On Monday, at 00:00 GMT, Australia will publish inflation data from MI for October, and at 00:30 GMT present the ANZ vacancy index for October and report changes in the volume of construction permits for September. Also at 00:30 GMT, Japan will release the manufacturing PMI for October. At 01:45 GMT China will release PMI index for the manufacturing sector from Caixin for October. Then, the focus will be on the indices of business activity in the manufacturing sector from Markit for October: at 08:30 GMT, Switzerland will report, at 08:50 GMT - France, at 08:55 GMT - Germany, at 09:00 GMT - the Eurozone, at 09:30 GMT-Britain, and at 14:45 GMT - the United States. At 15:00 GMT, the US will present the ISM manufacturing index for October and report changes in the volume of spending in the construction sector for September.

On Tuesday, at 03:30 GMT in Australia, the RBA's interest rate decision will be announced. At 07:30 GMT, Switzerland will publish the consumer price index for October. At 07:45 GMT, France will report a change in the balance of the state budget for September. At 15:00 GMT, the US will announce a change in the volume of production orders for September. The US presidential election will also be held on Tuesday. At 21:30 GMT, in Australia the AIG construction activity index for October will be released. At 21:45 GMT, New Zealand will announce changes in the unemployment rate and the number of employees for the 3rd quarter. At 23:50 GMT, in Japan the minutes of the Bank of Japan's monetary policy meeting will be released.

On Wednesday, at 00:30 GMT Australia will report the change of volume of retail trade for September. At 01:45 GMT China will present an index of business activity in the services sector from Caixin for October. Then the focus will be on the business activity indices in the services sector for October: at 08:50 GMT, France will report, at 08:55 GMT - Germany, at 09: 00 GMT - the Eurozone, and at 09:30 GMT - Britain. At 10:00 GMT, the Euro zone will publish the producer price index for September. At 13:15 GMT, the US will announce a change in the number of employees from ADP for October. At 13:30 GMT, Canada and the United States will announce changes in the foreign trade balance for September. At 15:00 GMT, the US will present the ISM non-manufacturing index for October. At 15:30 GMT, the US Department of energy will release a report on changes in oil reserves.

On Thursday, at 00:30 GMT, Australia will announce a change in the foreign trade balance for September. At 06:45 GMT, Switzerland will publish the SECO consumer sentiment index for the 4th quarter. At 07:00 GMT Germany will report the change in the volume of orders in industry in September. At 09:30 GMT, Britain will release the PMI for the construction sector for October. At 10:00 GMT, the Euro zone will announce a change in retail trade volume for September. At 12:00 GMT in Britain, the Bank of England interest rate decision will be announced. At 13:30 GMT, the US will report changes in the level of labor productivity in the non-manufacturing sector and the level of labor costs for the 3rd quarter, as well as the number of initial applications for unemployment benefits. At 19:00 GMT in the US, the FOMC interest rate decision will be announced. At 19: 30 GMT the FOMC press conference will be held. At 21:30 GMT in Australia, the AIG service sector activity index for October will be released. At 23:30 GMT, Japan will report changes in the level of wages and household spending for September.

On Friday, at 00:30 GMT, in Australia, the RBA Monetary Policy Statement will be released. At 02:00 GMT, New Zealand will report a change in expected inflation in two years. At 06:45 GMT, Switzerland will announce a change in the unemployment rate for October. At 07:00 GMT Germany will announce the change of volume of industrial production for September. At 07:45 GMT, France will report changes in the number of people employed in the private sector of the economy for the 3rd quarter. At 08:00 GMT, Switzerland will announce a change in the volume of foreign currency reserves for October. At 08:30 GMT, Britain will release the Halifax house price index for October. At 13:30 GMT, the US will announce changes in the unemployment rate and the nonfarm payrolls for October. Also at 13:30 GMT, Canada will report changes in the unemployment rate and the number of people employed for October. At 15:00 GMT Canada will present the Ivey Purchasing Managers Index for October. At 20:00 GMT, the US will announce a change in consumer credit for September.

On Sunday, at 23:50 GMT, Japan will announce changes in the volume of orders for machinery and equipment for September and the current account balance for September.

According to ActionForex, analysts at RBC Financial Group notes that Canada GDP grew 1.2% in August, and has now retraced three quarters of activity lost in spring.

