Review of the main events of the Forex economic calendar for the next trading week (15.11.2021 – 21.11.2021)
Despite the decline on the last day of the last week, the dollar nevertheless ended it in positive territory with a significant increase. Last week, the DXY dollar index added about 0.8%, rising above 95.00, which corresponds to the levels of mid-July 2020.
The main reason for the strengthening of the dollar is the increased likelihood of an earlier-than-planned increase in the Fed’s interest rate. As follows from data published last Wednesday by the US Department of Labor Statistics, the US consumer price index (CPI) in October jumped by 6.2% (in annual terms), which was the strongest growth in the last more than 30 years (the forecast assumed an increase CPI +5.8% after a rise of +5.4% in September).
At the same time, the optimistic weekly data with statistics on the number of jobless claims also indicate a continuing recovery in the US labor market (the number of initial claims for unemployment benefits fell to 267 thousand from 271 thousand a week earlier, which is in line with pre-crisis levels).
Now we see that inflation is significantly higher than the Fed’s target of 2%, and perhaps this is not temporary, as the Fed believes, and the state of the labor market is approaching the levels observed before the pandemic.
Now market participants will carefully study the macro statistics coming from the United States and follow the speeches of the Fed representatives in order to better assess the prospects for the monetary policy of the American central bank, and next week market participants will also pay attention to the publication of important macro statistics from China, the UK, Eurozone, the US, and Canada.
*during the coming week, new events may be added to the calendar and / or some scheduled events may be canceled
Monday, November 15
02:00 CNY Retail Sales Index
Retail Sales Index is published monthly by the National Bureau of Statistics of China and measures total retail sales and cash receipts. The index is often considered an indicator of consumer confidence and economic wellbeing and reflects the health of the retail sector in the near term. A rise in the index is usually positive for the CNY; a decrease in the indicator will have a negative impact on the CNY. The previous value of the index (in annual terms) was +4.4% (after an increase of +8% in the last months of 2019 and a fall of -20.5% in February 2020). Forecast: In October 2021, retail sales in China rose by +3.5% (yoy), indicating an ongoing recovery, albeit at a slower pace than in previous months of 2021, after a sharp drop in February-March 2020 of the year. If the data turns out to be even better, the CNY will strengthen even more.
Tuesday, November 16
00:30 AUD Minutes of the November meeting of the RB of Australia
This document is published two weeks after the meeting and the decision on the interest rate. If the RBA positively assesses the state of the labor market in the country, the rate of GDP growth, and also shows a hawkish attitude towards the inflation forecast in the economy, the markets regard this as a higher probability of a rate hike at the next meeting, which is a positive factor for the AUD. The bank’s soft rhetoric regarding, above all, inflation puts pressure on the AUD.
During the last (November) meeting, the RBA kept the key interest rate and the target level of yield on three-year government bonds unchanged at around 0.10%.
In September, the RBA leaders decided to start reducing weekly purchases of government bonds. The buyback program will now amount to A$ 4 billion per week (up from A$ 5 billion previously) until at least mid-February 2022. RBA Governor Philip Lowe promised that “the RBA will review the volume of bond purchases in mid-February,” noting a sharp deterioration in economic conditions.
Lowe reaffirmed the central bank’s intentions not to raise interest rates before 2024.
Many economists have already called this decision by the RBA to cut the volume of stimulus a mistake.
Wages continue to rise slowly and household debt has risen to an all-time high, which also puts interest rate hikes in the longer term.
According to Philip Lowe, “there is no serious argument in favor of tightening monetary policy in the short term.” In his opinion, “some time will pass before interest rates are raised.”
Nevertheless, if the published minutes contain unexpected information regarding the issues of the RBA’s monetary policy, the volatility in the AUD quotes will increase.
02:30 AUD Speech by the head of the RBA Philip Lowe
In his speech, Philip Lowe will assess the current situation in the Australian economy and point out further plans for the monetary policy of the department.
Market participants would also like to hear Lowe’s views on central bank policy amid the ongoing coronavirus pandemic and Australia’s first recession in 30 years. According to Lowe, “there is no serious argument in favor of tightening monetary policy in the short term,” and “it will be some time before interest rates rise.”
Any signals from him regarding a change in the plans of the RBA’s monetary policy will cause a sharp increase in volatility in the AUD trading and on the Australian stock market. If he does not touch on the topic of monetary policy, the market reaction to his speech will be weak.
07:00 GBP Report on the average wages of British citizens for the last 3 months. Unemployment rate
On a monthly basis, the UK Office for National Statistics (ONS) publishes a report on average wages covering the last 3 months, with and without bonuses.
This report is a key short-term indicator of the dynamics of changes in the level of wages of employees in the UK. Earnings growth is positive for the GBP, while a low reading is negative. Forecast: November report suggests that average wages with bonuses increased over the last calculated 3 months (July-September) +7.0% (against +7.2%, +8.3%, +8.8%, +7.3%, +5.6%, +4.0%, +4.5%, +4.8%, +4.7%, +3.7%, +2.8%, +1.3%, +0.1% in previous periods); without bonuses – increased by +6.0% (against +6.0%, +6.8%, +7.4%, +6.6%, +5.6%, +4.6%, +4.4%, +4.2%, +4.1%, +3.6%, +2.8%, +1.9%, +0.9%, +0.2% in previous periods). Thus, the data indicate a slowdown in the dynamics of wage growth, which is a negative factor for the pound. If the data turns out to be better than forecast, the pound is likely to strengthen in the foreign exchange market. The data worse than the forecast will also have a negative impact on the pound.
