Weekly Keys: What is happening this week?
Pre-election week in the US with many states still undecided but with a clear lead in the polls for Joe Biden.
Last week’s events
Very good data of PMI of manufacturing in Germany that rebounded to 58.0 points, 1.6 more than the month of September, and almost 2 points better than expected. This data contrasted with the significant falls in these same indicators where both manufacturing and services significantly corrected the September readings, especially the latter.
Last election debate between Biden and Trump. Much less angry than the first one but it seems that it will not have major consequences on the final vote. On the macroeconomic side, we note that initial unemployment claims are still at high levels but falling gradually, this week they fell to 787k, the lowest level since the explosion of the pandemic in mid-March.
The week ahead
Many points of attention in Europe, the main one being the meeting of the European Central Bank on Wednesday. However, we must not lose sight of two vitally important facts that will be published on Friday. The preliminary GDP figure for the third quarter in Germany and the Eurozone CPI figure is expected to remain at -0.3% per annum from last month’s final figure.
Durable goods orders and the consumer confidence index on Tuesday and the preliminary third-quarter GDP data on Thursday will be the main focus. GDP is expected to grow by 30.9% over the second quarter, which would leave the US economy still approximately 10% below first-quarter closing levels but with a significantly higher rebound than most developed economies.
Of course, we do not lose sight of the election race which is entering its final week with polls very much in Biden’s favor but with many important states still splitting the vote.
The evolution of financial markets
Several weeks have passed since the market crisis associated with the global spread of COVID-19: weeks during which we have witnessed extreme financial market developments.
Emerging-market currencies beaten down by COVID-19
The surge to the U.S. dollar given its perceived safe-haven status has driven several EM currencies to record lows against the greenback in recent weeks, such as the Turkish lira, Mexican peso and Brazilian real.