Daily Market Pulse

A quiet week ahead


The FX market remained volatile over the last week after the Fed promised to keep rates ultra-low for a longer period than initially thought and also due to the continued lack of progress in U.S. fiscal stimulus talks. The Dollar Spot Index ended the week down by 0.44%.

On the monetary policy front, Fed Chair Powell and Secretary Mnuchin will give their required quarterly testimony on Capitol Hill, which may reveal more information in support of the most recent statement at the Federal Open Market Committee Press Conference on September 16th.

It’s a quiet week ahead on the economic calendar, with the market participants focusing attention on PMIs data. Key figures coming up:

  • On Wednesday (09/23): Markit U.S. Manufacturing, Services, and Composite PMIs;
  • On Thursday (09/24): Initial Jobless Claims;
  • On Friday (09/25): Durable Goods Orders.

Also, the U.S Presidential Election, which is due to take place on November 3rd, should start to pick up and begin to have a greater influence on the global financial markets. Voters will choose between Joe Biden and Donald Trump, who both have polar approaches to foreign policies and issues such as global warming.


Daily case numbers in the European Union (EU) and United Kingdom (UK) last week reached record highs of more than 45,000 on a 14-day notification rate, according to the European Centre for Disease Prevention and Control. This has led some European members to raise fears over the pressure that hospitals could face in the coming months, as well as the impact that local businesses could face if restrictive measures are reimplemented. 

The focus will be on consumer confidence figures, as well as on PMIs numbers for France and Germany.

Key figures coming up:

  • On Monday (09/21): European Central Bank (ECB) President Lagarde Speech;
  • On Tuesday (09/22): Consumer Confidence Flash;
  • On Wednesday (09/23): ECB Non-Monetary Policy Meeting; Markit Services and Manufacturing PMI;
  • On Thursday (09/24): ECB General Council Meeting.

These figures will give the clearest representation yet of how the Eurozone economy is performing amid the Covid-19 pandemic last month. Therefore, any weak numbers would test the EUR’s strength.

Finally, President Lagarde is scheduled to speak today in an online event, but the market does not expect any surprises from this speech, because the ECB’s monetary policy approach has already been priced into EUR.


There is speculation that the UK and EU could still reach an agreement on Brexit, despite the UK Prime Minister Boris Johnson’s attempts to rewrite his Brexit withdrawal agreement, which was the primary cause of the FX movement seen over the past week. The GBP/USD ended the week down by 0.95%.

Further Brexit developments into this week will be closely monitored.

Investors will be closely watching the Bank of England Governor Andrew Bailey’s two scheduled appearances on Tuesday (09/22) and Thursday (09/24). Any further chatter on negative rates would weigh on the Pound.

Key figures coming up:

  • On Tuesday (09/22): CBI Industrial Trends Orders;
  • On Wednesday (09/23): Markit U.S. Manufacturing, Services, and Composite PMIs.


Japanese markets were closed for a national holiday (Aged Day) this Monday.

The Bank of Japan (BoJ) will release the minutes of last week’s Policy Board meeting (July 14-15) on Wednesday (09/23). In this last meeting, the central bank decided to maintain its quantitative easing monetary policy to help the virus-hit economy. It expects the nation’s economy to shrink 4.7% in the fiscal year 2020 but that it is projected to grow 3.3% in the following fiscal year, with expectations that economic activity will slowly return.

Key figures coming up:

  • On Wednesday (09/24): Japan Franchise Association to release convenience store sales data for August;
  • On Thursday (09/25): Japan Department Stores Association to release sales data for August.

Both statistics are likely to have a weak impact on the direction of the JPY. Covid-19 shutdowns and PMIs will influence market risk sentiment and drive the market this week.


Prime Minister Justin Trudeau will deliver Canada’s Throne Speech on Wednesday (09/23). while his office is under a cloud of controversy due to harassment claims. The throne speech could be expected to cover three main points: 

1. Measures to protect Canadians' health and to prevent another lockdown.

2. Economic support through the pandemic.

3. Eventual rebuilding measures.

House price figures for August will be released today, which is likely to have a low impact on USD/CAD.

Key figures coming up:

  • On Monday (09/21): New housing Price Index.

Also, the PMIs data from the Eurozone and the U.S, as well as Covid-19 vaccine developments, are expected to be key drivers this week.


On Thursday, Mexico’s Central Bank (Banxico) might opt to ease for a record 11th straight meeting to put the policy overnight rate at 4.25% even with inflation just above the top of the bank’s target range. A new cut of 25bps is widely anticipated, after five consecutive 50bps reductions.

It will be a busy week in Mexico.

There is a busy week ahead for Mexico’s economic calendar.

Key figures coming up:

  • On Wednesday (09/23): Retail Sales (INEGI) (y/y);
  • On Thursday (09/24): Bi-Weekly CPI and Core CPI inflation;
  • On Thursday (09/24): Interest Rate Decision;
  • On Friday (09/25): Global Economic Activity Indicator (IGAE) (y/y).

The bi-weekly inflation in the first half of September will likely remain low at 0.11%, distorted by the Covid-19 pandemic. If IGAE data comes in as expected, economic activity may have continued improving in July, with a sequential rise of 5.7% m/m.


The People’s Bank of China (PBOC), as expected, kept its benchmark lending rate for corporate and household loans steady for the 5th straight month at its September fixing on Monday. On Sunday evening, the PBOC decided to keep its one-year and five-year Loan Prime Rates on hold at 3.85% and 4.65%, respectively. The central bank has been on hold since May.

Recent economic data showed that China has steadily recovered from a virus-induced slump, however, policymakers face a tough job sustaining stable expansion over the next few years. In remarks published on Saturday, President Xi Jinping said facilitating quicker credit expansion with low rates is one of many policy tools at Beijing’s disposal, despite rising external risks. 

Investors will be closely watching further TikTok developments this week. On Sunday afternoon, President Trump said he had given a deal between TikTok, Oracle, and Walmart his “blessing,” prompting a one-week delay from the Commerce Department on TikTok’s ban.


Last week, the BRL accumulated a decrease of 0.85%. In the partial month, it strengthened by 1.88%. Year to date, the BRL has weakened approximately 34.5%.

Last week we saw President Jair Bolsonaro react strongly to reports that the government was planning to freeze benefits for the elderly and disabled to fund “Renda Brasil”, a national program to improve families' income. “Renda Brasil” has concerned the market because its funding would go beyond the limitations set in the federal budget for public spending. Bolsonaro’s response has provided initial support to the BRL. 

Key figures coming up:

  • On Tuesday (09/22): Brazil’s Central Bank - Committee the Policy Monetary (Copom) Meeting Minutes;
  • On Thursday (09/24): Brazilian Institute for Geography and Statistics (IBGE) Inflation IPCA-15;
  • On Friday (09/25): Current Account (US$ mm).

Brazil's central bank on Tuesday releases the minutes of last week’s meeting (16th Sep), which will offer a closer look at the decision to hold interest rates at its all-time low of 2%. In the Copom’s statement on the meeting, it noted that “the remaining space for monetary stimulus, if it exists, would be small” because of concerns about prudence and financial stability. The minutes may provide an insight into how the Copom’s will increase inflation, as it currently sits far below target.


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