Review of the main events of the Forex economic calendar for the next trading week (31.10.2022 – 06.11.2022)
The past week, which turned out to be extremely volatile, actually ends the trading month. On Tuesday, a new month begins, and its first day will be marked by the publication of important macro statistics from the US and the meeting of the Central Bank of Australia.
In addition, the Federal Reserve and the Bank of England will also hold their meetings on monetary policy issues next week. Both events can have a strong impact on the markets. The next week will be completed by the publication of key data from the US labor market for October.
In addition, during the upcoming trading week we expect the publication of important macro statistics from China, New Zealand, Canada, Germany, and the Eurozone.
Thus, the next week also promises to be extremely interesting and volatile with a lot of trading opportunities for investors.
We should also note that next week, European countries will switch their clocks to winter light saving time, i.e. 1 hour back, which must be taken into account when planning your trading.
* during the coming week, new events may be added to the calendar and / or some scheduled events may be cancelled.
** GMT time
Monday, October 31
00:30 AUD Retail Sales Index
Retail Sales Index is published monthly by the Australian Bureau of Statistics and measures total retail sales. The index is often considered an indicator of consumer confidence and reflects the state of the retail sector in the short term. The growth of the index is usually a positive factor for the AUD; a decrease in the indicator will negatively affect the AUD. The previous value of the index (for August) +0.6% (after an increase of +1.3%, +0.2% in previous months, in April by +0.9%, in March by +1.6%, in February and January 2022 by +1.8%). If the data turns out to be weaker than the previous value, the AUD may drop sharply in the short term, but if it’s above the previous values, the AUD is likely to strengthen.
01:00 CNY Chinese Manufacturing and Services PMI from the China Federation of Logistics and Purchasing (CFLP)
This is an important indicator of the state of the Chinese economy as a whole. A result above 50 is seen as positive and strengthens the CNY, while one below 50 as negative for the yuan. Previous values: 50.1 in September, 49.4 in August, 49.6 in May, 47.4 in April, 50.2 in February, 50.1 in January.
The relative growth of the index and the value of 50 should have a positive effect on the CNY. The data above the value of 50 indicate an increase in activity, which has a positive effect on the quotes of the national currency. Otherwise, and if the value of the indicator is below 50 yuan, it will be under pressure and probably will decrease. Forecast for October: 49.2.
Services PMI assesses the state of the services sector in the Chinese economy. A result above 50 is considered positive and strengthens the yuan. Previous values: 50.6 in September, 52.6 in August, 47.8 in May, 41.9 in April, 51.6 in February, 51.1 in January.
Despite the relative decline, the indicator is still above 50, which is likely to have a positive impact on the yuan quotes. Otherwise, and if the value of the indicator is below 50 yuan, it will be under pressure and probably will decrease.
Forecast for October: 51.9.
07:00 EUR Retail sales in Germany
Retail sales is the main indicator of consumer spending in Germany showing the change in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. Previous values: -1.3% (-4.3% yoy), +1.9% (-2.6% yoy), -1.5% (-9.6% yoy) , +1.2% (+1.1% YoY), -5.4% (-0.4% YoY), +0.9% (-1.7% YoY), + 0.2% (+6.9% YoY), -0.2% (+10.1% YoY) in January 2022.
The data speaks of the instability of the recovery of this sector of the German economy. Data better than the forecast and / or the previous value is likely to have a positive impact on the euro, but only in the short term. September forecast: -0.4% (annualized).
10:00 EUR Eurozone GDP for the 3rd quarter (preliminary estimate). Consumer Price Index. Core CPI (preliminary release)
GDP is considered an indicator of the overall health of the economy. The growing trend of the GDP indicator is considered positive for the EUR; a low result weakens the EUR.
Recently, macro data from the Eurozone have been indicating a gradual recovery in the growth rate of the European economy after a sharp drop in early 2020.
Thus, according to the forecast of economists, GDP in the Eurozone is expected to grow in the 3rd quarter of 2022 by +0.7% (+4.0% YoY) after +0.8% (+4.1% YoY) growth in Q2 2022, +0.6% (+5, 4% YoY in Q1, +0.3% (+4.6% YoY) in Q4, +2.2% (+3.9% YoY) in Q3 QoQ, +2.2% (+14.3% YoY) in Q2 and a -0.3% (-1.3% YoY) fall in Q1 2021.
