President Trump announced that he was walking away from a US stimulus package before the US elections this week. The market reaction was fairly muted. This was because whether Joe Biden or President Trump wins expectations are that a stimulus bill will eventually be passed. However, the prospect of the US election is still creating significant volatility in markets and more twists and turns are expected as the Democrats and Republicans seek to outmanoeuvre one another ahead of the US November elections.

Key events from the past week

  • AUD: Interest rate decision, October 06. The RBA kept rates on hold, but they signaled that they would continue to consider how additional monetary easing could support jobs. This opened up the potential for a rate cut ahead for the RBA weakening the AUD. OIS markets now price in a 58% chance of a rate cut.
  • GBP: Brexit headlines whip around the GBP, October 07. The GBP fell and rose on a number of Brexit headlines this week as formal negotiations continued between the EU and the UK. Next week will be crucial for the talks as the UK deadline approaches. See below for more details.
  • ASX200: Australian stocks supported, October 07. Australia’s index the ASX200 should remain supported after Australia’s Government announced an aggressive stimulus package. The large fiscal plan means, according to Bloom-berg analysts, there will be few ‘losers’ in stocks, Register for our Wednesday workshop to find out how you can develop a trading plan for the week ahead.

Key events for the coming week

  • GBP: Key week for the GBP, October 15. The UK is reported to end Brexit talks if no deal is seen by October 15. Last week the EU said that Britain would back down from this deadline, so we may see some strong moves in the GBP next week as the EU and UK potential reach the end of the negotiating road.
  • USD: Retail Sales, October 16. Around 70% of the US economy comes from the US consumer. If there is a healthy retail sales figure that will be positive for risk assets. However, a much weaker reading than expected, showing signs of weakness from the US consumer, will weigh on US stocks next week.
  • USD: Election risks, October 05-09. US elections approaching mean we can expect continued volatility in the USD and global stocks. If Biden’s present lead in the polls fall that should be negative for risk. Register for our Wednesday workshop to find out how you can develop a trading plan for the week ahead.