"GDP in Canada grew 1.2% in August, a bit higher than StatCan’s prelim estimate from a month ago but nonetheless a marked slowdown from an average growth rate of 4.8% over each of the prior three months. Output has retraced around 75% of the losses earlier in spring, but still sits around 5% below pre-Covid (February) levels."

"Services industries contributed 90% of the growth in August, led by expansion in the public sector (educational services, health care and social assistance, and public administration) as all sub-components continue to rebound from spring lows. Oil and gas extraction contracted again in August amid low oil prices."

"Hard-hit industries like food & accommodation and arts, entertainment, & recreation have lagged behind but also continued to recover in August as virus case counts remained low and containment measures eased. That growth probably extended into September, and Statistics Canada’s preliminary estimate is that GDP rose another 0.7% in that month. That’s pinning the quarter over quarter output growth in Q3 at slightly above the 45% (annualized) rebound we’ve previously expected."

"The bigger concern is how much of that Q3 growth can be sustained beyond September. COVID cases have been on the rise, prompting local governments to re-introduce some containment measures in hotspots. The less stringent and more targeted response this time around probably means activity held up much better than it did back in April. But the economic rebound was already slowing ahead of the virus resurgence, and there is still clearly a risk that broader containment measures could yet be needed."

According to FT, "people involved in the talks said that Britain and Brussels still needed to overcome deep-rooted disagreements over EU fishing rights in British waters, “level playing field” conditions for business and governance arrangements of the future deal."

FXStreet notes that over recent weeks, equities have rallied and bond yields have risen on occasions when the perceived chance of a Democratic win has gone up, and vice versa. As the election campaign draws to a close, economists at Capital Economics looks at how it has affected so far and assesses how different outcomes could affect equity, bond and currency markets after Election Day. 

“A win for their candidate for president, Joe Biden, combined with a ‘Blue wave’ sweep where Democrats won majorities in both the House of Representatives and the Senate, is perceived as the outcome that would deliver the largest fiscal boost and therefore the most help for risky assets.”

“Investors may be overly optimistic about how much stimulus a Biden administration would deliver, and how quickly it would get through Congress even with Democratic majorities in both houses. We also think that any further rise in US Treasury yields, if there was a large fiscal package, would not be sustained. We expect that the Fed will continue to keep yields low regardless because it wants financial conditions to remain accommodative while the economy recovers from the COVID-19 shock.”

“A surprise sweep for Republicans (which looks very unlikely) could well lead to a broadly similar market reaction as a Democratic win. They too would probably pass another stimulus package, albeit a smaller one, and continue with the generally business-friendly policies of the past four years. That said, a second term for President Trump would probably be bad news for some emerging market currencies – in particular, the Chinese renminbi – due to the risk that he may again ratchet up trade tensions again.”

“The worst outcome for investors would be if either side contested the outcome of the election. That would reduce the near-term prospects for a fiscal deal and increase uncertainty more generally. It could easily trigger a deeper setback for risky assets and a rally in safe havens, including the US dollar.”

The Fed announces in its press release that its Board on Friday adjusted the terms of the Main Street Lending Program "in two important ways to better target support to smaller businesses that employ millions of workers and are facing continued revenue shortfalls due to the pandemic. In particular, the minimum loan size for three Main Street facilities available to for-profit and non-profit borrowers has been reduced from $250,000 to $100,000 and the fees have been adjusted to encourage the provision of these smaller loans. The Board and Department of the Treasury also issued a new frequently asked question clarifying that Paycheck Protection Program loans of up to $2 million may be excluded for purposes of determining the maximum loan size under the Main Street Lending Program, if certain requirements are met, which should also help smaller businesses access Main Street loans."

FXStreet notes that EUR/USD below 1.1688/85 sees a more important top established and analysts at Credit Suisse expect this to clear the way for a test of the 1.1612 September low. 

“EUR/USD weakness has accelerated sharply following the removal of the mid-October low at 1.1689/85 and completion of a more important top established and we expect this to clear the way for a test of the 1.1612 September low.”

“Whilst the 1.1612 September low should again be respected, below here in due course would support then seen next at the 50% retracement of the rally from late June at 1.1590 and eventually what should be more important support at 1.1495/85 – the March high and 38.2% retracement of the entire 2020 rally – which we look to prove a solid floor for a resumption of the core uptrend. Should weakness extend, which is not our base case, this would warn of a more damaging reversal lower with support seen next at 1.1425/23.”

