Stay Connected

Our News Centre and Blog is your link to a dynamic network of information, people, and ideas curated by our FX and payments experts.

Weekly Market Digest
November 16 to November 20, 2020

Don Curren November 20, 2020

If the epic horror story that is the COVID-19 pandemic was split into two separate narratives last week when Pfizer and BioNTech released encouraging vaccine test results, the divergence between the positive story of possible vaccines and the overwhelmingly negative story of the current spread of the virus became even starker this week.

First, the good news.

On Monday, a week after Pfizer and BionNTech reported encouraging results from tests of their COVID-19 vaccine, another pharmaceutical concern, Moderna, released data showing its vaccine has a 94.5% vaccination success rate. US infectious disease expert Dr. Anthony Fauci labelled the results “stunningly impressive.”

Then on Thursday, data was published indicating AstraZeneca and Oxford University’s potential COVID-19 vaccine produced a strong immune response in older adults.

Despite the aura of euphoria surrounding the notion that an effective vaccine may soon be available – some say as early as December in the US – risk-sensitive stock markets were unable to sustain the positive momentum in evidence on Monday, and succumbed to volatile trading through the rest of the week.

A large part of the volatility in stocks – and the somewhat firmer tone in the US dollar on a trade-weighted basis – was attributable to the other component of the coronavirus story – the bad news of its continued rapid and relentless spread through the US and Canada, and around the world.

By Friday morning, there were 57,110,286 confirmed cases of COVID-19 and 1,364,073 deaths globally, according to data from Johns Hopkins University, and 11,740,229 cases and 252,838 deaths in the US.

The havoc wreaked by the coronavirus fostered serious doubts about the sustainability of the economic recovery in the minds of investors, and that’s a potent force offsetting the positivity unleased by developments on the vaccine front.

Economic fears have been exacerbated in the US by the continuing stalemate over another fiscal stimulus package. Tensions between the Republican and Democratic parties heightened by continuing allegations from the White House that there was widespread fraud in the November 3 presidential election seem, at the moment, to present an insurmountable obstacle to an effective fiscal relief package before the inauguration of the new administration on January 20.

Backward-looking economic data released during the week weren’t markedly negative. In fact, Statistics Canada reported that retail sales in Canada surged by 1.1% in September, much stronger than the 0.4% rise expected by economists. Inflation in Canada also exceeded expectations, with the Consumer Price Index for October rising by 0.7% on a year-over-year basis, a faster pace than the expected 0.4%, and up from a 0.5% increase in September.

In the US, data from the retail sales sector weren’t as encouraging as those from north of the border. The US Census Bureau reported retail sales there rose 0.3% month-over-month, missing the street’s consensus of 0.5%. The core reading, which removes highly volatile automobile sales, also missed expectations, registering a 0.2% gain vs. a 0.6% estimate.

There are some potentially significant data releases next week, but they are mostly clustered toward the center of the week, in part because of the Thanksgiving Day holiday on Thursday. Jobless claims and trade balance data for the US will be released Wednesday morning, followed by the minutes of the most recent Fed policy meeting that afternoon.

While Thanksgiving might normally distract investors, traders and corporates from the vicissitudes of the economy and markets, the dire coronavirus situation will likely remain top of mind for many.

If there isn’t more encouraging news about potential vaccines, risk-sensitive assets such as stocks could underperform, and the Canadian dollar, which has been performing strongly of late, could be vulnerable.

Suggested Reading   |   Cambridge Market Analysis

■ Canadian Retail Surges in September, Seen Weakening in Subsequent Months​​​​​​ read article
■ US Initial Jobless Claims Edge Higher Again  read article
■ Canadian CPI Rises More Rapidly Than Forecast in October   read article
■ US Retail Sales Miss Forecasts, Prompting Equity Futures To Extend Losses   read article

Suggested Reading   |   Counterparties

■ NYT: Recession With a Difference: Women Face Special Burden​  read article
■ Bank of Canada: Governor Tiff Macklem Remarks to Public Policy Forum’s Sustainable Finance 2 Roundtable​​​​​  read article
■ WSJ: Charles Koch Says His Partisanship Was a Mistake​​​​​​  read article
■ Wired: Huawei, 5G, and the Man Who Conquered Noise  read article
■ New Yorker: Wikipedia, “Jeopardy!,” and the Fate of the Fact  read article
■ NYT Opinion: I Am Living in a Covid-Free World Just a Few Hundred Miles From Manhattan​​​​​​ read article
■ Bank of England: Seizing the Opportunities from Digital Finance  read article
■ NYT Magazine: How Do You Know When Society Is About to Fall Apart?  read article

Calendar for the Week Ahead


Monday, November 23
■ EUR – Markit Composite Flash PMI
Tuesday, November 24
■ USD – Conference Board Consumer Confidence Index

​Wednesday, November 25
■ USD – Q3 GDP Second Estimate
■ USD – Goods Trade Balance
■ USD – Jobless Claims
■ USD – Fed Meeting Minutes

Thursday, November 26
■ USD – Thanksgiving Day
Friday, November 27
■ EUR – Economic Sentiment

Don Curren
Market Strategist and Content Editor