The US election took centre stage this week as world markets awaited the outcome. Once again the polls were unhelpful in their projections. A clear Biden victory had been anticipated, however President Trump gained far more voters than virtually any-one predicted. In the end the states of Wisconsin and Michigan turned in Biden’s favour and this has almost certainly given Biden the victory. At the time of writing there are only a few key swing states left to finalise their counts. US stocks rose, the dollar fell, and gold launched higher anticipating a Biden win.
Other key events from the past week
- AUD: Interest rate decision, November 03. The RBA cut interest rates to 0.10% from 0.25%, increased bond purchases by $AUD100 billion, and dropped the 3yr yield target to 0.10% from 0.25%. All of this was expected, so it was a sell the rumour, buy the fact scenario event with AUD rallying higher this week.
- UK: Interest rate decision, November 05. The BoE kept rates unchanged, in-crease asset purchase to £875 billion, and committed to do whatever it takes. The GBP rallied higher post the meeting because the BoE was pretty low key about moving to negative interest rates.
- US: Interest rate decision, November 05. The Fed made virtually no changes to their statement and rates were kept unchanged at 0.00-0.25%. The lack of changes was likely due to not creating unnecessary distractions during the US election.
Key events for the coming week
- Oil: OPEC+ to extend cuts? November 07. If we get confirmation that OPEC+ will extend production cuts into Q1 2021 that will be even more supportive for near term oil prices. This is the one key headline oil traders need to watch for next week ahead of the JMMC meeting on November 17.
- NZD: Interest rate decision, November 11. The RBNZ is expected to cut interest rates to negative next year. Expectations are that they will cut rates next week, but will they keep signaling negative rates for 2021? If they do many investors will expect AUDNZD buyers on pull backs after the RBA decision.
- EUR: COVID-19: Shutdowns in Europe, November 09-13. France, Germany, UK, Italy and Spain have all announced new lockdown measures. How can that impact European markets?