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OCTOBER 2020 EVENTS - 01/10/2020

Micro Analysis

01 October, 2020

For General Information only. Not Intended to Provide Trading or Investment Advice. Your Capital is at Risk.

  • NFP and Unemployment Rate (Sep) (Oct 2 at 13:30 GMT+1)

NFP for August recorded a slightly below expectations 1.371k result vs 1,400k exp. This time (September) 850k jobs are expected to be added. Unemployment for August was a better than expected 8.4% vs 9.8% exp. In September the unemployment rate is expected to be 8.2%.

Possible Influence: Volatile US Dollar, Gold and US Stocks

  • Monetary Policy Meeting of the Reserve Bank of Australia (October 6)

In September the Board reaffirmed that it would not increase the cash rate target until progress is made towards full employment. Its members noted that the downturn was not as severe as had been forecast, and that the recovery was taking hold in most of Australia. It agreed to maintain a highly accommodative policy as long as required.

Possible Influence: Volatile AUD

  • Inflation data in US (Sep) (Oct 13 at 13:30 GMT+1)

The Labor Department said that the consumer price index came in higher than expected 0.4% in August, but not as high as July’s 0.6% figure. September’s figure is expected to be 0.2%.

Possible Influence: Volatile US Dollar, Gold and US Stocks

  • US EARNINGS SEASON (October 13 - November 27, 2020)

A large number of U.S. companies will be releasing quarterly earnings in October. Investors will be watching to see how well corporate earnings are recovering after the worst of the pandemic lockdowns are over. The other major factor that will have an effect on corporate earnings is the fiscal cliff that the U.S. economy went over at the end of July. The bulk of the enhanced unemployment benefits ended and many of the other special stimulus packages such as the Payroll Protection Program ran their course. So analysts will be watching how the lack of that government stimulus affects earnings.

Earnings releases in October include but are not limited to JPMorgan, Netflix, Verizon, United Airlines, Microsoft, Amazon, Pfizer, Google, Tesla, and Facebook.

Possible Influence: US Stocks and Indices

  • US PRESIDENTIAL DEBATES (October 15 and October 22, 2020)

Americans will go to the polls on November 3rd. There are two Presidential debates and one Vice-presidential debate in October. The Presidential ones are on October 15th and 22nd. The Vice-Presidential debate will be October 7th. The next Presidential debate on October 15th will be “Town Hall” style with direct questions from the audience.

At the time of this writing President Trump is an underdog to win re-election. Joseph Biden’s probability of winning is currently 78%.

Possible Influence: Volatile US Stocks and Indices, Global Stocks and Indices, Commodities, Currencies

  • BREXIT: EU-UK trade negotiations (October 15)

EU UK trade negotiations are entering their final phase with the parties approaching the October 15th deadline set by the UK. If no compromise is reached by then the UK is expected to leave the EU without a deal. However, it is more likely that a deal will be reached between the two sides, but the question is whether it is a more comprehensive deal or a “bare bones” free trade deal that leaves out major issues of dispute. The European Council meets on October 15-16th which could potentially provide the venue for a signing ceremony.

Possible Influence: Volatile GBP and EUR

  • Retail Sales in US (Sep) (Oct 16 at 13:30 GMT+1)

Retail sales were below expectations 0.6% in August, indicating the consumer sector is still struggling in a weakened economy. The Commerce Department reported that August’s disappointing sales followed a below expectations reading of 0.6% in July.

Possible Influence: Volatile US Dollar, Gold and US Stocks

  • OPEC+ JMMC Meetings and Events (October 19)

The Joint Ministerial Monitoring Committee (JMMC) will meet on October 19. This committee advises the members on compliance with current quotas and makes recommendations. At its last meeting on September 17th it found its members and participating non-OPEC members were 102% in compliance in August 2020. It recommended the compensation period for prior cheating members be extended to December 2020. It noted that the economic recovery across the globe has not been the same everywhere and recommended that participating countries should be willing to take further measures when needed.

Possible Influence: Volatile Brent and Crude Oil prices

  • Monetary Policy Meeting of the Central Bank of Canada (October 28)

In September the Bank of Canada maintained its overnight rate at .25%. It committed to continuing its quantitative easing (QE) program, with large scale asset purchases of at least C$5 billion per week of Canadian Government bonds. It found CPI inflation was close to zero with downward pressure from energy and travel services. It noted that as the economy moved from reopening to recuperation it will continue to require extraordinary monetary support.

Possible Influence: Volatile CAD

  • Monetary Policy Meeting of the Central Bank of Japan (October 29)

In September the Bank of Japan set short term interest rates at negative 0.1% and agreed to purchase longer term 10-year Japanese Government Bonds to help keep yields around 0%. The Bank announced it would be purchasing Exchange Traded Funds and Japanese REIT’s. It noted that Japan’s economy was improving after the pandemic. It stated the outlook for the economy should be improving due to pent up demand and extremely accommodative monetary policy, but noted the uncertainty of the long term effects of the pandemic. The Bank said it will continue its Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control and a price stability target of 2%.

Possible Influence: Volatile JPY

  • Monetary Policy Meeting of the European Central Bank (October 29)

In September the ECB left rates unchanged at 0.25% for the marginal lending facility. It said it will continue its purchases under the pandemic emergency purchases program (PEPP) with a total envelope of 1.35 billion euros. It said the Governing Council would continue to provide ample liquidity through its refinancing operations.

Possible Influence: Volatile EUR

  • Second Wave of COVID-19 (October)

An increase in the number of Coronavirus Infections in Europe and other parts of the world and associated restrictions has reminded investors that the world is facing another wave of infections over the next period including further lockdowns and more damage to the global economy. Analysts believe that most countries do not want to implement “hard” national lockdowns due to the heavy economic (and political) damage to their countries. However, “soft” lockdowns that may include closures of businesses and localized lockdowns are still likely to make a negative impact. FRANCE: In recent weeks numbers are rising again with new infections totaling more than 10,000 cases a day in the last week of September. Fears are increasing that harsh restrictions are around the corner with Prime Minister Castex refusing to rule out a second lockdown. SPAIN: On October 1st the Spanish government ordered another lockdown in Madrid after new cases of Coronavirus continued to rise in the country. However, hundreds have already taken to the streets to protest stronger measures. UK: The UK has seen an increase in Covid cases that has caused a number of local lockdowns in the North of England and increased restrictions throughout the country including the early closure of businesses in the service industry. US: The US has seen numbers rise beyond 7 million cases and over 200,000 dead, but the rate of infections have fallen over the last couple of months. However, rising case numbers in the Mid-West and a recent spike in New York, has shown how quickly the situation could change with the US facing another expected wave this year. INDIA: India has seen over 6 million cases hit as the country is still struggling to get the first wave under control with the country still recording around 80,000 cases per day. RUSSIA: Russia has been hit hard by Covid after the country and the Financial Times recently reported that rising cases in the last week of September means that Russian businesses are facing the reimposition of lockdown measures.

Markets have responded positively to news on progress on a vaccine with AstraZeneca, Moderna and Pfizer thought to be leading the race with Johnson and Johnson also in the running. Most hope to produce a vaccine by the end of the year and want to roll their vaccine out to the public in the first half of next year.

Possible Influence: The US dollar could be expected to remain under pressure along with the Euro, the Australian dollar and the Japanese yen. The global stocks, including those of the US, and oil prices could be expected to remain under pressure. Gold is also expected to rise in volatility.

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