FXStreet notes that a contested US election outcome is a risk, but any short-term risk-off move in markets is likely to be limited in length, as in 2000. Looking beyond that, the US dollar should resume its multi-year cyclical downtrend as global growth recovers, per Standard Chartered.

“The long-term outlook for the USD remains bearish. We expect a broad USD decline of around 6% over the next 6-12 months, driven by a global growth recovery, narrowing real interest rate differentials, as well as a renewed focus on the US twin budget and current account deficits.”

“In our assessment, the EUR, GBP, AUD and CNY will likely do well against the USD. The near-term focus, though, will principally be the US election. Although the USD could see a near-term bounce on a contested election, history shows any knee-jerk reactions to election outcomes are unlikely to derail the medium-term outlook.”

The final reading for the October Reuters/Michigan index of consumer sentiment came in at 81.8 compared to a preliminary reading of 81.2 and the September final reading of 80.4. This was the highest reading since March.

Economists had forecast the index to remain unrevised at 81.2.

According to the report, the index of the current economic conditions fell 2.2percent m-o-m to 85.9 from September’s final reading of 87.8. Meanwhile, the index of consumer expectations climbed 4.8 percent m-o-m to 79.2 from September’s final reading of 75.6.

“Consumer sentiment remained virtually unchanged from the first half of October (+0.6 points) and was insignificantly different from last month's figure (+1.4 points)”, noted Richard Curtin, the Surveys of Consumers chief economist. “Fear and loathing produced this false sense of stability. Fears were generated by rising covid infection and death rates, and loathing was generated by the hyper-partisanship that has driven the election to ideological extremes. Moreover, the impact of the covid virus and the extremes of hyper-partisanship will continue long past next week's election, with the potential to permanently alter the economic and political landscape.”

Statistics Canada announced on Friday that the country’s gross domestic product (GDP) grew 1.2 percent m-o-m in August, following a revised 3.1 percent m-o-m advance in July (originally a 3.0 percent m-o-m increase).

This was above economists’ forecast for a 0.9 percent m-o-m growth and marked the fourth consecutive monthly gain. However, overall economic activity was still about 5 percent below February's pre-pandemic level.

In y-o-y terms, the Canadian GDP fell 3.8 percent in August.

According to the report, both goods-producing (+0.5 percent m-o-m) and services-producing (+1.5 percent m-o-m) industries were up as 15 of 20 industrial sectors posted advances and two were essentially unchanged in August.

U.S. stock-index futures fell on Friday, dragged down by tech heavyweights, which came under pressure after the release of their earnings reports.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

Yandex N.V. (YNDX) resumed with a Buy at Goldman

Starbucks (SBUX) target raised to $94 at Telsey Advisory Group  

Amazon (AMZN) target raised to $4000 from $3750 at Monness Crespi & Hardt

Facebook (FB) target raised to $350 from $290 at Monness Crespi & Hardt 

Alphabet A (GOOGL) target raised to $2000 from $1700 at Monness Crespi & Hardt 

Twitter (TWTR) target raised to $64 from $59.75 at Pivotal Research Group

Yandex N.V. (YNDX) downgraded to Hold from Buy at Jefferies

The Commerce Department reported on Friday that consumer spending in the U.S. rose 1.4 percent m-o-m in September after an unrevised 1.0 percent m-o-m increase in August. Economists had forecast the reading to show a 1.0 percent m-o-m advance.

Meanwhile, consumer income increased 0.9 percent m-o-m in September, following a revised 2.5 percent m-o-m fall in the previous month (originally a 2.7 percent m-o-m decline). This was the largest monthly gain since April. Economists had forecast a 0.4 percent m-o-m gain.

The September surge in personal income reflected gains in proprietors’ income, compensation of employees, and rental income of persons that were partly offset by a decrease in government social benefits.

The personal consumption expenditures (PCE) price index, excluding the volatile categories of food and energy, which is the Fed's preferred inflation measure, rose 0.2 percent m-o-m in September, following an unrevised 0.3 percent m-o-m increase in the prior month. Economists had projected the index would rise 0.2 percent m-o-m.

In the 12 months through September, the core PCE increased 1.5 percent, following a revised 1.4 percent climb in the 12 months through August (originally a 1.6 percent climb). Economists had forecast an advance of 1.7 percent y-o-y.

