Key Points from This Week

COVID Second Wave Intensifies

Fears over the rising second wave of COVID-19 intensified this week. The number of new infections and deaths has been steadily rising across America and most of Europe over the last week. In Europe, a number of countries have noted new milestones with Spain crossing the 1 million infections threshold. In the UK, deaths have moved back into triple digits for the first time since June while both France and Germany have noted new daily infections records. A number of countries have now begun stepping up restrictions and controls, prompting fears that we could see a return to nationwide lockdowns over the coming winter months if the virus intensifies further. The UK has deployed a three-tier system which has already seen a number of regions sent back into a full lockdown with fears that London could be heading the same way soon.

Biden Leads in Final Presidential Debate

In the final televised debate of the US 2020 presidential elections, Democrat candidate Joe Biden was once again seen taking a small lead over Trump. Despite a much calmer and more considered approach from the President, which allowed for a more substantive discussion, Biden was deemed to answered more favourably on the key policy areas discussed. Trump’s handling of COVID, race issues, immigration and climate change have created a difficult bed for him to lie in and despite an effort to deliver more substantive answers, he was found to still be lacking substance. Initial. Post-debate polls gave the win to Biden, with national polls also noting a small uptick in support for the Democrat.

Key Events Next Week

BOC October Meeting

The BOC was seen striking a decidedly dovish tone at its last meeting, reassuring markets that more easing would likely be necessary while highlighting that negative rates could also be used. However, with recent data showing some improvement, the pressure for immediate easing seems to have been reduced somewhat meaning there is more scope for the BOC to remain on hold next week though markets do still forecast further easing by year end.

ECB October Meeting

In line with the growing concerns over the rising COVID second wave in the eurozone as well as the strength of EUR which is negatively impacting activity, the market is gearing up for fresh easing from the ECB, or rather, an increase in the current easing in play. However, given that the old rift between doves and hawks has opened up again, it is likely that the ECB will remain on hold next week and instead use the opportunity to pave the way for future easing, currently priced in for December.

Keep An Eye On

Brexit Trade Talks

The UK and EU resumed trade talks late this week following an earlier impasse. Both sides are now urgently pressing for a deal to avoid a no deal exit at the end of the year. However, tensions remain high and the situation is fragile. Should talks falter again next week this could be a big blow to investor sentiment in the UK and the EU alike especially given the downside risks both economies face from COVID over the coming months.

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