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THE WEEK AHEAD 31.08.2020

What happened last week:

  1. A 5th straight week of gains for the S&P500 as it ended 3.30% higher, supported by positive news about a coronavirus vaccine and the Fed’s shift to inflation average targeting.
  2. The Feds decision to inflation targeting was announced in a speech by Fed Chair Powell at the Jackson Hole Symposium and will allow the Fed to keep rates at near zero for a longer period without having to raise rates to pre-empt inflation.
  3. New coronavirus cases fell in the U.S, Japan, and Australia although the number of new cases in Europe is rising.
  4. Economic data in the U.S was varied. Durable goods, personal spending and personal income were higher than expected. However, consumer confidence dropped to its lowest level since 2014.
  5. Japanese PM Abe resigned from his position due to health reasons catching the market by surprise on a Friday afternoon.
  6. Volatility, as measured by the VIX index, ended slightly firmer at 23.0.
  7. S. 10-year yields rallied by 10bp to 0.73%.
  8. Gold ended firmer at U.S $1965 from U.S $1940 the previous week.
  9. A fourth straight week of profits for crude oil to ended 1.50% higher, at U.S $42.97/bbl.

This week’s key Economic Data announcements

Monday

 • New Zealand ANZ Business confidence

 • Japan Industrial production

 • Japan retail sales

 • Japan consumer confidence

 • Australia Private sector credit

 • Australia business inventories

 • Australia company gross profits

 • China NBS manufacturing

 • China non-manufacturing PMI

 • Canada Building permits

 • German inflation

Tuesday

 • New Zealand building permits

 • New Zealand terms of trade

 • German and EA unemployment

 • Japan unemployment

 • US. ISM manufacturing PMI

 • Australia building permits

 • Australia current account

 • Australia RBA interest rate meeting

 • China Caixin manufacturing PMI

 • Canada Markit manufacturing PMI

 • EA inflation

Wednesday

 • Australia Q2 GDP

 • UK Nationwide housing prices

 • EU German retail sales

Thursday

 • Australia balance of trade

 • China Caixin services

 • China composite PMI

 • Canada balance of trade

 •  US. factory orders

 •  US. balance of trade

 •  US. initial jobless claims

 • US. ISM non-manufacturing

 • EA retail sales

Friday

 • Australia retail sales

 •  US. Non-farm payrolls

 • Canada employment

 • UK construction PMI

 • US. non-farm payrolls

 • German factory orders and construction

Points worth mentioning:

The Australian Central Bank this week is expected to make no change to its current monetary policy settings including leaving the targets for the cash rate and the yield on 3-year Australian Government bonds at 25 basis points.

  On Friday in the U.S, the Non-farm payrolls are expected to have a 1.5 million gain in payrolls in August and the unemployment rate to fall by to 9.9%.

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