EUR fell against most of its major counterparts in the European session on Friday despite the release of mostly better-than-forecast Q3 GDP readings from the EU's major economies.

Eurostat reported that Eurozone's GDP climbed 12.7 percent q-o-q in the third quarter. This marked the sharpest growth seen since the series started in 1995. Economists had forecast a growth of 9.4 percent q-o-q after a 11.8 percent q-o-q drop in the second quarter. On a yearly basis, the euro-area economy contracted 4.3 percent after falling 14.8 percent in the second quarter. GDP was forecast to decline 15 percent in y-o-y terms. Among member countries, France recorded the biggest q-o-q increase in GDP (+18.2 percent), followed by Spain (+16.7 percent) and Italy (+16.1 percent). Germany's economy expanded by 8.2 percent in the third quarter.

A separate report from Eurostat revealed the Eurozone’s unemployment rate was unchanged at 8.3% in September, remaining the highest since April 2018. This was in line with economists’ expectations.

The European single currency remained pressured by the ECB's hints that further monetary easing might come in December. “We agreed, all of us, that it was necessary to take action and therefore to recalibrate our instruments at our next Governing Council meeting,” ECB President Christine Lagarde said yesterday.

In addition, investors' sentiment continued to be dented by growing coronavirus cases around the globe and imposition of fresh restrictions, as well as uncertainty about the U.S. presidential election, which is to take place in less than a week.

FXStreet reports that analysts at CIBC expect the aussie to underperformance as the Reserve Bank of Australia (RBA) has reinforced its dovish policy stance. They see the AUD/USD pair moving to the downside over the next months, reaching 0.69 during the fourth quarter. 

“RBA Governor Lowe and other members of the central bank have gone to lengths to prepare the market for easing at the next meeting. When the RBA meets on November 3, we expect a combination of measures to be announced. We see the cash rate target being cut from the current 25bps to 10bps and the YCC target on 3- year bonds to be reduced to the same 10bps. The rate on the term funding facility (TFF) will also likely be cut to 10bps.”

“Amongst challenges for the AUD, a deterioration in trade with China is concerning. Chinese economic activity, including trade, has rebounded strongly, but trade with Australia has not. Chinese imports in September from all countries expanded by 13.2% YoY, while imports from Australia fell 9.5% YoY and are 7.4% lower YTD YoY.”

FXStreet notes that EUR/JPY weakness has accelerated again to remove with ease a cluster of key supports at 122.38/23. Analysts at Credit Suisse stay biased lower for the 200-day average at 121.27/15, with the 50% retracement support just below at 120.73.

“EUR/JPY weakness has accelerated again for a break with ease below key support at 122.38/23. This reinforces the top below 123.01 and we maintain our bearish view outlook with support seen next at 121.27/15 – the rising 200-day average and the back of broken trend support from June. We look for an attempt to then hold here. A closing break though would instead see the immediate risk stay lower with support seen next at the 50% retracement of the entire rally from May at 120.75/73.” 

Chevron (CVX) reported Q3 FY 2020 earnings of $0.11 per share (versus $1.36 per share in Q3 FY 2019), better than analysts’ consensus estimate of -$0.27 per share.

The company’s quarterly revenues amounted to $24.451 bln (-32.3% y/y), missing analysts’ consensus estimate of $26.339 bln.

CVX fell to $68.65 (-0.22%) in pre-market trading.

Exxon Mobil (XOM) reported Q3 FY 2020 loss of $0.15 per share (versus earnings of $0.75 per share in Q3 FY 2019), better than analysts’ consensus estimate of -$0.24 per share.

The company’s quarterly revenues amounted to $46.199 bln (-29.0% y/y), missing analysts’ consensus estimate of $48.357 bln.

XOM fell to $32.75 (-0.67%) in pre-market trading.

FXStreet notes that the near-term outlook for the sterling continues to be dominated by late-stage Brexit negotiations, rather than fundamentals. Analysts at CIBC see the pound posting a mild recovery over the next months. They forecast GBP/USD at 1.29 by the end of the fourth quarter and at 1.31 by the first quarter of 2021. 

“Brexit talks have now moved into an intensified state. The two sides are working on the legal text that will underpin an agreement, which will need to be ratified by the UK and EU parliaments. Due to timelines around the ratification process, this suggests that the deadline for an agreement is likely to be the second week in November. As both sides recognise that a no-deal scenario will compound increasing covid headwinds, we put the probability of an agreement at around 75%.”