If the data turns out to be weaker than the forecast and / or previous values, the euro may decline. Better-than-expected data may strengthen the euro in the short term, although the full recovery of the European economy, even to pre-crisis levels, is still far away.
Consumer Price Index (CPI) is published by Eurostat and measures the change in prices of a selected basket of goods and services over a given period. The index is a key indicator for assessing inflation and changing consumer preferences. A positive result strengthens the EUR, a negative result weakens it.
Previous values: +9.9% in September, +9.1% in August, +8.6% in June, +8.1% in May, +7.4% in April and March, +5.9% in February, +5.1% in January, +5.0% in December. If the data turns out to be worse than the forecast, the euro may sharply decline in the short term. Data better than the forecast and / or the previous value may strengthen the euro in the short term. Note that the target level of consumer inflation of the ECB is slightly below 2.0%, and the data indicate an acceleration of inflation in the Eurozone.
Core Consumer Price Index (Core CPI) determines the change in prices of a selected basket of goods and services over a given period and is a key indicator for assessing inflation and changing consumer preferences. Food and energy are excluded from this indicator for a more accurate estimate. A high result strengthens the EUR, while a low result weakens it. In January, Core CPI grew by +2.3%, in February – by +2.7%, in March – by +2.9%, in April – by +3.5%, in May – by +3.8 %, in June – by +3.7%, in August – by +4.3%, in September – by +4.8%. If the data for October 2022 turns out to be worse than the previous value or forecast, this may negatively affect the euro. If the data turns out to be better than the forecast or the previous value, the euro is likely to react with an increase in quotations. Core inflation in the Eurozone is accelerating, which is positive (under normal economic conditions) for the euro.
Tuesday, November 1
Due to the celebration of Saints’ Day in European Catholic countries, banks will be closed and trading volumes in financial markets will be reduced.
03:30 AUD RBA’s interest rate decision. RBA’s accompanying statement
The main negative factors for the Australian economy are weak wages growth, a weak labor market and a slowdown in growth. However, Australia’s economic recovery is accelerating. The government of the country expects that in the 2022-23 financial year, the country’s economy will grow by + 3.5%, the unemployment rate will fall to the lowest level since the early 1970s (in April, unemployment in Australia fell to 3.9%, the lowest since August 2008) and wages will increase by about 3.25%. This, in turn, will allow the Reserve Bank of Australia to continue on the course of monetary policy normalization it already launched in May by raising interest rates for the first time since November 2010. To curb inflation, which hit a 20-year high (in Q1 2022, Australian headline annual consumer price inflation was 5.1% and core inflation was 3.7%), the rate was raised by 0.25% to 0.35% and then to 0.85%, 1.85%, 2.60% (in October 2022). In addition, the RBA signaled the likelihood of a further increase in the coming months.
“The Board will do everything necessary to ensure that over time, inflation in Australia returned to the target level – said the head of the central bank Philip Lowe. – This will require further interest rate hikes in the future.”
According to the RBA forecast, in 2022 headline inflation will be at the level of 6%, while core inflation will accelerate to 4.75%. At the same time, the unemployment rate next year may fall to 50-year lows.
“With the move towards full employment and data on prices and wages, some scaling back of the emergency monetary support provided during the pandemic is appropriate,” Lowe said.
Economists now expect the RBA to continue raising its key rate this year and then hold it at the same level next year.
Thus, the Australian dollar received an impulse to grow. As you know, (under normal economic conditions) an increase in the interest rate usually leads to the strengthening of the national currency.
It is possible that at this meeting the Central Bank of Australia will again raise the interest rate, although unexpected decisions are possible, for example, a decrease or a stronger increase in the interest rate.
In an accompanying statement, the RBA officials will explain the reasons behind the rate decision. If the RBA signals the possibility of easing monetary policy in the near future, the risks of the fall of the Australian dollar will increase. And, on the contrary, tough rhetoric of the RBA’s accompanying statement may provoke the strengthening of the Australian dollar.
