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Trump’s Lead In Key Battleground States Continue To Erode

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Fundamental analysis of Forex market

Notes/Observations

  • US presidential election remains undecided with former VP Biden still closer to 270 electoral votes than President Trump (Note: Trump’s lead totally dissipated in key battleground state of Georgia with Biden currently holding over a 900 vote edge)
  • Two possible run-off Senate race run-offs in Georgia could flip the Senate
  • US jobs data on back burner for the 1st time in a while

Asia:

  • RBA Quarterly Statement on Monetary Policy (SOMP) reiterated stance that was prepared to expand bond buying if needed and saw no rate hike until inflation was suitably in 2-3% range. Reiterated negative rates were extraordinarily unlikely
  • China PBoC Vice Gov Liu Guoqiang stated that current interest rate levels were appropriate; Needed to consider policy adjustments as China policy recovered; Reiterated monetary policy will be more flexible and appropriate
  • Japan PM Suga: stated that he wanted to refrain from comments on FX Rates; Stable FX Rate was important; Would respond appropriately on markets with close coordination with overseas authorities
  • Japan Senior LDP Politician Seko stated that a 3rd extra budget ~¥30T would be reasonable
  • Hong Kong Monetary Authority (HKMA) stated that it would maintain peg against US dollar for monetary stability

Coronaviurs:

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  • Total global cases 48.63M (+1.2% d/d); total deaths: 1.23M (+0.7 d/d%)

Europe:

  • Speculation circulated that Russia President Putin could be possible planning to step down due to health reasons. NY Post article noted that Putin might be suffering from Parkinson’s as the president has been seen recently exhibiting symptoms of the disease (Note: Russia refutes such speculation)

Americas:

  • FOMC kept policy steady (as expected. Left Target range unchanged between 0.00-0.25% and kept Interest Rate on Excess Reserves (IOFR) unchanged at 0.10%
  • Fed Chair Powell post rate decision press conference noted that economy had continued to recover and reaffirmed its commitment to support the economy. Recent rise in Covid cases was particularly concerning; full recovery was unlikely until people felt they are safe to return to a broad range of economic activities

Election Update:

  • Arizona Sec of State: Approx 285K ballots to count
  • Pennsylvania Attorney General: Ballot count is continuing, should have results “soon”; Few thousand ballots were mailed in late [Note: 95% of estimated vote tallied, Trump 49.5% and Biden 49.2%]
  • Georgia Senator Perdue (R-Incumbent) vote count below 50% level and likely that Georgia will have two runoff races for US Senate
  • President Trump: A lot of votes arrived late; If you count the ‘legal’ votes, I easily win; Could be down a little bit in Georgia; I am on track to win Arizona

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 -0.95% at 363.64, FTSE -0.68% at 5,866.25, DAX -1.31% at 12,403.55, CAC-40 -1.24% at 4,922.16, IBEX-35 -1.17% at 6,843.00, FTSE MIB -1.01% at 19,531.50, SMI -0.77% at 10,227.13, S&P 500 Futures -1.16%]
  • Market Focal Points/Key Themes: European indices open lower across the board and moved further into the red as the session wore on; better performing sectors include materials and telecom; energy and health care sectors among those trending downwards; Novo Nordisk to acquire Emisphere; reportedly Bilfinger received takeover offer from private equity firm; RSA gets takeover ofer from Intact Financial and Tryg; focus on upcoming NFP and potential results from US elections; earnings expected in the upcoming US session include AES, DISH Network, CVS and Telus

Equities

  • Consumer discretionary: Richemont [CFR.CH] +10% (partnership), United Internet [UTDI.DE] -2.5% (earnings)
  • Financials: Allianz [ALV.DE] +1.5% (earnings), Natixis [KN.FR] -5% (earnings)
  • Technology: AMS [AMS.CH] -2% (earnings), OSRAM Licht [OSR.DE] -1.5% (earnings)
  • Materials: Rheinmetall [RHM.DE] -2% (earnings)

Speakers

  • Trump’s lead in State of Georgia dissipates; Challenger Biden moves moved ahead by over 900
  • BOJ Member Sakurai reiterated stance that BOJ needed to continue working closely with Japan Govt and other central banks during pandemic. BOJ needed cooperation to implement flexible and bold policies in a timely and appropriate manner
  • Japan Chief Cabinet Sec Kato reiterated govt stance to take all steps on economy if necessary in a timely manner. Reiterated govt overall assessment that domestic economy was in a severe state
  • China Foreign Ministry spokesperson Wang Wenbin reiterated stance that Australia needed to do more for China-Australia relationship
  • China PBoC Financial Stability Report: To enhance macro policy adjustment as financial sector faces more difficulties

