Major events of the upcoming week
A nervous attitude remains on the financial markets. Investors are increasingly concerned about the prospects for the development of the world economy in the face of a worsening epidemiological situation in the most developed regions of the world and growing geopolitical uncertainty.
Despite the tightening of quarantine measures, the spread of COVID-19 remains high in the United States and Europe. The pandemic slows down economic activity in the regions, forcing experts to revise their forecasts for the timing and pace of recovery for the worse. Obviously, the COVID-19 vaccine will not be able to quickly cure the global economy of the accumulated problems. Even with the most optimistic forecasts, recovery will take a significant amount of time.
The uncertainty in the market is aggravated by political instability in the United States and the approaching Brexit. Trump's headquarters refuses to recognize the election results, trying to delay the transfer of power as much as possible. Considering the above, the US is postponing the process of adopting a new package of economic assistance measures. Republicans and Democrats cannot agree on the size of the program.
The UK and EU are struggling to reach a trade agreement, while Brexit is less than 50 days away. Both sides stated last week the lack of progress in the negotiations. Some media outlets report that the European side is pessimistic about the prospects for concluding an agreement. But this does not prevent the British currency from strengthening, as traders continue to believe that an agreement will be reached at the last moment.
China - Big Block of Statistics from NBS Press Conference
China now remains the main engine for the recovery of the entire world economy. While the United States and Europe are struggling with the economic consequences of the second wave of the pandemic, China continues to restore its previous growth rates by mobilizing domestic reserves. It is domestic demand that remains the main factor in the growth of the Chinese economy in recent months. The main question is how large is this reserve, and will the Chinese economy be able to maintain high growth rates against the background of obvious problems in the USA, Europe and other countries?
Most experts agree that the growth rate of the Chinese economy will gradually slow down amid pressure from external factors. Growth driven by deferred domestic demand has already exhausted itself, and in the future, China will not be able to maintain a high pace of recovery amid slowing economic activity in other regions of the world. In October, investors expect a slowdown in industrial production growth from + 6.9% to + 6.5%. There is a high probability that the actual values of the indicator may be below market expectations, which may increase the pressure on risky assets at the beginning of the trading week.
USA - Retail Sales Report
In October, the epidemiological situation in the United States worsened significantly. Several states have tightened quarantine measures amid record numbers of new infections. Against this background, it is expected that the growth rate of retail sales in October will slow down from 1.9% to 0.5%. Actual values may be even lower. These data may increase the pressure on the dollar.
USA - index of manufacturing activity from the Federal Reserve Bank of Philadelphia
Philadelphia Fed Manufacturing Index shows the current state of the manufacturing sector in the Philadelphia area. Calculated from a survey of about 250 manufacturing companies in Philadelphia. This indicator helps predict the overall index of manufacturing activity in the US, which is calculated by ISM.
Against the background of a worsening epidemiological situation in the United States, experts predict a decline in the manufacturing activity index in November from 32.3 to 22.0 points. The actual figure could be even lower as many states tightened quarantine measures in November.