Economic calendar for the week 01.11.2021 – 07.11.2021

Review of the main events of the Forex economic calendar for the next trading week (01.11.2021 – 07.11.2021)

The dollar rose last week, but ended October in negative territory. Investors are assessing the prospects for the Fed’s monetary policy after US central bank leaders are expected to begin winding down stimulus policies at a November 2-3 meeting, starting by cutting back on purchases in the bond market.

The Fed has maintained its key rate at 0.25% since March 2020, purchasing at least $120 billion in government bonds and mortgage bonds every month since June 2020.

Nevertheless, the opinions of market participants regarding the short-term prospects of the dollar after the Fed meeting were divided. About half of them believe that the Fed’s decision to start curtailing stimulus will not greatly affect the dynamics of the dollar. At the same time, unexpected and more radical statements on the part of the Fed are possible.

If tough signals follow, it will lead to the closure of a significant part of the short positions in the dollar and to its further strengthening. The tougher the statements made by the Fed leaders at the end of the November meeting, the more the dollar will strengthen.

At the same time, optimism prevails on global stock exchanges, associated with expectations of a further recovery in the global economy, both against the backdrop of the unfolding vaccination against coronavirus in Europe and North America, and the overly soft policy of the world’s largest central banks.

Next week, financial market participants will also pay attention to the publication of important macro statistics on Germany, the US, New Zealand, Australia, the Eurozone, Canada, as well as the results of meetings (in addition to the Fed) of the central banks of Australia and the UK.

Traders should also take into account that many European countries switch to winter saving time this coming Sunday. In the United States, this transition will take place a week later.

*during the coming week, new events may be added to the calendar and / or some scheduled events may be canceled

**GMT time

Monday, November 1

07:00 EUR Retail Sales in Germany

Retail sales is the main indicator of consumer spending in Germany showing changes in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. Forecast: +0.6% (+1.8% in annual terms) in September against +1.1% (+0.4% in annual terms) in August, -5.1% (-0.3% in annualized) in July, +4.2% (+6.2% yoy) in June, +4.2% (-2.4% yoy) in May, -2.0% (+4.4% in annual terms) in April, +7.7% (+11% in annual terms) in March, +1.2% (-9.0% in annual terms) in February, -4.5% ( -8.7% YoY) in January.

The data indicate the instability of the recovery of this sector of the German economy caused by the lockdowns due to the coronavirus pandemic. Better-than-expected data is likely to have a positive effect on the euro, but in the short term.

14:00 USD US Manufacturing PMI (from ISM)

Published by the Institute for Supply Management (ISM), the US Manufacturing PMI is an important indicator of the health of the US economy as a whole. A result above 50 is seen as positive and strengthens the USD, one below 50 as negative for the US dollar. Forecast: 60.4 in October (against 61.1 in September, 59.9 in August, 59.5 in July, 60.6 in June, 61.2 in May, 60.7 in April, 64.7 in March , 60.8 in February 58.7 in January, 60.7 in December). The index is above the 50 level and has a relatively high value, which is likely to support the dollar, despite the relative slight decline in the indicator. The data above the value of 50 indicates 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.

23:50 JPY Bank of Japan Monetary Policy Committee Meeting

At this meeting, the Monetary Policy Committee of the Bank of Japan will once again sum up the results of the last week’s regular meeting of the Bank, analyze the economic situation in Japan and give indications on possible future prospects for the Bank of Japan’s financial policy.

If the tone of the minutes of the meeting indicates the firmness of intentions of the Bank of Japan regarding monetary policy in the country, it will negatively affect the Japanese stock market and strengthen the yen. Conversely, a soft rhetoric about the bank’s monetary policy prospects will contribute to the weakening of the yen and the growth of the Japanese stock market.

Tuesday, November 2

03:30 AUD RBA’s decision on interest rate. RBA’s accompanying statement

In March 2020, the RBA made 2 rate cuts, bringing it to the level of 0.25%, and launched a quantitative easing program. At the same time, for the 3-year government bonds of Australia, the target level of yield is set at 0.25%. The RBA has launched a lending program for the banking system in the amount of at least A$ 90 billion.

