There was widespread discussion last week about the U.S. presidential election. The winner, though unofficially, is considered to be Joe Biden. Donald Trump has continued to talk about a vote recalculation that could potentially change the overall results. However, it is expected that everything will be completed by the beginning of December, when the final vote will be confirmed.
More U.S. Senate election data has come to light revealing that Republicans won an additional 2 seats and now have 50 seats, exactly half. For the last 2 seats, re-elections will take place in January next year.
There was little economic data in the U.S.:
- Inflation stood at 1.2% per year in October, up from 1.6% after eliminating food and energy prices
- The University of Michigan's Consumer Sentiment Index has dropped to 77 points, the lowest level in 4 months, according to preliminary data
- The number of new jobless claims fell from 0.75 to 0.71 million per week, reflecting a gradually strengthening and recovering labor market
Coronavirus has remained in the spotlight while investors have been trying to understand global economic trends for the coming months. There are concerns that the growing number of cases is increasing pressure to impose restrictions and quarantine, which will undoubtedly have a negative impact on economic activity.
The number of new infections was at record highs of about 600,000 per day:
- U.S. statistics are climbing to record highs, with the number of new cases exceeding 150,000 cases per day
- In India, the number of cases was stable for the second week at 45,000
- In Brazil, there was a slight increase to 24,000 per day.
In terms of the number of cases, Russia has overtaken France, where the quarantine effect and the slowdown in the number of new cases are already noticeable.
The major currency pair EUR/USD started the week rising to the September highs, but quickly lost inertia and returned to the consolidation cycle of recent weeks.
Economic data was mixed:
- The change in Europe's economy in the third quarter was -4.4% year-on-year, but recorded growth of 12.6% year-on-year in the second quarter of 2020
- German exports in September were -3.8% lower than a year ago, suggesting generally lower economic activity in Europe's largest economy and global market
- The ZEW economic index in Germany recorded 39 points, which was the second consecutive worst month and the worst result since May.
The EUR/USD pair ended the week down -0.3%.
The top Asian pair, the USD/JPY, reacted significantly to the U.S. presidential election and rose as much as 2.0% on Monday. Nevertheless, positive sentiment subsided over the week and the pair remained below the 50-day moving average. No relevant economic data was published.
USD/JPY ended the week appreciating 1.2%.
The British pound reflected general currency market sentiment, rising to 1,330 against the U.S. dollar at the beginning of the week, then depreciating and closing at 1,320 on Friday.
Among the economic data was the following:
- Labour market results showed that the number of unemployed fell by 30,000 in October
- The unemployment rate in the country rose to 4.8% in September
- The economy was -9.6% lower in the third quarter compared to a year ago, while industrial production was down -6.3% year-on-year
The GBP/USD ended the week appreciating 0.3%.
This week will start early in the morning with data on Japan's third-quarter economic change and results from China's industrial, investment and retail volumes.
The rest of the week will unfold as follows:
- U.S. retail and industrial output data for October will be monitored on Tuesday
- Actual inflation data for U.K. and Europe will be expected on Wednesday
- The results of the U.S. secondary real estate market will be announced on Thursday
Lastly, inflation in Japan in October and retail sales in Britain will be announced on Friday.
According to Admiral Markets market sentiment data:
- 35% of investors have long positions in the EUR/USD pair (up 17 percentage points from last week's data)
- In the main Asian pair USD/JPY, 61% of investors have long positions (fell -23 percentage points)
- In the GBP/USD pair, 34% of participants expect a rise (up 4 percentage points)
Such market data is interpreted as contraindicative, so EUR/USD and GBP/USD pairs are expected to rise and USD/JPY to fall. The analysis of positioning data needs to be combined with fundamental projections and technical analysis.
Sources: bloomberg.com, reuters.com, Admiral Markets MT4 Supreme Edition, investing.com
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