The week ahead is likely to be dominated by the COVID-19 pandemic news. As the second wave hits the United States, the number of infections grows to extreme levels – over 150,000 cases were reported in one single day over the weekend.
The evolution of the pandemic is an important factor to consider in any economic analysis, and the Western world so far did an awful job containing the spread. If we look at some other parts of the world, like Australia, New Zealand, and most Asian countries, the differences are appalling.
ECB’s Lagarde Again in Focus
Last week it was all about the Sintra virtual event and the message that Christine Lagarde, the ECB President, sent to the markets. Many ECB watchers consider the October message and the one from last week as the best ones in Lagarde’s presidency so far. More easing comes at the end of the year, and the Euro sees a robust central bank behind the crisis – hence trades with a bid tone. Lagarde speaks three times this week, so the Euro should be one of the currencies to move the most.
Germany began preparation for massive coronavirus vaccination in an effort to speed up the process once a vaccine is available. At the same time, infection rates throughout Europe seem to have peaked but remain at elevated levels. Therefore, the following months are crucial, especially considering the low temperatures in the winter season.
Another round of negotiations starts in Brussels this week after last week the European Union delegation was in London. It appears that the two parts desperately try to reach a deal, and this week may be the week a breakthrough will be announced.
Retail Sales data in the United States and the United Kingdom will offer us a clue about the shape of the consumer in the two countries. With the holiday season coming up soon and the Black Friday event as well, the focus will be to see if the savings rate decreased in the light of the positive COVID-19 vaccine news.
All in all, the trading week should be pretty active, with the markets remaining stretched at the highs. The Dow Jones futures remain close to all-time highs, and so do the main risk pairs – EURUSD trades at 1.1850, AUDUSD regained 0.73.