Currencies/Fixed Income

  • USD trying to stem its recent 3-day slide in quiet trade with the focus on the US Presidential outcome. Challenger Joe Biden still making gains in key battleground States as the vote count continuing. Trump appeared to be hoping for court victories. Risk appetite had grown over the week chalked up to likelihood for a split Congress that translated to continuation of favorable tax and regulatory environment and had weighed upon the greenback as a result. Focus now turning to US payroll data to be released during the US morning.
  • TRY currency (Lira) poised to record its 11th straight weekly loss for its worst losing streak for Lira since 1999. Most emerging currencies (BRL, ZAR, IDR, PHP, CNY) had rallied the past few sessions against the dollar amid prospects for Joe Biden’s victory in US Presidential elections
  • EU Bond issuance expected to pick up next week with Italy, Germany, Portugal all expected to auction debt. EU also to launch its 2nd SURE bond syndicate

Economic Data

  • (SE) Sweden Maklarstatistik Oct Housing Prices Y/Y: 11% v 10% prior; Apartment Prices Y/Y: 6% v 5% prior
  • (ZA) South Africa Oct Gross Reserves: $53.7B v $54.4B prior; Net Reserves: $51.4B v $50.7B prior
  • (DE) Germany Sept Industrial Production M/M: 1.6% v 2.5%e; Y/Y: -7.3% v -6.5%e
  • (FI) Finland Sept Preliminary Trade Balance: -€0.4B v -€0.3B prior
  • (DK) Denmark Sept Industrial Production M/M: 2.0% v 5.9% prior
  • (MY) Malaysia End-Oct Foreign Reserves: $104.6B v $105.2B mid-Oct reading
  • (NO) Norway Sept Industrial Production M/M: -1.7% v +1.1% prior; Y/Y: 6.3% v 8.3% prior
  • (NO) Norway Sept Manufacturing Production M/M: -0.5% v +3.0% prior; Y/Y: -3.4% v -2.5% prior
  • (CN) Weekly Shanghai copper inventories (SHFE): 131.3K v 139.7K tons prior
  • (FR) France Sept Trade Balance: -€5.8B v -€6.9Be; Current Account Balance: -€5.7B v -€4.7B prior
  • (FR) France Q3 Preliminary Private Sector payrolls Q/Q: 1.8% v 0.2%e
  • (ES) Spain Sept Industrial Production M/M: 0.8% v 1.4%e; Y/Y: -3.4% v -3.8%e; Industrial Output NSA (unadj) Y/Y: -0.6% v -3.8%e
  • (CH) Swiss Oct Foreign Currency Reserves (CHF): 871.5B v 873.5B prior
  • (AT) Austria Oct Wholesale Price Index M/M: +0.6% v -0.8% prior; Y/Y: -4.1% v -5.0% prior
  • (RU) Russia Narrow Money Supply w/e Oct 30th (RUB): 13.33T v 13.42T prior
  • (CZ) Czech Sept National Trade Balance ( CZK): 34.4B v 17.5Be
  • (CZ) Czech Sept Industrial Output Y/Y: -1.5% v -5.0%e; Construction Output Y/Y: -8.2% v -9.7% prior
  • (HU) Hungary Sept Industrial Production M/M: 2.3% v 6.3% prior; Y/Y: -1.0% v -3.2%e
  • (HU) Hungary Sept Preliminary Trade Balance: €1.1B v €0.3B prior
  • (UK) Halifax Oct House Price Index M/M: 0.3% v 1.6% prior; 3M/Y: 7.5% v 7.3% prior (strongest annual pace since Jun 2016)
  • (SE) Sweden Oct Budget Balance (SEK): -36.0B v -13.1B prior
  • (CN) China Q3 Preliminary Current Account: $94.2B v $110.2B prior
  • (IT) Italy Sept Retail Sales M/M: -0.8% v -1.5%e; Y/Y: 1.3% v 1.2%e

