Attention should be paid to several socioeconomic events in September as they may affect the trend of USD and non-American currencies. At the same time, meetings will be separately convened by central banks of Australia, Canada, Europe, Japan, the U.S., the U.K., and Switzerland. Among them, the one scheduled for September 22nd by the Federal Reserve (Fed) has drawn the most attention, which will witness whether Powell is going to announce the time and details of withdrawing quantitative easing (QE). In addition, great importance should be attached to three general elections and a presidential election.
Compared to the Norwegian parliamentary election on September 13th making relatively slight influences, the Canadian federal election on September 20th will play a remarkable role in the domestic real estate market and the trend of CAD. Owing to the decline in his popularity, James Trudeau, the current prime minister of Canada, has decidedly brought the election forward. His political programs include vigorously suppressing a fad for real estate, imposing tax hikes on financial institutes, and improving national health services.
Under the climate of his crackdown, if Trudeau wins the election, the overheated real estate market in Canada will face huge pressure of adjustment. The question has been repeatedly asked by journalists this week whether CAD will be adversely impacted by the potential plummet of the Canadian real estate market. In my opinion, adversity has a chance to emerge but may not affect the currency‘s trend. The reason for my answer is that Canada’s central bank is more likely to increase interest rates in a positive manner to curb a domestic craze for real estate businesses, the policy in turn supporting CAD probably. In this case, the prospect of CAD is not doomed to be bearish. Besides, its trend will be fueled by oil prices that have rebounded after hitting the trough.
Whats more, the German federal election will commence on September 26th. According to polls nationwide, Social Democratic Party (Sozialdemokratische Partei Deutschlands, or SPD), the Opposition, has seen its approval rating rising to 23%, the figure exceeding that for the coalition built by the Christian Democratic Union (CDU) and the Christian Social Union (CSU). The popularity of the Green that led the polls several months earlier has dropped to only 18%. Taking the lead at present, SPD has trumped the governing coalition comprised of CDU and CSU for the first time in 25 years. Basically, three parties are running neck and neck with each other, making it hard to say that which one boasts overwhelming advantages. Under these uncertain circumstances, the European Central Bank (ECB) will definitely not launch the withdrawal from QE.
In addition, more traders may turn to USD under the context of the forex market possibly hyping the withdrawal of the Fed regarding QE, which will inflict pressure on EUR. As a result, the German federal election should make more differences to EUR than its Canadian counterpart. Moreover, Japans ruling Liberal Democratic Party (LDP) will conduct a presidential election on September 29th, a curtain-raiser for the general election of members of the House of Representatives on October 17th. The influences exerted accordingly will be shared and discussed in upcoming articles.