14:00 USD US Manufacturing PMI(from ISM)
The US Manufacturing PMI published by the Institute for Supply Management (ISM) is an important indicator of the state of the US economy as a whole. A result above 50 is considered positive and strengthens the USD, while one below 50 is considered negative for the US dollar. Forecast: 50.4 in October (against 50.9 in September, 52.8 in August, 53.0 in June, 56.1 in May, 55.4 in April, 57.1 in March, 58.6 in February , 57.6 in January). The index is above the level of 50 and, despite the relative decline, has a relatively high value, which is likely to support the dollar. The data above the value of 50 indicate an acceleration of activity, which has a positive effect on the quotes of the national currency. If the indicator falls below the forecast and, especially, below the value of 50, the dollar may sharply weaken in the short term.
21:45 NZD Employment rate. Unemployment rate (data for the 3rd quarter)
The employment rate reflects the quarterly change in the number of employed New Zealanders. The growth of the indicator has a positive impact on consumer spending, which stimulates economic growth. A high value is positive for NZD, while a low value is negative.
Previous values: 0% in Q2 2022, +0.1% in Q1 and Q4, +2.0% in Q3, +1.0% in Q2, +0.6% in Q1 2021.
Also at the same time, the New Zealand Bureau of Statistics publishes a report on the unemployment rate – an indicator that assesses the ratio of the unemployed population to the total number of able-bodied citizens. The growth of the indicator indicates the weakness of the labor market, which leads to a weakening of the national economy. The decrease in the indicator is a positive factor for the NZD. Forecast: New Zealand unemployment in Q3 2022 was at 2.9% (against 3.3% in Q2, 3.2% in Q1 and Q4, 3.4% in Q3, 4.0% in Q2, 4.7% in Q1 2021).
If other indicators of the New Zealand Bureau of Statistics report come out with a deterioration, this is likely to negatively affect the NZD. Worse-than-expected data will have an even stronger negative impact on the NZD.
23:50 JPY Minutes of the meeting of the Monetary Policy Committee of the Bank of Japan
This document will once again sum up the results of the bank’s regular meeting held last week, analyze the economic situation in Japan and provide guidance on possible future prospects for the financial policy of the Bank of Japan.
If the tone of the minutes of the meeting indicates the firmness of the intentions of the Bank of Japan in relation to the monetary policy in the country, this will negatively affect the stock market in Japan and strengthen the yen. Conversely, the soft rhetoric of the minutes regarding the prospects for the bank’s monetary policy will contribute to the weakening of the yen and the growth of the Japanese stock market.
Wednesday, November 2
12:15 USD ADP National Employment Report
Usually, the ADP report on the level of employment in the private sector has a strong impact on the market and dollar quotes. An increase in the value of this indicator has a positive effect on the dollar. The US private sector workforce is expected to fall -163,000 in October (against an increase of 208,000 in September, 185,000 in August, 358,000 in May, 457,000 in April, 425,000 in March, 375,000 in February, 372,000 in January 2022, up 807,000 in December, 534,000 in November, 571,000 in October, 568,000 in September, 374,000 in August, 330,000 in July, 692,000 in June, 978,000 in May, 742,000 in April, 517,000 in March, 117,000 in February, 174,000 in January 2021). The relative growth of the indicator may have a positive impact on the dollar quotes, and the relative decline of the indicator will affect them negatively. The market reaction may be negative, and the dollar may decline if the data also turns out to be worse than the forecast.
Millions of Americans have previously been laid off due to the coronavirus pandemic and related quarantine measures. Most of the layoffs were concentrated in the tourism and retail sectors. Other important sectors of the economy also suffered. The ADP previously reported that the most significant drop in employment was recently noted in the construction sector and the financial services sector.
Although the ADP report does not have a direct correlation with the US Department of Labor official data on the labor market, which will be published on Friday, however, the ADP report is often its harbinger, having a noticeable impact on the market.
18:00 USD The Fed’s interest rate decision. The Fed’s monetary policy statement
In March 2020, the Fed cut interest rates sharply (to 0.25% from 1.75% in February) and also announced $700 billion to buy U.S. government bonds and mortgage-backed securities. Subsequently, the Fed repeatedly announced additional measures to support the US economy and inject cheap liquidity into the financial system. Usually, with the easing of monetary policy, the national currency becomes cheaper and its quotes decrease.
