by Apple, replacing the Intel chips.

Economic Data

US NFIB small business optimism, JOLTS job openings

Japan current account balance

Australia business confidence

China CPI, PPI

CPI: Hungary, Czech

UK labor jobless claims and Claimant Count Rate

Industrial production: France, Italy

Germany ZEW index: Expectations Survey: 45.0e v 56.1 prior; Current Situation: -65.0e v -59.5 prior

Turkey unemployment

South Africa manufacturing production

Wednesday, November 11th

US Veterans Day holiday

– Alibaba has its annual Singles’ Day

– ECB President Christine Lagarde speaks at the ECB Forum on Central Banking.

– Riksbank Governor Ingves’s press conference on the central bank’s stability report.

– OPEC monthly Oil Market Report released.

Economic Data

Mexico industrial production

South Korea unemployment rate

Australia consumer confidence

New Zealand rate decision: Expected to keep Cash Rate unchanged at 0.25% and maintain pace of QE bond purchases

Romania CPI

Turkey current-account balance

Japan machine tool orders

Thursday, November 12th

– ECB President Christine Lagarde, BOE Governor Andrew Bailey and Fed Chair Jerome Powell are among the speakers at an online ECB Forum entitled “Central Banks in a Shifting World.” Through Nov. 12.

– Chicago Fed President Charles Evans speaks at a Detroit community forum.

– Bank of Canada Senior Deputy Governor Wilkins gives a speech via video conference.

– The BOE’s Andrew Bailey speaks at the FT Global Boardroom conference.

– EIA crude oil inventory report

Economic Data

US Oct CPI M/M: 0.2%e v 0.2% prior; Y/Y: 1.3%e v 1.4% prior; initial jobless claims, Treasury budget statement

Mexico rate decision: Analysts are split, could keep rates steady or cut by 25bps

Japan PPI, core machine orders

India CPI, industrial production, trade

UK Q3 Prelim GDP Q/Q: 15.8% v -19.8% prior; RICS house-price index

South Africa unemployment, mining production

Israel trade balance

Norway GDP

Friday, November 13th

– Finance ministers and central bankers from the Group of 20 hold an extraordinary meeting to discuss bolder action to help poor nations struggling to repay their debts.

– St. Louis Fed President Bullard will discuss monetary policy in a webinar hosted by the Economic Club of Memphis.

– The BOE Governor Andrew Bailey speaks at a UBS conference.

– Bundesbank President Jens Weidmann speaks at the Bundesbank Listens event in Frankfurt.

– Bank of Canada releases its Senior Loan Officer Survey

Economic Data

US PPI, University of Michigan sentiment

New Zealand manufacturing PMI, food prices

Turkey industrial production

GDP: Malaysia, Hong Kong, Hungary, Romania, Poland

Poland CPI

Sovereign Rating Updates

– Austria (Fitch)

– France (Fitch) 

– Iceland(S&P)

– Netherlands (S&P)

– Israel (S&P)

– Austria (Moody’s)

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Craig Erlam

Craig Erlam

Former 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.