Review of the main events of the Forex economic calendar for the next trading week (06.12.2021 – 12.12.2021)
As reported last Friday by the US Department of Labor, Non-Farm Payrolls increased by 210 thousand in November (against the forecast of 550 thousand), and unemployment fell by 0.4% to 4.2% instead of the expected 4.5%. Despite the fact that the NFP was more than half below the forecast, these are still strong indicators that indicate a continuing improvement in the state of the American labor market and speak of a growing labor shortage.
The DXY dollar index fell sharply immediately after the publication of the US Department of Labor report, but then recovered, returning to the middle of the range between the local multi-month high of 96.94 and the local low of 95.54 reached earlier last week. Another drop in the US unemployment rate in November means that the Federal Reserve may still accelerate its asset buying phase-out during its December meeting.
The dollar remains strong in anticipation of an earlier start to the Fed’s interest rate hike. Its head Jerome Powell unequivocally hinted at this, announcing the possibility of an earlier curtailment of the QE program. The dollar is also getting support from the strong macro data released earlier last week, which indicated the continued improvement in the state of the American economy, in particular, its manufacturing sector.
Now investors are buying the dollar, already counting on the fact that the Fed will raise interest rates three times next year, although there are fears that the spread of the omicron strain could complicate the situation in the global economy. Next week (December 10), the inflation report will be released, which could push the Fed to more rapidly curtail asset purchases. The US consumer inflation is expected to slow slightly in November, but remain strong.
Next week, market participants will pay attention to the publication of important macro statistics from Germany, China, the Eurozone, the United States, as well as the results of the meetings of the central banks of Australia and Canada.
*during the coming week, new events may be added to the calendar and / or some scheduled events may be canceled
Monday, December 6
No important macro statistics scheduled to be released.
Tuesday, December 7
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. 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 hard.
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 the accompanying statement, the RBA executives will explain the reasons for the rate decision. 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.
10:00 EUR Eurozone GDP for the 3rd quarter (final estimate)
GDP is considered to be an indicator of the overall health of the economy. The upward trend in GDP is considered positive for the EUR; a poor 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 first estimate, GDP growth in the Eurozone is expected in the 3rd quarter of 2021 by +2.2% (+3.7% in annual terms) after growth by +2.2% (+14.3 % in annual terms) in the 2nd quarter and a decline of -0.3% (by -1.3% in annual terms) in the 1st quarter of 2021, by -0.7% (-4.9% in annualized) in the 4th quarter of 2020, an increase of +12.5% (a fall of -4.3% in annual terms) in the 3rd quarter, a fall of -11.8% (-14.7% in YoY) in the 2nd quarter and a decline of -3.6% (-3.1% YoY) in the 1st quarter of 2020.
If the data turns out to be weaker than the forecast and / or previous values, the euro may decline. Better-than-forecast data may strengthen the euro in the short term, although it is still far from a full recovery of the European economy even to pre-crisis levels.
23:50 JPY Japan’s GDP for the 3rd quarter of 2021 (final estimate)
GDP is considered an indicator of the general state of a country’s economy and estimates the rate of its growth or decline. The report on gross domestic product, published by the Cabinet of Ministers of Japan, expresses in monetary terms the aggregate value of all final goods and services produced by Japan over a certain period of time. An upward trend in GDP is considered a positive factor for the national currency (yen), while a low result is considered negative (or bearish).
In the previous 2nd quarter, the country’s GDP grew by +0.4% (+1.5% in annual terms) after falling in the 1st quarter by -0.9% (-3.7% in annual terms), growth in the 4th quarter of 2020 by +2.8% (+11.7% in annual terms) and a fall in the first half of 2020.
The preliminary estimate implied a fall in GDP in the 3rd quarter of 2021 by -0.8% or -3.0% in annual terms. The data points to a bumpy recovery in the Japanese economy after it collapsed due to the coronavirus pandemic in 2020.
However, the revised forecast implies that in the 3rd quarter of 2021, Japan’s GDP grew by +0.4% (+1.6% in annual terms), which is a moderately positive factor, primarily for the Japanese stock market.
Better-than-expected data is likely to help the Japanese stock market rally.
Wednesday, December 8
15:00 CAD Bank of Canada’s decision on interest rate. Bank of Canada’s accompanying statement
The Bank of Canada will decide on the interest rate. In March 2020, the bank lowered the rate 3 times, bringing it to the level of 0.25%, to mitigate the economic damage from the novel coronavirus pandemic.
In an accompanying statement, the central bank of Canada said that the decision “aims to support the financial system, which plays a central role in lending to the economy, as well as to create a foundation that will allow the economy to return to normal.” The central bank also said in a press release that the spread of the coronavirus and the plummeting global oil prices combined are weighing heavily on Canadians and the Canadian economy.
In fact, quantitative easing and a significant cut in the interest rate should contribute to the weakening of the national currency.