“Should a deal be agreed to, removing the threat of tariffs and quotas, expect a potential GBP relief rally. Speculative investors have recently rebuilt negative sterling positions as Brexit uncertainties have persisted.” 

“Avoiding a no-deal EU exit will encourage short-term sterling gains as speculative shorts are cleared. However, with the realisation of ongoing trade frictions being compounded by weakening economic performance, alongside the rising tide of Covid cases, the UK economy remains highly exposed to a retreat in service sector activity. Consequently, we expect more BoE QE in November, providing reason as to why any post-Brexit GBP gains will prove short-lived.”

Honeywell (HON) reported Q3 FY 2020 earnings of $1.56 per share (versus $2.08 per share in Q3 FY 2019), beating analysts’ consensus estimate of $1.49 per share.

The company’s quarterly revenues amounted to $7.797 bln (-14.2% y/y), beating analysts’ consensus estimate of $7.650 bln.

HON fell to $163.00 (-0.97%) in pre-market trading.

FXStreet reports that analysts at Credit Suisse apprise AUD/USD remains under pressure in line with the overall risk-off sentiment, which suggests further weakness, with first key support at 0.7006/00.

“AUD/USD remains under pressure after a renewed test of the pivotal September lows as well as the psychological barrier at 0.7021/00. Whilst this should again be respected, below here in due course would reinforce the overall risk-off sentiment and see support next at 0.6989, ahead of the more important 23.6% retracement of the entire 2020 surge at 0.6965/63. Although we would expect to see another attempt to hold, beyond here would see support move back to 0.6935, ahead of 0.6921, with scope for the 0.6800 200-day average if 0.7006/6965 is broken.” 

Altria (MO) reported Q3 FY 2020 earnings of $1.19 per share (versus $1.19 per share in Q3 FY 2019), beating analysts’ consensus estimate of $1.16 per share.

The company’s quarterly revenues amounted to $5.678 bln (+4.9% y/y), beating analysts’ consensus estimate of $5.384 bln.

MO rose to $37.18 (+0.84%) in pre-market trading.

Twitter (TWTR) reported Q3 FY 2020 earnings of $0.19 per share (versus $0.17 per share in Q3 FY 2019), beating analysts’ consensus estimate of $0.05 per share.

The company’s quarterly revenues amounted to $0.936 bln (+13.7% y/y), beating analysts’ consensus estimate of $0.773 bln.

Twitter’s average mDAU was 187 mln for Q3 FY 2020 compared to 145 mln in the same period of the previous year and compared to 186 mln in the previous quarter, falling shy of analysts’ expectations of 195 mln.

TWTR fell to $44.44 (-15.24%) in pre-market trading.

Starbucks (SBUX) reported Q4 FY 2020 earnings of $0.51 per share (versus $0.70 per share in Q4 FY 2019), beating analysts’ consensus estimate of $0.31 per share.

The company’s quarterly revenues amounted to $6.203 bln (-8.1% y/y), beating analysts’ consensus estimate of $6.074 bln.

The company also issued downside guidance for Q1 FY 2021, projecting EPS of $0.50-0.55 versus analysts’ consensus estimate of $0.64.

For the full FY 2021, it forecast EPS of $2.70-2.90 versus analysts’ consensus estimate of $2.74 and revenues of $28-29 bln versus analysts’ consensus estimate of $28.21 bln.

SBUX fell to $86.50 (-2.04%) in pre-market trading.

FXStreet reports that economists at CIBC said that in the near-term, the loonie remains resilient but a more dovish Bank of Canada (BoC) could see the CAD losing ground in 2021. 

“A more pessimistic view on global growth as virus cases escalated and US stimulus was delayed sent USD/CAD back to the 1.33 level. That’s a weaker CAD than the starting point of the year, but not weak enough to support Canadian exports in the medium-term. Look for CAD to remain resilient into the first half of 2021, and then give up ground. 

“Our more optimistic forecasts for Canadian and US growth in 2022-23 have both the Fed and the BoC hiking in 2023. That’s not out of line with the BoC’s messaging, but it’s a year sooner for the US than what the Fed is signaling or the market expects. Indeed, we see the BoC letting the Fed take the first move which will work to push US yields above those in Canada and thereby steer the Canadian dollar a bit weaker, to benefit export competitiveness. Look for CAD to soften in the latter half of next year as markets sense that the BoC can be even more patient than the Fed.” 