In early November 2020, the RB of Australia lowered its key rate again, bringing it and the target 3-year bond yield to 0.10% from 0.25% and announced a quantitative easing program in the amount of A$ 100 billion to support the incipient economic recovery. country.

The main negative factors for the Australian economy are weak wages growth, a weak labor market and a slowdown in growth. Annual inflation has remained below the RBA’s target range of 2% -3% for four years.

Unemployment in the country has remained above the 5% level for many years, unwilling to decline. Now the Australian economy is experiencing difficulties due to the coronavirus pandemic, which has hit the tourism and transport sectors.

It is expected that at this meeting the Central Bank of Australia will leave the rate at the current level of 0.1%, although unexpected decisions are not ruled out.

In an accompanying statement, the leaders of the RBA will explain the reasons for the decision on the rate. If the RBA signals the possibility of further easing of monetary policy in the near future, the risks of a fall in the Australian dollar will increase.

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 Zealand citizens. The growth of the indicator has a positive impact on consumer spending, which stimulates economic growth. A high reading is positive for the NZD, while a low reading is negative. Outlook: In the 3rd quarter, the number of employed citizens of New Zealand increased, and the employment rate increased by +0.4% (against an increase of +1.0% in the 2nd quarter, +0.6% in the 1st quarter of 2021 of the year).

Also at the same time, the Bureau of Statistics of New Zealand publishes a report on the unemployment rate – an indicator that estimates 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: unemployment in New Zealand in the 3rd quarter was at the level of 3.9% (against 4.0% in the 2nd quarter, 4.7% in the 1st quarter of 2021).

If other indicators of the NZ Bureau of Statistics report deteriorate, it is likely to negatively affect the NZD. Data worse than the forecast will have an even stronger negative impact on the NZD.

Wednesday, November 3

10:15 EUR Speech by head of the ECB Christine Lagarde

During the speech of the head of the ECB, the volatility of trading increases not only in the euro and European stock indices, but throughout the financial market, especially if Christine Lagarde touches on the topic of the monetary policy of the Central Bank. Any hints at curtailing the QE program in the Eurozone will cause the euro to rise. Lagarde’s soft tone and the propensity to continue the extra soft monetary policy of the ECB will negatively affect the euro.

Speeches of the head of the ECB after the bank’s meetings have a particularly strong influence on the market. In previous periods, the speech of the head of the ECB in similar situations could cause a change in the euro rate by more than 3%. If Christine Lagarde does not touch upon the topic of the ECB’s monetary policy, the reaction to her speech will be weak.

12:15 USD ADP National Employment Report

Typically, the ADP’s private sector employment report 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. US private sector employment is expected to grow by +400,000 in October (up from 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, a drop of -123,000 in December). The relative growth of the indicator may have a positive effect on the dollar quotes, while the relative decline in the indicator is negative. Therefore, the market reaction may be negative, and the dollar may decline if the data turns out to be worse than forecast.

Millions of Americans have previously been laid off due to the coronavirus pandemic and related quarantine measures. The bulk of layoffs were concentrated in tourism and retail. Other important sectors of the economy were also affected. ADP previously reported that the most significant drop in employment was recently noted in the construction and financial services sectors.

Although the ADP report does not directly correlate with the official US Department of Labor data on the labor market, which will be released on Friday, the ADP report is often a harbinger of it, having a noticeable impact on the market.

14:00 USD US Services PMI (from ISM)

This indicator assesses the state of the services sector in the US economy. These services sectors (as opposed to the manufacturing sector) have practically no impact on the country’s GDP.

In July this indicator came out with a value of 64.1, and in September – 61.9. A result above 50 is seen as positive for the USD. Outlook for October: 62.0, which is likely to have a positive overall effect on the USD. However, a deeper relative decline in the index could negatively affect the dollar in the short term.

18:00 USD The Fed’s decision on the interest rate. The Fed’s comments on monetary policy

In March 2020, the Fed lowered the interest rate to 0.25% (from 1.75% in February), and also announced the allocation of $700 billion for the purchase of US government bonds and mortgage-backed securities. Subsequently, the Fed has repeatedly announced additional measures to support the American economy and inject cheap liquidity into the financial system. Usually, with the easing of the monetary policy, the national currency becomes cheaper and its quotations go down.

