Risk on with Positive Data from China. Non-Farm Payrolls and First US Debate Later This Week.
UNITED STATES
Today’s agenda is dominated by ECB and FOMC speeches with CNY off on holiday. We should see US Final GDP Numbers and Non-Farm Payrolls later this week. Trump and Biden first debate and Brexit talks final round of discussions are set for Tuesday. Ahead of US debate NY Times published an article on Sunday saying that Trump paid virtually no income taxes in recent years.
Dollar is slightly lower in early European trade Monday with risk on after positive data from China. Stocks rebounded in US on Friday as a rally in tech shares tempered concern over an uncertain outlook for US stimulus package. The S&P 500 erased losses and the Nasdaq 100 outperformed as giants Apple and Tesla climbed at least 1.8%. Industrial, consumer-discretionary and financial shares also gained. The dollar surged amid continued short covering while the euro dropped as European economies struggled with the resurgence of virus cases. The pound extended losses, heading for its worst month in almost four years.
EUROPEAN UNION
European stocks opened higher on Monday with positive data from China released over weekend. Dax rose 2.4%. CAC 40 is 1.65% higher and FTSE 100 1.5%. The profits in China’s industrial companies increased for the fourth consecutive month in August.
Attention will remain on the rising infection rates in Europe where many countries have imposed the first significant tightening of restrictions on public life since lockdown. But there’s intense anxiety about whether these measures will be enough and how much they’ll weigh on the region’s economic recovery.
OIL
Brent fell 0.6% to $42.14, while gold futures are lower at $1,863.
TURKEY
Elsewhere Turkish Central Bank raised Benchmark Rate to 10.25% on Friday.
RUSSIA
Ruble slipped 0.3% against the U.S. dollar to 77.3550 on Friday; a close at that level would be the weakest since April 1. The ruble is the worst performer in EM this quarter after the Turkish lira as speculation over new sanctions returned and investors looked to U.S. elections in November. The Kremlin is getting alarmed at prospect of Biden win, while Moscow Reintroduces some Covid-19 Restrictions from September 28. 10-year benchmark ruble bond yields -2bps to 6.27% Russia’s Finance Ministry still hopes to sell a euro-denominated bond before the end of the year, despite a recent surge in market volatility that it expects to continue in the fourth quarter.
LATAM
In Brazil, the highlight of the coming week is August industrial production. A positive result could set the mood for the upcoming round of activity data and trigger further upside revision in the consensus growth forecast. In Chile, the monthly economic activity index, industrial production and retail sales data for August are likely to add evidence that activity is still recovering, but remains below its level prior to the outbreak and one year prior. Employment figures should confirm labour-market conditions remain weak, but are more stable after a sharp drop earlier this year. In Colombia, the minutes from the central bank meeting should suggest the easing cycle is over and policy makers are poised to hold interest rates for a prolonged period. Unemployment data for August is likely to extend its uptrend and support expectations for demand and pressure on prices to remain subdued.
SSA
Angola’s Eurobonds reversed declines that drove benchmark yields to three-month highs after the country said it will honour payments on these obligations while it looks for relief from other creditors. Elsewhere last week the Central Bank of Nigeria unexpectedly cut its key interest rate to its lowest since 2016 as it chose to boost a contracting economy over fighting inflation that’s been above target for more than five years.