In 2020, the dollar was declining, because investors were withdrawing funds from safe-haven assets, buying more risky and profitable assets of the stock market, which continued to grow despite the threat of a second wave of the coronavirus epidemic and the associated economic slowdown. The role of the dollar as a defensive asset also declined. However, in 2021 the situation has changed – the dollar has strengthened. Now market participants are waiting for the US central bank to accelerate the cycle of tightening monetary policy.
It is widely expected that at this meeting the rate will again be raised by 0.75% to 4.00%. However, during the publication of the rate decision, volatility may rise sharply throughout the financial market, primarily in the US stock market and in dollar quotes, especially if the rate decision differs from the forecast or unexpected statements are received from the Fed leaders.
Powell’s comments could affect both short-term and long-term USD trading. A more hawkish stance on the Fed’s monetary policy is seen as positive and strengthens the US dollar, while a more cautious stance is seen as negative for the USD. Investors want to hear Powell’s opinion on the Fed’s plans for this year.
18:30 USD Press conference of the FOMC (Federal Open Market Committee of the US Federal Reserve)
The press conference of the Federal Open Market Committee of the US Federal Reserve lasts about an hour. The first part reads the ruling, followed by a series of questions and answers that can increase market volatility. Any unexpected statements by Powell on the topic of the Fed’s monetary policy will cause an increase in volatility in dollar quotes and in the US stock market.
Thursday, November 3
Trading volumes during the Asian trading session will be lower than usual – Japan celebrates Culture Day. Banks and stock exchanges will be closed in this country.
00:30 AUD Balance of Trade
The indicator (balance of trade) evaluates the ratio between exports and imports. The growth of exports from Australia leads to an increase in the trade surplus, which has a positive impact on the AUD. Previous values: AU$8.324 billion (August), AU$8.733 billion (July), AU$17.670 billion (June), AU$15.965 billion (May), AU$10.495 billion (April), AU$9.314 billion dollars (for March), 7.457 billion Australian dollars (for February), 12.891 billion Australian dollars (for January). A decrease in the trade surplus may have a negative impact on the Australian dollar. Conversely, a growing trade surplus is positive for the AUD. Forecast for September: 8.640 billion Australian dollars.
12:00 GBP Bank of England’s interest rate decision. Minutes of the meeting of the Bank of England. Planned volume of purchases of assets by the Bank of England. Monetary Policy Report
Following the results of the December meeting, the Bank of England unexpectedly raised its key interest rate to 0.25%, becoming the first leading central bank to increase the cost of borrowing since the start of the coronavirus pandemic. In February, the interest rate was raised to 0.50%, in March to 0.75%, in May to 1.00%, and in September to 2.25%. Members of the Monetary Policy Committee felt that raising the cost of borrowing in a strong labor market to curb price increases was entirely appropriate. At the same time, further tightening of monetary policy may be required to bring inflation to the target level of 2.0%.
The Bank of England is expected to raise interest rates again at this meeting. However, despite the positive macro data from the UK, the interest rate may remain at the same level of 2.25%, given the situation in Ukraine. Such a decision could cause a weakening of the pound.
Also at this time, the minutes of the Monetary Policy Committee (MPC) of the Bank of England are published with the votes “for” and “against” the increase / decrease in the interest rate. The main risks for the UK after Brexit are associated with expectations of a slowdown in the country’s economic growth, as well as with a large current account deficit in the UK’s balance of payments.
The intrigue about the further actions of the Bank of England remains. In the pound and FTSE100 index futures, there are plenty of trading opportunities during the publication of the bank’s rate decision.
Also at the same time we expect the report of the Bank of England on monetary policy containing an assessment of economic prospects and inflation. At this time, the volatility in the pound quotes can rise sharply. One of the main benchmarks for the Bank of England regarding the prospects for monetary policy in the UK, in addition to GDP, is the inflation rate. If the tone of the report is soft, the British stock market will receive support, and the pound will fall. Conversely, the report’s tough rhetoric on curbing inflation, which implies a further increase in the interest rate in the UK, will lead to a strengthening of the pound.
