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US Manufacturing drives up the USD

Worldwide coronavirus cases surpass 59.47 million with over 1,401,000 official deaths.

As we approach 2021 we are still seeing muted economic activity which is below levels seen prior to the outbreak of the coronavirus pandemic. The severe lack of offshore visitors and tourists has undermined a strong recovery domestically.  As the massive monetary policy stimulus in the form of quantitative easing becomes no longer needed the decision of repayment will have to be weighed up. It’s clear that any strong momentum in the economy will be closely tied to coronavirus. However, many tourism related sectors are recovering at a faster pace than expected post lockdowns. The building industry is showing strong demand as well as manufacturing and recent spikes in Retail Sales. Retail Sales jumped 28.0% yesterday for the third quarter after 20% was predicted, a massive rise from second quarters -14.6% performance.

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Economic Releases

Monday 23/11

  • All Day, JPY, Bank Holiday
  • 915pm, EUR, French Flash Services PMI
    • Forecast 39.2
    • Previous 46.5
  • 930pm, EUR, German Flash Manufacturing PMI
    • Forecast 56
    • Previous 58.2
  • 930pm, EUR, German Flash Services PMI
    • Forecast 46.1
    • Previous 49.5
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International Trade

FX Update

Worldwide coronavirus cases surpass 57.2 million with over 1,364,000 official deaths.

        Key Points:

  • Australian Unemployment rose from 6.9% in September to 7.0% in October
  • The RBNZ Wednesday acknowledged less justification for interest rates to be lowered. We see rates being cut in May 2021 to 0.10%
  • US coronavirus daily numbers are continuing to get bigger with 165,000 new cases yesterday and 164,000 Wednesday with a total number of just over 3M Americans now with the virus. Alarmingly over 1.15M have been diagnosed in the past 7 days. 
  • President Trump’s legal claim regarding ballot counting in the state of Wisconsin started Wednesday with Elections Commission officials agreeing to recount ballots in Milwaukee and Dane counties.
  • Moderna boost risk markets after their vaccine trials report 94.5% effectiveness.
  • UK’s Frost has informed Prime Minister Johnson to expect a Brexit deal early next week.

Vaccine Optimism Boosts Risk

Worldwide coronavirus cases surpass 55.19 million with over 1,330,000 official deaths.

Key Points:
• Biden and the Democrats oppose a new 4-6 week nationwide lockdown proposal by newly elected advisory board
• The RBNZ was less dovish than we expected, acknowledging less justification for interest rates to be lowered. We see rates being cut in May 2021 to 0.10%
• US coronavirus numbers over the last 10 days are averaging over 150,000 cases per day with hospitals at capacity.
• President Trump has made legal claims on the legitimacy of the ballot counts in at least 4 states, his legal claim in Georgia is underway with an official recount.
• Moderna boost risk markets after their vaccine trials report 94.5% effectiveness.
• UK’s Frost has informed Prime Minister Johnson to expect a Brexit deal early next week.

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Economic Releases

Monday 16/11

  • 940pm, AUD, RBA Gov Lowe Speaks
  • 10pm, EUR, ECB Financial Stability Review

Tuesday 17/11

  • 2am, EUR, ECB President Lagarde Speaks
  • 1130am, AUD, RBA Assist Gov Kent Speaks
  • 130pm, AUD, Monetary Policy Meeting Minutes
  • Tentative, All, OPEC-JMMC Meetings
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FX News

FX NEWS

Worldwide coronavirus cases surpass 52.95 million with over 1,296,000 official deaths. 

Trump has refused to concede defeat just yet in the 2020 US Election preferring to kick off a large-scale litigation process in efforts to reverse vote counts in several key states. The first state to have its voter count fully audited is Georgia. Georgia’s secretary of state announced on Wednesday that the state would conduct a full audit of the US Election voter result by doing a full recount by hand of the millions of ballots cast. The margin is so close in the state which Biden is holding by around 12,000 votes majority. Democrats say there is no actual evidence of widespread fraud in the election as no state or county has reported any inaccuracy of the vote count specifically. The legal process and any likely outcome will take weeks, possibly months to be made official. 

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President Trump

Trump Turns Energy to Courtroom Hopes

Worldwide coronavirus cases surpass 51.22 million with over 1,268,000 official deaths.

The US Election has extended past election day as we wait for an official winner and outcome.  Is a win by Joe Biden and the Democrat Party imminent or are we to see weeks of President Trump Republican voter fraud claims play out in the courts with much delay. In the 11th hour Joe Biden had massive comebacks in the key states of Pennsylvania and Georgia – some say ballot foul play was at hand. Markets however seemed to embrace the new possible reality of a Democrat victory but with a long drawn out legal process underway a proper result could take weeks. Voter turnout certainly had no positive outcome in the battle against coronavirus with the virus spreading at a rate of over 100,000 per day recently with health experts expecting these figures to double. New lockdowns will be brought back which will paralyse the US economy again detrimentally affecting the economy for the rest of the year and possibly into 2021. Any such potential uncertainty in the US Election could make markets nervous and send the kiwi and Aussie lower, although most scenarios have already been well priced in.  

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Economic Releases

Monday 09/11

  • 1135pm, GBP, BOE Gov Bailey Speaks

Wednesday 11/11

  • 2pm, NZD, Official Cash Rate
  • Forecast 0.25%
  • Previous 0.25%
  • 2pm, NZD, RBNZ, Monetary Policy Statement
  • 2pm, NZD, RBNZ Rate Statement
  • 3pm, NZD, RBNZ Press Conference
  • All Day, EUR, French Bank Holiday
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FX News

Worldwide coronavirus cases surpass 48.3 million with over 1,228,000 official deaths.

Key Points:
The US Election hangs in the balance this morning, perhaps with an edge to Biden in the race to become President. Currently Biden is sitting on 253 electorate votes while the President sits on 213, 270 electoral votes are needed for victory. There are 6 states which are too close to call. My call on it is,- if Trump wins Nevada he will win the presidency. As votes continue to be counted President Trump has made legal claims on the legitimacy of the ballot counts in at least 4 states.
Equity markets are up overnight the fourth straight day of rises – the Nasdaq gaining over 2.5%

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US Election results has potential to rattle currencies.

Worldwide coronavirus cases surpass 47.28 million with over 1,210,000 official deaths.

It’s a massive week of economic data, the biggest we have seen in a long time. Most notably the US Election Wednesday, we published a piece on this yesterday for anyone who is interested. The Melbourne Cup is later today just after the Australian Cash Rate announcement.

Just a note to clients- tomorrow as US Elections results start flowing in our market liquidity providers will be pricing accordingly to allow for wider/ volatile market conditions. If you have currency to move it may be best to do this in the morning or later in the week when market liquidity conditions return to normal trading conditions.    

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