Facebook (FB) reported Q3 FY 2020 earnings of $2.71 per share (versus $2.12 per share in Q3 FY 2019), beating analysts’ consensus estimate of $1.91 per share.

The company’s quarterly revenues amounted to $21.470 bln (+21.6% y/y), beating analysts’ consensus estimate of $19.778 bln.

FB fell to $274.89 (-2.12 %) in pre-market trading.

Apple (AAPL) reported Q1 FY 2021 earnings of $0.73 per share (versus $3.03 per share in Q1 FY 2020), beating analysts’ consensus estimate of $0.70 per share.

The company’s quarterly revenues amounted to $64.700 bln (+1.0% y/y), beating analysts’ consensus estimate of $63.331 bln.

AAPL fell to $111.13 (-3.63%) in pre-market trading.

According to the report from Eurostat, in September 2020, the euro area seasonally-adjusted unemployment rate was 8.3%, stable compared with August 2020 and up from 7.5% in September 2019. The EU unemployment rate was 7.5% in September 2020, stable compared with August 2020 and up from 6.6% in September 2019.

Eurostat estimates that 15.990 million men and women in the EU, of whom 13.612 million in the euro area, were unemployed in September 2020. Compared with August 2020, the number of persons unemployed increased by 42 000 in the EU and by 75 000 in the euro area. Compared with September 2019, unemployment rose by 1.811 million in the EU and by 1.376 million in the euro area.

In September 2020, 2.995 million young persons (under 25) were unemployed in the EU, of whom 2.451 million were in the euro area. In September 2020, the youth unemployment rate was 17.1% in the EU and 17.6% in the euro area, down from 17.8% and 18.3% respectively in the previous month. Compared with August 2020, youth unemployment decreased by 97 000 in the EU and by 77 000 in the euro area. Compared with September 2019, youth unemployment increased by 259 000 in the EU and by 202 000 in the euro area.

Amazon (AMZN) reported Q3 FY 2020 earnings of $12.37 per share (versus $4.23 per share in Q3 FY 2019), beating analysts’ consensus estimate of $7.36 per share.

The company’s quarterly revenues amounted to $96.145 bln (+37.4% y/y), beating analysts’ consensus estimate of $92.556 bln.

The company also issued upside guidance for Q4 FY 2020, projecting revenues of 112-121 bln versus analysts’ consensus estimate of $112.4 bln.

AMZN fell to $3,158.52 (-1.63%) in pre-market trading.

Alphabet (GOOG) reported Q3 FY 2020 earnings of $16.40 per share (versus $10.12 per share in Q3 FY 2019), beating analysts’ consensus estimate of $11.20 per share.

The company’s quarterly revenues amounted to $46.173 bln (+14.0% y/y), beating analysts’ consensus estimate of $42.837 bln.

GOOG rose to $1,665.00 (+6.24%) in pre-market trading.

According to the report from Eurostat, in the third quarter 2020, seasonally adjusted GDP increased by 12.7% in the euro area and by 12.1% in the EU, compared with the previous quarter. These were by far the sharpest increases observed since time series started in 1995, and a rebound compared to the second quarter of 2020, when GDP had decreased by 11.8% in the euro area and by 11.4% in the EU. Economists had expected a 9.4% increase in the euro area.

Compared with the same quarter of the previous year, seasonally adjusted GDP has however decreased by 4.3% in the euro area and by 3.9% in the EU in the third quarter of 2020, which represents a partial recovery after -14.8% and -13.9% respectively in the previous quarter.

Among the Member States, for which data are available for the third quarter 2020, France (+18.2%) recorded the highest increase compared to the previous quarter, followed by Spain (+16.7%) and Italy (+16.1%). Lithuania (+3.7%), Czechia (+6.2%) and Latvia (+6.6%) recorded the lowest increases. While a rebound was observed for all publishing countries compared to the second quarter, the year on year growth rates were still negative.

Reuters reports that the European Central Bank's Survey of Professional Forecasters showed that the euro zone economy may shrink less this year than feared but its rebound is also likely to be more shallow.

According to the quarterly survey, the economy is shrinking by 7.8% this year, less than its July prediction for an 8.3% drop, while next year's growth is seen at 5.3%, below a previous forecast for 5.7%.