In 2020, the dollar declined as investors withdrew funds from defensive 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 was also declining. However, in 2021, the dollar is strengthening, which is associated with an increase in the yield of US government bonds, and the Fed has not yet responded to this in any way.

The rate is widely expected to remain at 0.25% at this meeting. Nevertheless, during the period of publication of the decision on the rate, volatility may sharply grow throughout the financial market, primarily in the American stock market and in the dollar quotes, especially if the decision on the rate differs from the forecast or unexpected statements are received from the Fed leaders.

Powell’s comments may 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 are eager to hear Powell’s views on the Fed’s future plans for this year.

18:30 USD FOMC press conference

The press conference of the US Federal Open Market Committee lasts about an hour. In the first part, the ruling is read, followed by a series of questions and answers that can increase market volatility. Any hints by Powell about the possibility of a change in the current monetary policy will cause an increase in volatility in the dollar quotes and in the American stock market.

Thursday, November 4

00:30 AUD Balance of trade

The indicator (balance of trade) assesses the ratio of the volume of Australia’s exports and imports. Growth in exports from Australia leads to an increase in the trade surplus, which has a positive impact on the AUD. Previous value A$ 15.077 Billion (August), A$ 12.117 Billion (July), A$ 9.681 Billion (May), A$ 8.028 Billion (April), A$ 5.574 Billion (March), AU$ 7.529 Billion dollars (for February). A decrease in the trade surplus may negatively affect the Australian dollar. Conversely, the growing trade surplus is a positive factor for the AUD. Forecast for September: A$ 12.175 billion.

12:00 GBP Bank of England’s interest rate decision. Minutes of the meeting of the Bank of England. Planned volume of asset purchases by the Bank of England. Monetary Policy Report

In March (11 March and 19 March) 2020, during its extraordinary meetings, the Bank of England cut its interest rate twice, bringing it to the level of 0.1%, and announced its intention to purchase UK government bonds in the amount of 200 billion British pounds, trying to counteract economic damage from the coronavirus pandemic. The central bank announced an increase in its bond portfolio to £645bn, then to £745bn and to £895bn from £445bn at the time. “The current situation is completely unprecedented,” said Governor of the Bank of England Andrew Bailey during a press conference after an emergency meeting on March 19. Bailey said he expects a sharp economic contraction due to the coronavirus, and the Bank of England is ready to take further stimulus measures if necessary. “No, we are not done yet,” he said. Based on these statements by Andrew Bailey, it is fair to expect further actions from the Bank of England towards easing its monetary policy. It is possible that at this meeting the Bank of England will again undertake them, increasing the volume of purchases of bonds or lowering the interest rate. Although, most market participants believe that the Bank of England will refrain from these actions, especially since some economists believe that the Bank of England will soon be ready to start curtailing its stimulating policy, while very positive macro data is coming from the UK.

Also at this time, the minutes of the Monetary Policy Committee (MPC) of the Bank of England are published with the distribution of votes “for” and “against” raising / lowering 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 balance of payments.

The intrigue about the further actions of the Bank of England remains. And in trading the pound and futures on the FTSE100 index, a lot of trading opportunities are provided during the period of publication of the bank’s decision on rates.

Also at the same time, the Bank of England’s monetary policy report will be published, containing an assessment of the economic outlook and inflation. At this time, the volatility in the pound quotes may rise sharply. Apart from GDP, one of the main benchmarks for the Bank of England regarding the prospects for monetary policy in the UK is the inflation rate. If the tone of the report is soft, the British stock market will receive support and the pound will decline. Conversely, the report’s tough rhetoric on curbing inflation, implying an increase in interest rates in the UK, will strengthen 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 the speech of the head of the Bank of England usually rises sharply in the quotes of the pound and the London Stock Exchange FTSE index, if he gives any hints of tightening or easing of the Bank of England’s monetary policy. Probably, Andrew Bailey will also give explanations regarding the decision made by the Bank of England on the interest rate and will touch upon the state and prospects of the British economy after Brexit and the partial lifting of quarantine restrictions due to the coronavirus. If Bailey does not touch upon the issues of monetary policy, the reaction to his speech will be weak.

