The Week Ahead 21st – 25th September 2020

Market Outlook for Today 

The dollar slipped and yen and yuan led Asia’s currencies a little higher on Monday, as investors looked ahead to a slew of U.S. Federal Reserve speakers this week and to a decision on the inclusion of Chinese government bonds in a global index. 

Moves were slight and volumes light due to a public holiday in Japan. The dollar index, which tracks the greenback against a basket of six major currencies, dipped 0.2% to 92.779. 

The euro and sterling crept toward the top of ranges they have occupied for a couple of weeks, with the euro last at $1.1867 and sterling at $1.2958. 

The yen looked to break new ground, extending a week of solid gains amid trepidation about the global economic outlook and perhaps a shift in the yen’s drivers as central banks pin rates around the world at or below zero. 

The yen and yuan rose about 0.3% each, with the yen touching a seven-week peak of 104.27 per dollar and the yuan hovering just below a 16-month high it hit last week.  The yen is up nearly 2% in five consecutive weeks of gains. 

Oil prices edged higher on Monday as a tropical storm took aim for the U.S. Gulf of Mexico region halting some production, though price gains were capped by the potential return of oil output in Libya and a continued rise in coronavirus cases. 

Brent crude was up 9 cents, or 0.2%, at $43.24 a barrel by 0230 GMT, while U.S. crude was up 10 cents, or 0.2%, to $42.21 a barrel. 

Gold prices edged higher on Monday, helped by a softer dollar while investors looked forward to speeches by Federal Reserve policymakers due this week for further clues on the U.S. central bank’s approach to inflation. 

Spot gold rose 0.2% to $1,953.37 per ounce by 0330 GMT before falling back to 1943 by 0830 GMT. 

The dollar index was down 0.1% against its rivals, making gold more attractive for buyers holding other currencies. 

 “The focus on Jerome Powell will be how much he is going to try to sway the Senate to provide more stimulus, more stimulus in the U.S. could lead to a weaker U.S. dollar and that would be positive for gold,” said Stephen Innes, chief market strategist at AxiCorp

Gold has surged about 29% this year as governments and central banks worldwide released unprecedented global stimulus measures to revive their economies from coronavirus-induced slump. 

Among other precious metals, silver ticked up 0.3% to $26.85 per ounce, platinum gained 1% to $936.84 and palladium was 1.1% higher at $2,381.86. 

European stocks are expected to open lower Monday as allegations surrounding bank dealings and rising coronavirus infections weigh on market sentiment around the world. 

London’s FTSE is seen opening 40 points lower at 5,976, Germany’s DAX down 52 points at 13,104,  France’s CAC 40 15 points lower at 4,972 and Italy’s FTSE MIB down 20 points at 19,425, according to IG. 

As well as the latest coronavirus developments, investors in Europe will be keeping a close eye on bank shares Monday following allegations this weekend that some have been dealing with suspicious funds. 

Rising coronavirus cases remain in focus. The World Health Organization warned Friday that the coronavirus is “not going away,” noting that it’s still killing about 50,000 people a week. “That is not where we want to be,” Dr. Mike Ryan, executive director of the WHO’s health emergencies program, said. 

Overview for the Week Ahead 

Asian shares slipped on Monday on fears the global economy may sputter for a while due to a resurgence of coronavirus infections in Europe, while fading hopes for U.S. fiscal stimulus also having an effect.  U.S. stock futures were lower early Monday morning as the market tried to bounce back from its longest weekly losing streak in about a year.  

This week, all eyes are on the U.S. Federal Reserve speakers, with the UK, New Zealand, France, Germany, and Switzerland all with high impact financial releases.  These events have the potential to influence the markets which mean there are plenty of trading opportunities. 

Today’s High Impact Events

The times below are GMT+3.

Monday 21st September 

  • 17.00 – Fed Chair Powell Speaks 

Potential instruments to Trade: USD Crosses and gold.  

Tuesday 22nd September 

  • 10.30 – UK BOE Gov. Bailey Speaks 

Potential instruments to Trade: GBP Crosses.  

  • 17.30 – Fed Chair Powell Speaks 

Potential instruments to Trade: USD Crosses and Gold.  

Wednesday 23rd September 

  • 05.00 Official Cash Rate & RBNZ Rate Statement (New Zealand) 

Potential instruments to Trade: NZD Crosses.  

  • 10.15 French Flash Services PMI & Manufacturing PMI 

Potential instruments to Trade: EUR Crosses.  

  • 10.30 Germany Flash Services PMI & Manufacturing PMI 

Potential instruments to Trade: EUR Crosses.  

  • 11.30 UK Flash Services PMI & Manufacturing PMI 

Potential instruments to Trade: GBP Crosses.  

  • 16.45 US Flash Services PMI & Manufacturing PMI 

Potential instruments to Trade: USD Crosses.  

  • 17.00 Fed Chair Powell Testifies 

Potential instruments to Trade: USD Crosses & Gold.  

Thursday 24th September 

  • 10.30 – SNB Monetary Policy Assessment & Policy Rate   

Potential instruments to Trade: CHF Crosses.  

  • 15.30 – US Unemployment Claims 

  Potential instruments to Trade: USD Crosses.  

  • 17.00 – UK BOE Gov. Bailey Speaks 

  Potential instruments to Trade: GBP Crosses.  

  • 17.00 Fed Chair Powell Testifies & Treasury Sec. Mnuchin Speaks 

Potential instruments to Trade: USD Crosses & Gold.  

Friday 25th September 

  • 15.30 Core & Durable Goods Orders m/m 

Potential instruments to Trade: USD Crosses.  

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