Your week ahead – Trump with the “China Virus”

5 Eki 2020

ust as you think things couldn’t get weirder – arguably the most powerful man in the world, President Donald Trump, and the First Lady contracted the Coronavirus. This is after their aide, Hope Hicks, was stated to have contracted the Coronavirus the day before their announcement. This week ahead could be interesting.

There have been conflicting accounts to Trump’s health (depending on the source of news you choose to absorb). To add to this, Trump’s leading health officials have been giving conflicting and confusing information to the public, confusing press officials, the people, and the markets. Sean Conely, the White House Physician, told reporters that the President was receiving oxygen, after stating that he had not been treated to oxygen on Friday. He admitted to sharing misleading information initially to “reflect the upbeat attitude” of Trump and his doctors. However, he does state he is “doing really well.”

Donald Trump has received three different drugs during his stay at Walter Reed National Medical Center. He first received a dose of experimental medicine by Regeneron Pharmaceuticals Inc before making his way to the hospital. During his stay at Walter Reed, he has been given Remdesivir and dexamethasone.

Futures were all over the show, initially dropping hard over uncertainty, however rebounding on positive news on his health. Expect an extremely volatile week ahead, as we slowly hear word on Donald Trump’s health. Here is your week ahead.

Monday 5th October, Tuesday 6th October and Wednesday 7th October – US ISM Non-Manufacturing Index, Fed Chair Powell Speech and FOMC minutes
The US dollar and the United States Equities need upbeat news to balance any negative news regarding Trump’s condition. Trump has been hard at work while in hospital trying to continue his duties, mainly to dot the I’s and cross the T’s on a second stimulus bill, which the Federal Reserve believes is required to pull the United States economy out of the slump it is in. However, Non-manufacturing ISM’s are expected to print a slightly bearish figure of 56, down from 56.9 the month before.

Alongside the ISM figures, Federal Reserve Chairman Jerome Powell is set to speak, providing further guidance on the American Economy’s future. We should see Powell give support for more fiscal stimulus from the government. However, a more than expected dovish tone and less than expected financial support from the Jerome Powell and the FOMC minutes should see equities fall, considering the weak fundamentals and volatility Trump’s hospitalization brings.

Tuesday, 6th October – RBA Interest Rate Decision and Government Budget Release
Australia is slowly coming out of its second wave as cases calm down in Victoria. Talks of a Trans-Tasman bubble between New Zealand and Australia have come back, with citizens who have not been in a designated Coronavirus hotspot in the past 14 days will be able to travel into New South Whales and the Northern Territory. It is interesting to note that the bubble will only be one way – with New Zealanders can travel to Australia. However, Australian citizens would not be allowed to travel to New Zealand. Tickets are costly at around $900 NZD for a one-way ticket to Sydney. Seven out of the 11 economists at UBS Group expect the Reserve Bank of Australia to expand their quantitative easing, alongside a heightened possibility for the RBA to cut rates in the next six months. However, the Governor of the RBA, Philip Lowe, has pushed back against negative rates, stating that negatives rates are extraordinarily unlikely in Australia due to downsides on consumption and sentiment.

This is after a farewell email was sent to staff by Peter Tulip after he resigned in August, stating that the Reserve bank has a board “that does not understand monetary policy or statistical research” and that “..although there are lots of great people at the bank, our environment makes the organization dysfunctional”. Rates in Australia are currently at 0.25%, with a consensus for rates to stay the same.

Wednesday 7th October – ECB President Lagarde Speech
The main interest investors and traders should look out for when ECB President Christine Lagarde speaks later this week is implementing a potential digital currency. This would be an attempt to further push their quantitative easing in all of their nooks and crannies of the European Economy. Christine Lagarde state that “Europeans are increasingly turning to digital in the ways they spend, save and invest” and that “[the bank’s] role is too secure trust in Money.. making sure the euro is fit for the digital age”. They are set to go two directions; one would use a centralized system similar to how cash is handled today. The alternative would be a decentralized system with rules, identical to cryptocurrencies such as Bitcoin – however, it would not be self-governing. Instead, it would be governed by third parties. They expect to decide whether to implement a digital euro after the public consultation in mid-2021.

Christine Lagarde is also set to touch on the European Economy and its current road to recovery alongside recent Euro strength.

Thursday, 8th October – Bank of Canada Governor Macklem Speech and Unemployment rate
A couple of weeks ago, the Bank of Canada kept rates at historically low levels at 0.25% and continued to see an increase in holdings of government bonds as they continue to propel the Canadian Economy. Tiff Macklem, Governor of the Bank of Canada, stated in a speech that the Bank of Canada “will be supporting the economy through the full length of the recovery, helping to bring it back to full capacity with full employment.” They plan to keep interest rates as unpreceded levels until excess capacity is absorbed and inflation targets are reached. Expect Macklem’s speech to be much of the same, reiterating its support for the Canadian Economy. Any deviation may see wild swings in Canadian Dollar pairs.

Eyes on the news this week, particularly on Trump’s Coronavirus recovery. Stay safe, Trade Safe.