The Weekly Wrap – COVID-19 and U.S Election Jitters Sink Riskier Assets

Out of the U.S

It was a busy week on the economic data front.

In the 1st half of the week, durable and core durable goods orders for September impressed. Consumer confidence weakened in October, however, with concerns over COVID-19 and labor market conditions weighing.

The focus then shifted to 3rd quarter GDP numbers and weekly jobless claims figures on Thursday.

Both were positive, with the U.S economy surging by 33.1% to reverse the 2nd quarter’s 31.4% contraction.

In the week ending 23rd October, initial jobless claims came in at 751k, which was down from a previous week of 791k.

At the end of the week, personal spending and inflation figures were skewed to the positive. Personal spending rose by 1.4%, following a 1% rise in August, with the annual rate of core inflation picking up from 1.4% to 1.5%.

PMI numbers from Chicago were also upbeat, in spite of a modest decline in October. The PMI fell from 62.4 to 61.1.

In the equity markets, the NASDAQ fell by 5.51%, with the Dow and S&P500 seeing losses of 6.47% and 5.64% respectively.

Out of the UK

It was a particularly quiet week on the economic data front, with no material stats to provide the Pound with direction.

The lack of stats left the Pound in the hands of Brexit, COVID-19, and market risk sentiment.

In the week, the Pound fell by 0.71% to $1.2947. In the week prior, the Pound had risen by 0.97% to $1.3040.

The FTSE100 ended the week down by 4.83% following on from a 1.00% loss from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

In the 1st half of the week, Germany’s Ifo Business Climate Index fell from 93.2 to 92.7, reflecting sentiment towards the 2nd wave of the COVID-19 pandemic.

While there was improved sentiment towards current conditions, there were rising concerns over the economic outlook.

The focus then shifted to a particularly busy 2nd half of the week.

German unemployment numbers impressed on Thursday, with the unemployment rate falling from 6.3% to 6.2%.

Of greater significance, however, was a dovish ECB. While holding policy unchanged, Lagarde talked of further monetary policy easing next month. The ECB President also noted that, while 3rd quarter GDP numbers would likely impress, there would be a contraction in the 4th quarter.

On Friday, 3rd quarter GDP numbers for France, Germany, Spain, and the Eurozone were key stats. Eurozone and member stats saw a v-shaped economic rebound in the 3rd quarter. While the numbers were better than forecasts, however, the impact on the majors was modest.

French and German consumer spending and Eurozone inflation figures were also in focus. Consumer spending slumped in September, with deflationary pressures persisting in October.

For the week, the EUR slid by 1.80% to $1.1647. In the week prior, the EUR had risen by 1.21% to $1.1860.

Away from the economic calendar, the continued rise in new COVID-19 cases and new lockdown measures were negative for the major bourses and for the EUR.

For the European major indexes, it was another bearish week. The CAC40 and EuroStoxx600 fell by 6.42% and by 5.56% respectively, with the DAX30 sliding by 8.61%.

For the Loonie

It was a relatively quiet week on the economic data front.

Key stats included September building permits and RMPI figures and August GDP numbers.

In September, building permits surged by 17%, following a 1.4% rise in August, reflecting improved economic conditions. Influence on the Loonie was limited, however, with crude oil prices on the slide.

The GDP and RMPI figures on Friday were disappointing, however. Canada’s economy grew by 1.2% in August, slowing from 3.1% growth in July. The RMPI slid by 2.2%, partially reversing a 3.2% rise in September.

Of greater interest in the week, however, was the Bank of Canada’s monetary policy decision on Wednesday.

The BoC left monetary policy unchanged, which was in line with market expectations. The BoC failed to distract the markets from sliding oil prices and negative sentiment towards the economic outlook.

In the week ending 23rd October, the Loonie fell by 1.49% to end the week at C$1.3321. In the week prior, the Loonie had risen by 0.49%.


It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 30th October, the Aussie Dollar slid by 1.55% to $0.7028, with the Kiwi Dollar falling by 1.14% to end the week at $0.6615.

For the Aussie Dollar

It was a relatively busy week on the economic calendar.

Key stats included 3rd quarter inflation and business confidence figures.

The stats were skewed to the positive. A pickup in inflationary pressures failed to give the Aussie Dollar a boost, with improving business confidence also failing to support.

Market risk aversion stemming from the 2nd wave of the COVID-19 pandemic weighed on commodity prices and the Aussie Dollar.

With the RBA in action next week, and a rate cut expected, the losses were on the heavier side.

For the Kiwi Dollar

It was also a relatively busy week on the economic calendar.

Key stats included September trade and October business confidence figures.

The stats were skewed to the positive for the Kiwi.

In September, the annual trade surplus widened to its largest since 2014. This was attributed to a slump in imports, however. Demand for crude waned, leading to the marked decline.

Business confidence improved, however, with firms being more confident about the economic outlook.

For the Japanese Yen

It was a relatively busy week on the economic calendar.

Key stats included retail sales, inflation, and industrial production figures.

It was a mixed bag for the Yen.

Retail sales slid by 8.7% in September, following a 1.9% decline in August.

Deflationary pressures also picked up, with Tokyo consumer prices falling by 0.5% in October, year-on-year. In September, consumer prices had fallen by 0.2%.

On the positive, however, was a 4% jump in industrial production, according to prelim figures. In August, industrial production had risen by 1.0%.

The stats had a muted impact on the Yen, however, with concerns over the economic outlook supporting demand for the Yen.

On the monetary policy front, the BoJ stood pat on policy, which was in line with market expectations.

The Japanese Yen rose by 0.05% to ¥104.66 against the U.S Dollar. In the week prior, the Yen had risen by 0.65%.

Out of China

It was a particularly quiet week on the economic data front.

There were no material stats to provide the Yuan and the equity markets with direction.

In the week ending 30th October, the Chinese Yuan fell by 0.07% to CNY6.6915. In the week prior, the Yuan had risen by 0.16%.

The CSI300 fell by 0.49%, with the Hang Seng ending the week down by 3.26%.

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