Although these surveys are often an integral part of the ECB's policy deliberations, its role has likely diminished this time since the economic outlook is rapidly deteriorating as governments implement lockdown measures to contain the rapid spread of the coronavirus.

Inflation in the survey is now seen at 0.3% this year, below a previous forecast for 0.4% while in 2021, it is expected to average 0.9%, down from 1% predicted in July, both well below the ECB's target of almost 2%.

According to the report from Federal Statistical Office (Destatis), the gross domestic product (GDP) rose by 8.2% in the third quarter of 2020 on the second quarter of 2020 after adjustment for price, seasonal and calendar variations. Economists had expected a 7.3% increase. Growth was based on higher final consumption expenditure of households, higher capital formation in machinery and equipment and a sharp increase in exports. 

Destatis also reports that the German economy thus grew markedly after the historic slump of the gross domestic product in the second quarter of 2020 due to the beginning corona pandemic. However, when compared with the fourth quarter of 2019 - the quarter before the global corona pandemic -, the price-, seasonally and calendar-adjusted GDP was by 4.2% lower in the third quarter of 2020.

GDP in the third quarter of 2020 was down a price-ajusted 4.1% on the third quarter of 2019 (price- and calendar-adjusted: -4.3%).

FXStreet reports that George Saravelos, a Strategist at Deutsche Bank, analyzes how recent developments impact EUR/USD.

“The key variable to watch in the coming weeks is not the severity of restrictive policies in Europe but how effective they are in reducing virus incidence. Equally, in the US, we should be concerned about accelerating cases in the absence of measures to control them.”

“While the ECB just now has made clear its willingness to extend easing measures in the December meeting, there is very little it can do to force European rates even lower. Another 10bps cut to the deposit rate is already priced (which we think is unlikely due to its costs) and GDP 5y5y weighted yields are already at record lows.”

“Over the last month we have been emphasizing a broadly weaker dollar view, more so against high-beta and EM FX rather than the euro. It is the powerful negative mix of easy monetary and fiscal policy in the US and the prospect that this accelerates further after next week’s Presidential election that will dominate as the key driver of the dollar over the next two months. The key thing for Europe is that the virus numbers are brought back into control and that we don't see a repeat of the Great March Shutdown. In the meantime, the US election next week is more important.”

During today's Asian trading, the euro rose slightly against the US dollar after falling the day before on statements by European Central Bank (ECB) President Christine Lagarde that raised hopes for new stimulus in the region. Lagarde, speaking at the end of the ECB meeting, promised that in December the European Central Bank will "calibrate" the available monetary policy instruments appropriately in order to maintain favorable financial conditions to stimulate economic recovery and mitigate the negative consequences of the coronavirus pandemic.

The yen rose against the euro and the dollar due to the growing demand for safe haven currencies against the background of the second wave of coronavirus infection in Europe and the United States, which required the introduction of new quarantine measures.

French President Emmanuel Macron this week announced a "new stage" in the fight against the spread of COVID-19, which provides for a partial lockdown from Friday. The new restrictive measures will last until at least December 1. Germany reported the closure of a wide range of public institutions due to the increase in the incidence of COVID-19.

Meanwhile, the United States on Thursday set another record for the number of cases of COVID-19 - more than 91 thousand new cases were recorded in the country.

The ICE index, which tracks the US dollar against six currencies (the Euro, Swiss franc, yen, canadian dollar, pound sterling and Swedish Krona), fell 0.08%.

According to the report from KOF Economic Research Agency, the Economic Barometer falls in October for the first time after a brief recovery phase. It now stands at 106.6 points, 3.5 points lower than in September (revised from 113.8 to 110.1 points). Economists had expected a decrease to 107.0.

The lower level of the KOF Economic Barometer in October is in particular due to negative developments of the indicator bundles of the economic sector other services, the accommodation and food service activities and foreign demand. In addition, indicators relating to the manufacturing sector also recorded a decline. By contrast, private consumption and the construction sector remained virtually stable relative to the previous month.

Within the manufacturing sector, indicators for the electrical industry, the food and beverage sector and the metal industry in particular are pointing in a negative direction. Indicators for the mechanical engineering industry, on the other hand, are sending a slightly positive signal. 