Fixed income Issuance

  • (IN) India sold total INR290B vs. INR290B indicated range in 2022, 2025, 2030 and 2060bonds
  • (ZA) South Africa sold total ZAR2.0B vs. ZAR2.0B indicated in I/L 2029, 2038 and 2046 Bonds

Looking Ahead

  • (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.10%
  • (IT) Bank of Italy Balance-Sheet Aggregates
  • (CO) Colombia Oct Consumer Confidence Index: -18.0e v -21.6 prior
  • 05:30 (PL) Poland to sell Bonds
  • 06:00 (IE) Ireland Oct Live Register Monthly Change: No est v +1.6K prior; Live Register Level: No est v 215.4K prior
  • 06:00 (CL) Chile Oct CPI M/M: 0.3%e v 0.6% prior; Y/Y: 2.6%e v 3.1% prior
  • 06:00 (BR) Brazil Oct FGV Inflation IGP-DI M/M: 3.2%e v 3.3% prior; Y/Y: 21.6%e v 18.4% prior
  • 06:00 (UK) DMO to sell £1.75B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £0.75B respectively)
  • 06:45 (US) Daily Libor Fixing
  • 06:30 (IN) India Weekly Forex Reserve w/e Oct 30th: No est v $560.5B prior
  • 07:00 (MX) Mexico Aug Gross Fixed Investment: -16.0%e v -21.2% prior
  • 07:00 (BR) Brazil Oct IBGE Inflation IPCA M/M: 0.8%e v 0.6% prior; Y/Y: 3.9%e v 3.1% prior
  • 07:00 (IN) India announces upcoming bill issuance (held on Wed)
  • 07:30 (IS) Iceland to sell 2023, 2028 and 2033 RIKB Bonds
  • 07:30 (US) Oct CBIZ Small Business Employment Index: No est v +1.5% prior
  • 08:00 (PL) Poland Oct Official Reserves: No est v $139.5B prior
  • 08:00 (PL) Poland Central Bank Oct Minutes
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:30 (US) Oct Change in Nonfarm Payrolls: +590Ke v +661K prior; Change in Private Payrolls: +700Ke v +877K prior; Change in Manufacturing Payrolls: +55Kev +66K prior
  • 08:30 (US) Oct Unemployment Rate: 7.7%e v 7.9% prior; Underemployment Rate: No est v 12.8% prior; Participation Rate: 61.5%e v 61.4% prior
  • 08:30 (US) Oct Average Hourly Earnings M/M: 0.2%e v 0.1% prior; Y/Y: 4.5%e v 4.7% prior; Average Weekly Hours: 34.7e v 34.7 prior
  • 08:30 (CA) Canada Oct Net Change in Employment: +58.0Ke v +378.2K prior; Unemployment Rate: 9.0%e v 9.0% prior; Full Time Employment Change: No est v +344.0K prior; Part Time Employment Change: No est v 44.2K prior; Participation Rate: 65.0%e v 65.0% prior; Hourly Wage Rate: 5.4%e v 5.4% prior
  • 09:00 (CA) Bank of Canada (BOC) Mackkem
  • 09:15 (AT) ECB’s Holsmann (Austria)
  • 09:30 (TR) Turkey Oct Cash Budget Balance (TRY): No est v -30.8B prior
  • 10:00 (PL) Poland Central Bank (NBP) Interest Rate Decision
  • 10:00 (CA) Canada Oct Ivey Purchasing Managers Index (Seasonally Adj): No est v 54.3 prior; PMI (unadj): No est v 61.1 prior
  • 10:00 (US) Sept Final Wholesale Inventories M/M: -0.1%e v -0.1% prelim; Wholesale Trade Sales M/M: 1.1%e v 1.4% prior
  • 11:00 (RU) Russia Oct CPI M/M: +0.4%e v -0.1% prior; Y/Y: 4.0%e v 3.7% prior
  • 11:00 (RU) Russia Oct CPI Core M/M: 0.4%e v 0.3% prior; Y/Y: 3.6%e v 3.3% prior
  • 11:00 (EU) Potential sovereign ratings after European close (Moody’s on Italy, Greece sovereign debt rating; S&P on Egypt sovereign debt rating; Fitch on Germany and Slovakia sovereign debt rating; Canadian debt rating agency DBRS on Finland and Estonia sovereign debt rating)
  • 13:00 (US) Weekly Baker Hughes Rig Count
  • 15:00 (US) Sept Consumer Credit: +$7.8Be v -$7.2B prior