13:00 EUR Speech by head of the ECB Christine Lagarde

During the speech of the head of the ECB, the volatility of trading increases not only in the euro and European stock indices, but throughout the financial market, especially if Christine Lagarde touches on the topic of the monetary policy of the Central Bank. Any hints at curtailing the QE program in the Eurozone will cause the euro to rise. Lagarde’s soft tone and the propensity to continue the extra soft monetary policy of the ECB will negatively affect the euro.

Speeches of the head of the ECB after the bank’s meetings have a particularly strong influence on the market. In previous periods, the speech of the head of the ECB in similar situations could cause a change in the euro rate by more than 3%. If Christine Lagarde does not touch upon the topic of the ECB’s monetary policy, the reaction to her speech will be weak.

Friday, November 5

00:30 AUD RBA’s monetary policy report

The monetary policy report provides an overview of economic and financial conditions and an assessment of risks to financial stability and sustainable economic growth. The report is a kind of guideline for defining the RBA’s monetary policy plans. A tougher stance on the RBA’s monetary policy is seen as positive and strengthens the Australian dollar, while a more cautious stance is seen as negative for the AUD.

10:00 EUR Retail Sales in the Eurozone

Retail sales is a major consumer spending indicator that shows the change in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. September forecast: +0.2% (+1.5% yoy) against +0.3% (+0% yoy) in August, -2.3% (+3.1% yoy) ) in July, +1.5% (+5.0% in annual terms) in June, +4.6% (+9.0% in annual terms) in May, -3.1% and +23.9 % (in annual terms) in March, +3.0% and -2.9% (in annual terms) in February, -5.9% and -6.4% (in annual terms) in January. The data suggests that, despite the rise in indices, retail sales have not yet reached pre-coronavirus levels after a sharp drop in March-April 2020, when strict quarantine measures were in force in Europe. Nevertheless, better-than-expected data is likely to have a positive effect on the euro.

12:30 USD Average hourly wages. Non-Farm Payrolls. Unemployment rate

These are the most important indicators of the state of the labor market in the United States in October. Forecast: +0.4% (against +0.6% in September and August, +0.4% in July, +0.3% in June, +0.5% in May, +0.7% in April ) / +0.425 million (against +0.194 million in September, +0.235 million in August, +0.943 million in July, +0.850 million in June, +0.559 million in May, +0.266 million in April, +0.916 million in March, +0.379 in February, +0.049 million in January, -0.140 million in December, +0.245 million in November, +0.638 million in October, +1.763 million in July and -20.687 million in April 2020) / 4.7% (against 4.8% in September, 5.2% in August, 5.4% in July, 5.9% in June, 5.8% in May, 6.1% in April, 6.0% in March, 6, 2% in February, 6.3% in January, 6.7% in December and November, 6.9% in October, 13.3% in May and 14.7% in April 2020), respectively.

In general, the indicators can be desxcribed as encouraging. The data speaks of continued improvement in the US labor market after plummeting in the first half of 2020. Prior to the coronavirus, the US labor market remained strong, signaling the stability of the American economy and supporting dollar quotes.

It is often difficult to predict the market reaction to the publication of indicators, 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 United States and many other large economies remains controversial due to the coronavirus. In any case, when data from the US labor market is published, a surge in volatility is expected in trading not only in USD, but throughout the entire financial market. Cautious investors might choose to stay out of the market during this time frame.

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, including amid massive business closures due to coronavirus and layoffs. Unemployment rose from the usual 5.6% – 5.7% to 7.8% in March and already up to 13.7% in May 2020. If unemployment continues to rise, the Canadian dollar will decline. If the data is better than the previous value, the Canadian dollar will strengthen. A decrease in the unemployment rate is a positive factor for the CAD, an increase in unemployment is a negative factor. In September, unemployment was at the level of 6.9% (against 6.9% in August, 7.5% in July, 7.8% in June, 8.2% in May, 8.1% in April, 7.5 % in March, 8.2% in February, 9.4% in January, 8.8% in December, 8.6% in November).

Price chart of EURUSD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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