In the goods producing sector (manufacturing and construction), indicators for the assessment of export prospects, the general business situation and production capacities in particular point in a negative direction. This assessment is reinforced by indicators relating to the competitive situation. On the other hand, indicators for the assessment of inventories, employment and the purchase of intermediate goods send a positive signal.

According to the report from INSEE, over a year, the Consumer Price Index (CPI) should be stable in October 2020, for the second month in a row, according to the provisional estimate made at the end of the month. Compared to those of September, the food prices should be more dynamic year on year, whereas those of services should rise less. The prices of energy and those of manufactured goods should fall less than in the previous month.

Over one month, consumer prices should decrease by 0.1%, after –0.5% in the previous month. The food prices and those of energy should rebound after a fall in September. Those of services should decline less than in the previous month. The prices of tobacco should be stable. Those of manufactured goods should slow down strongly after a rebound in the last month.

Year on year, the Harmonised Index of Consumer Prices should be stable for the second month in a row. Over one month, it should decline by 0.1%, after –0.6% in the previous month.

According to the report from Federal Statistical Office (FSO), turnover adjusted for sales days and holidays rose in the retail sector by 0.3% in nominal terms in September 2020 compared with the previous year. Seasonally adjusted, nominal turnover fell by 3.6% compared with the previous month. 

Real turnover adjusted for sales days and holidays rose in the retail sector by 0.3% in September 2020 compared with the previous year. Real growth takes inflation into consideration. Compared with the previous month, real, seasonally adjusted retail trade turnover registered a decline of 3.6%.

Adjusted for sales days and holidays, the retail sector excluding service stations showed a 1.0% increase in nominal turnover in September 2020 compared with September 2019 (in real terms +1.5%). Turnover at service stations continued its decline at –15.1% in nominal terms (–3.8% in real terms).

Retail sales of food, drinks and tobacco registered an increase in nominal turnover of 5.6% (in real terms +5.1%), whereas the non-food sector registered a nominal negative of 3.1% (in real terms –2.0%).

Excluding service stations, the retail sector showed a seasonally adjusted decline in nominal turnover of 3.4% compared with the previous month (in real terms –3.3%). Retail sales of food, drinks and tobacco registered an increase the name and the nominal minus of 3.2% (in real terms -3.3%). The non-food sector showed a minus of 3.9% (in real terms –3.7%).

EUR/USD

Resistance levels (open interest**, contracts)

$1.1766 (512)

$1.1742 (537)

$1.1723 (396)

Price at time of writing this review: $1.1674

Support levels (open interest**, contracts):

$1.1637 (1646)

$1.1616 (2103)

$1.1590 (1016)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date November, 6 is 57267 contracts (according to data from October, 29) with the maximum number of contracts with strike price $1,1800 (4134);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3018 (265)

$1.2981 (800)

$1.2958 (213)

Price at time of writing this review: $1.2913

Support levels (open interest**, contracts):

$1.2859 (650)

$1.2837 (568)

$1.2811 (753)

Comments:

- Overall open interest on the CALL options with the expiration date November, 6 is 33232 contracts, with the maximum number of contracts with strike price $1,3950 (3784);

- Overall open interest on the PUT options with the expiration date November, 6 is 26865 contracts, with the maximum number of contracts with strike price $1,2050 (2391);

- The ratio of PUT/CALL was 0.80 versus 0.81 from the previous trading day according to data from October, 29

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

According to provisional data from Destatis, turnover in retail trade in September 2020 was in real terms 2.2% and in nominal terms 2.6% (both adjusted for calendar and seasonal influences) lower than in August 2020. Economists had expected a 0.8% decrease in real terms.

In September 2020, the turnover in retail rose by 6.5% (real) and 7.7% (nominal) compared to the same month of the previous year, where the September 2020 had one day of sale more. In comparison to February 2020, the month before the outbreak of Covid 19 in Germany, the turnover in September 2020 was 2.8% higher.

Retail sales of food, beverages and tobacco were in real terms 6.8% and 9.6% in nominal terms higher in September 2020 than in September 2019. Turnover in retail sale in supermarkets, self-service department shops and hypermarkets were in real terms 7.0% and in nominal terms 9.7% higher than in the same month last year.

In the non-food retail sector, sales in September 2020 rose in real terms by 6.5% and in nominal terms by 7.0% compared with the same month previous year. The largest increase in turnover compared with the previous year's month in real terms by 21.2% and 22.3% in nominal terms was achieved by the internet and mail order business.