We believe that three events acted as the market drivers last week. One of them was TV debates between Hillary Clinton and Donald Trump, where Mrs. Clinton seemed to be more successful. Different approaches of the candidates for U.S. President to the economic policy of the country affect financial market. Donald Trump promised tax cuts for companies, which could support economy growth and the USD. It is expected that Mrs. Clinton will continue soft monetary policy, which could positively affect the American stock market. Hillary Clinton was more successfully in the first TV debates than Donald Trump.
The second event is OPEC meeting in Algeria.
As the outcome of 6- hour negotiations in Algeria OPEC members announced that an agreement had been reached to reduce production in order to decrease oversupply of oil and support oil prices. It was agreed that OPEC countries would reduce total production to 32.5-33 million barrels per day against the level of 33.2 million barrels per day in August. The agreement is not yet final, and OPEC members decided to wait until November before they make a final agreement.
Crude oil Brent sharply rose to $50.00 per barrel.
The second event was the fact that last Friday shares of Deutsche Bank fell to the lows of several decades but then recovered after reports that settlement with the US authorities may not be as costly as expected. The cost of settlement may reach about $5.4 billion, instead of $14 billion, as previously reported. In the end, securities of Deutsche Bank went up by 6.4%, reaching the strongest one-day rise since April. This fact supported the stock market. Indices S&P500 and Nasdaq Composite rose by 0.8% last Friday. European index EuroStoxx50 rose by 2.0%.
The main events of this week is interest rate decision by the RBA (Tuesday 06:30 GMT+3) and US labor market data for September (Friday 15:30 GMT+3).
Statistics and news of this week are as follows:
17:00 (GMT+3) – US purchasing managers index (PMI) from Markit Economics Agency for September; This index is an indicator of business activity in the manufacturing sector, which constitutes a part of GDP.
ISM index of inflation acceleration and PMI in the US manufacturing sector for September (forecast is 50.5 against 49.4 in August, which should have a positive impact on the USD).
06:30 – interest rate decision by the RBA. The RBA reduced interest rate in August to the record lows of 1.5% due to pressure from the weak inflation data. It is expected that the RBA will not change interest rates at the meeting; however generally the RBA adheres to the soft monetary policy;
12:00 – producer price index in Eurozone for August;
23:30 – American petroleum Institute (API) will publish report on changes to the US oil reserves for last week.
03:30 – retail sales in Australia for August;
10:15 - business activity index in the services sector of Spain for September by Markit Economics. This index evaluates business climate in the service sector and can have an impact on the price of the Euro;
11:00 - business activity index in the services sector of Eurozone for September by Markit Economics. The indicator impacts on the Euro. According to the forecast the index will be at the level of 52.1;
15:15 - ADP unemployment rate in the US private sector for September As a rule, this report has a strong impact on the market and the USD; however, it is not direct correlate with the Non-Farm Payrolls. It is expected that the number of employees in the private sector will fall by 12.000 to 165 000 versus177 000 in August;
15:30 – US trade balance for August;
16:45 – US business activity index (PMI) in the services sector for September by Markit Economics, which evaluates sales and employment rate, and predicts the development of the service sector;
17:00 - business activity index (PMI) in the US services sector for September by ISM. US industrial orders for August are an indicator estimating activity in the manufacturing sector;
17:30 – US Department of Energy will issue the data on changes to the US stocks of oil and oil products for last week.
03:30 – Australian foreign trade balance for August;
10:15 – Swiss consumer price index (CPI) for September. This index is the key indicator of inflation and changes to the purchasing trends in the country. The forecast is +0.2% against -0.1% in August;
14:30 – report on the ECB monetary policy meeting with the review of the changes to the financial, economic and monetary policy made by the ECB;
15:30 – initial applications for unemployment benefits in the US last week. Previous number was 254 000;
11:30 – some important UK data for August including industrial production, production in the manufacturing sector and foreign trade balance. Volatility in the pound and in the index FTSE100 of the London stock exchange may increase;
15:30 - the data on the US labor market for September including the number of new jobs created outside the agricultural sector (Non-Farm PayRolls. According to the forecast, the index will be at the level of 176 000 against 151 000 in August. Unemployment rate in the USA is expected to remain unchanged at the level of 4.9%. Average hourly wage will be also known. In August this index grew by 2.4%. The data has impact on the monetary policy by the US Fed along with the inflation data and GDP;
15:30 - Canadian data on the labour market for September including unemployment rate;
17:00 - GDP growth by NIESR. This index estimates economic growth in the UK in the past three months. The report will be published before the release of official GDP data and can affect monetary policy of the Bank of England. Volatility in pairs with the Pound can increase.
20:00 - report on the number of active drilling platforms in the USA from the oilfield services company Baker Hughes. This is an important indicator of the state of the US oil sector. It has a significant impact on the oil prices. The number of the existing active oil rigs is 425.