12:30 GBP Speech by head of the Bank of England Andrew Bailey
Financial market participants expect Andrew Bailey to clarify the situation regarding the future policy of the UK central bank. Volatility during a speech by the head of the Bank of England usually rises sharply in the quotes of the pound and the FTSE London Stock Exchange index if he gives any hints of tightening or easing monetary policy of the Bank of England. Probably, Andrew Bailey will also give explanations regarding the decision taken by the Bank of England on the interest rate and touch upon the state and prospects of the British economy after Brexit against the backdrop of a sharp rise in energy prices and inflation. If Bailey does not touch on monetary policy issues, the reaction to his speech will be weak.
14:00 USD US Services PMI (from ISM)
This indicator assesses the state of the services sector in the US economy. These services sectors (unlike the manufacturing sector) have virtually no impact on the country’s GDP.
A result above 50 is seen as positive for the USD. Forecast for October: 56.0 (against 56.9 in August, 56.7 in July, 55.3 in June, 55.9 in May, 57.1 in April, 58.3 in March, 56.5 in February , 59.9 in January, 62.0 in December), which is likely to have a generally positive impact on the USD. However, a relative decline in the index, and especially below 50, may have a short-term negative impact on the dollar.
Friday, November 4
00:30 AUD RBA Monetary Policy Report
The Monetary Policy Report provides an overview of economic and financial conditions and an assessment of the risks to financial stability and sustained economic growth. The report is, in a way, a guideline for determining the RBA’s monetary policy plans. A tougher stance on the monetary policy of the RBA is seen as positive and strengthens the Australian dollar, while a more cautious stance is seen as negative for the AUD.
12:30 USD Average hourly wages. Non-farm Payrolls. Unemployment rate
The most important indicators of the state of the labor market in the US in October. Forecast: +0.3% (against +0.3% in September and August, +0.5% in July, +0.3% in June, May and April, +0.4% in March, 0% in February, +0.7% in January 2022, +0.6% in December, +0.3% in November, +0.4% in October, +0.6% in September and August 2021) / + 0.200 million (against +0.263 million in September, +0.315 in August, +0.528 million in July, +0.372 million in June, +0.390 million in May, +0.428 million in April, +0.431 million, +0.678 million in February, + 0.467 million in January 2022, +0.199 million in December, +0.210 million in November, +0.531 million in October, +0.194 million in September, +0.235 million in August 2021) / 3.6% (against 3.5% in September, 3.7% in August, 3.5% in July, 3.6% in June, May, April and March, 3.8% in February, 4.0% in January 2022, 3.9% in December, 4.2% in November, 4.6% in October, 4.8% in September, 5.2% in August 2021), respectively.
In general, the figures can be described as encouraging. The data shows continued improvement in the US labor market after its precipitous fall in the first half of 2020. Before the coronavirus, the US labor market remained strong, indicating the stability of the US economy and supporting the dollar quotes.
Predicting the market reaction to the publication of indicators is often difficult, because many indicators for previous periods are subject to revision. Now it will be even more difficult to do this, because the economic situation in the US and many other major economies remains controversial due to the coronavirus pandemic. In any case, when the data from the US labor market is published, a surge in volatility is expected in trading not only in USD, but throughout the financial market. The most cautious investors might prefer to stay out of the market during this period of time.
12:30 CAD Unemployment rate in Canada
Statistics Canada is to publish data on the country’s labor market for October. Unemployment has risen in Canada in recent months, partly amid massive coronavirus-related business closures and layoffs. Unemployment rose from the usual 5.6% – 5.7% to 7.8% in March and to 13.7% in May 2020. If unemployment continues to rise, the Canadian dollar will decline. If the data turns out to be better than the previous value, the Canadian dollar will strengthen. Decreasing unemployment rate is a positive factor for the CAD, while rising unemployment is a negative factor. In September 2022, unemployment was at 5.2% (against 5.4% in August, 4.9% in July and June, 5.1% in May, 5.2% in April, 5.3% in March , 5.5% in February, 6.5% in January 2022). Forecast for October 2022: 5.3%.
Price chart of GBPUSD in real time mode
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