According to data released by the National Bureau of Statistics, GDP in Canada contracted by 3.2% (on an annualized basis) in the second quarter, while economists had forecast its growth by 2.5%. The data for the 3rd quarter turned out to be much better: the annual GDP growth was +5.4% (against the forecast of +3.0%). However, many economists have lowered their 2021 growth forecast for the Canadian economy.
The negative effects of the coronavirus on the Canadian economy and the country’s labor market, as well as the weakness of the housing market, are putting pressure on the Bank of Canada to further ease monetary policy.
However, the Bank of Canada is expected to keep its interest rate at 0.25% at its meeting on Wednesday.
Tough tone of the accompanying statement by the Bank of Canada on rising inflation and the prospects for further tightening of monetary policy will cause the Canadian dollar to strengthen. If the Bank of Canada signals the need for soft monetary policy, the Canadian currency will decline.
Thursday, December 9
01:30 CNY Consumer Price Index (CPI)
The National Bureau of Statistics of China will release another monthly data reflecting the dynamics of consumer prices in China. The rise in consumer prices could trigger an acceleration in inflation, which could force the People’s Bank of China to take measures aimed at tightening fiscal policy. Increased growth in consumer inflation may cause appreciation of the yuan, a weak result will put pressure on the yuan.
China’s economy, according to various estimates, is already the largest in the world, pushing the US economy into second place. Therefore, the publication of important macroeconomic indicators of this country has a significant impact on world financial markets, primarily on the positions of the yuan, other Asian currencies, the dollar, commodity currencies, as well as on Chinese and Asian stock indices. China is the largest buyer of raw materials and a supplier of a wide range of finished products to the world commodity market.
In January 2021, the growth of the consumer inflation index amounted to +1.0% (-0.3% in annual terms), in February +0.6% (-0.2% in annual terms), in May -0.2% (+1.3% in annual terms), in September 0% (+0.7% in annual terms), and in October +0.7% (+1.5% in annual terms).
Deterioration in macroeconomic indicators, including a decrease in consumer inflation, may negatively affect the positions of the yuan, as well as commodity currencies such as the Canadian, Australian and New Zealand dollars. To a greater extent, this applies to the Australian dollar, since China is Australia’s largest trade and economic partner.
According to the forecast, CPI is expected to grow by +0.7% in November (+1.4% in annual terms).
The rise in the consumer inflation index will have a positive effect on the quotes of the yuan, as well as commodity currencies. However, the data worse than forecast and the relative decline in CPI may negatively affect them.
Friday, December 10
07:00 EUR Harmonized Consumer Price Index (HICP) in Germany (final release)
This index is published by the EU Statistical Office and is calculated on the basis of a statistical method agreed between all EU countries. It is an indicator for assessing inflation and is used by the Governing Council of the ECB to assess the level of price stability. A positive result strengthens the EUR, a negative one weakens it.
Previous indicator values: +4.6% in October, +4.1% in September, +3.4% in August, +3.1% in July, +2.1% in June, +2.4% in May, +2.1% in April, +2.0% in March, +1.6% in January and February, -0.7% in December and negative values in the second half of 2020 (in annual terms). If the data for November turn out to be better than the previous values, the euro may strengthen in the short term. The growth of the indicator is a positive factor for the euro. The data suggests increasing inflationary pressures in Germany. Data worse than the previous value will negatively affect the euro. Forecast: +6.0% in November (against preliminary estimates of +5.4%).
13:30 USD Consumer Price Index (ex food and energy)
Consumer Price Index (CPI) determines the change in prices of a selected basket of goods and services for a given period and is a key indicator for assessing inflation and changes in consumer preferences. Food and energy have been excluded from this indicator to provide a more accurate estimate. A high value strengthens the US dollar, while a low value weakens it. In October 2021, the value of the indicator was +0.6% (+4.6% in annual terms), in September +0.2% (+4.0% in annual terms), in August +0.1% (+4.0% in annual terms), in July +0.3% (+4.3% in annual terms), in June +0.9% (+4.5% in annual terms), in May +0.7% (+3.8% in annual terms), and in April +0.9% (+3.0% in annual terms), which indicates a strong growth in consumer inflation after the fall of the index in March and April 2020 against the background of pandemic coronavirus. If the data turns out to be weaker than forecast, the dollar is likely to respond with a short-term decline. Better-than-forecast data will strengthen the dollar. Forecast for November: +0.4% and +4.3% (in annual terms), which is likely to have a positive impact on the USD, despite the relative decline in the indicator.
15:00 USD University of Michigan Consumer Confidence Index (preliminary release)
This indicator reflects the confidence of American consumers in the economic development of the country. A high level indicates economic growth, while a low one indicates stagnation. Previous indicator values: 67.4 in November, 71.7 in October, 72.8 in September, 70.3 in August, 81.2 in July, 85.5 in June, 84.9 in March, 76.8 in February, 79.0 in January 2021. An increase in the indicator will strengthen the USD, while a decrease in the value will weaken the dollar. The data indicate that the recovery of this indicator is uneven, which is negative for the USD. Data worse than previous values may negatively affect the dollar in the short term. Preliminary forecast for December: 72.4.
Price chart of EURUSD in real time mode
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