Also at this time, data on unemployment in the UK are published. It is expected that in the 3 months from July to September, unemployment was at the level of 4.5% (against 4.5%, 4.6%, 4.7%, 4.8%, 4.7%, 4.8%, 4.9%, 5.0%, 5.1%, 5.0%, 4.9%, 4.8%, 4.5%, 4.3%, 3.9%, 3.9% previous periods). Since 2012, the UK unemployment rate has declined steadily (from 8.0% in September 2012). This is a positive factor for the pound, a rise in unemployment is a negative factor.
If the data from the UK labor market turn out to be worse than the forecast and / or the previous value, the pound will be under pressure.
In any case, at the time of the publication of data from the British labor market, an increase in volatility in the pound quotes and on the London Stock Exchange is expected.
10:00 EUR ВВП Eurozones for the 3rd quarter (second 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.
So, according to the forecast of economists, based on 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 an increase of +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 turn out to be weaker than the forecast, the euro may decline. Better-than-forecast data may strengthen the euro in the short term, although it is still far from the full recovery of the European economy even to pre-crisis levels (quarterly growth within 0.2% – 0.4%).
13:30 USD Retail sales. Retail control group
This report (Retail Sales) reflects the total sales of retailers of all sizes and types. Changes in retail sales are the main indicator of consumer spending. The report is a leading indicator, and in the future the data may be strongly revised. A high result strengthens the US dollar, a low one weakens it. A relative decrease in the indicator may have a short-term negative impact on the dollar, while an increase in the indicator will have a positive effect on the USD. In the previous month (September), the value of the indicator was +0.7% (after an increase of +0.9% in August, +0.7% in June, +10.7% in March, +7.6% in January and fall by -2.9% in February), which indicates that the improvement in this sector of the American economy is still unstable after the partial lifting of strict quarantine restrictive measures in a number of states. Forecast for October: +0.7%.
Retail sales is the leading indicator of consumer spending in the United States, showing changes in retail sales. The Retail Control Group metric measures volume across the entire retail industry and is used to calculate price indices for most products. A strong result strengthens the US dollar, and vice versa, a weak report weakens the dollar. A slight increase in indicators is unlikely to accelerate the growth of the dollar. The data worse than the values of the previous period (+0.8% in September, +2.6% in August, +1.4% in June, -1.4% in May) may negatively affect the dollar in the short term. Forecast for October: +0.4%.
Wednesday, November 17
07:00 GBP Consumer price index. Core consumer price index
Consumer Price Index (CPI) reflects the dynamics of retail prices for a group of goods and services that make up the British consumer basket. The CPI is a key indicator of inflation. Its publication causes active movement of the pound in the foreign exchange market, as well as the London Stock Exchange FTSE100 index.
In the previous reporting month (in September), the growth in consumer inflation amounted to +0.3% (+3.1% in annual terms). The data suggests growing inflationary pressures, which are likely to support the pound. The indicator reading below the forecast / previous value may provoke a weakening of the pound, as low inflation will force the Bank of England to adhere to a soft monetary policy.
Core CPI is published by the Office for National Statistics and determines the price change of a selected basket of goods and services (excluding food and energy) for a given period. It is a key indicator for assessing inflation and changes in purchasing preferences. A positive result strengthens the GBP, a negative one weakens it.
In September, Core CPI (on an annualized basis) increased by +2.9%. Probably, the publication of the indicator will have a positive effect on the pound in the short term, if its value is higher than the forecast and previous values. Forecast for October: +3.0% (annualized). The indicator reading below the forecast and / or previous values may provoke a weakening of the pound.
13:30 CAD Consumer price indices in Canada
Core Consumer Price Index (Core CPI) from the Bank of Canada reflects the dynamics of the retail prices of the corresponding basket of goods and services (excluding fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation and tobacco products). The inflation target for the Bank of Canada is in the range of 1-3%. The rise in CPI is a harbinger of a rate hike and a positive factor for the CAD. Consumer Price Index increased in September 2021 by +0.2% (+4.4% in annual terms). If the expected data turns out to be worse than the previous values, it will negatively affect the CAD. The data will strengthen the Canadian dollar better than the previous values.
Thursday, November 18
No important macro statistics scheduled to be released.
Friday, November 19
08:00 EUR Speech by head of the ECB Christine Lagarde
During the speech of the head of the ECB, the volatility of trade 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 exchange 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.
13:30 CAD Retail Sales Index
Retail Sales Index is published monthly by Statistics Canada and estimates total retail sales. The index is often considered an indicator of consumer confidence and reflects the health of the retail sector in the near term. A rise in the index is usually positive for the CAD; a decrease in the indicator will negatively affect the CAD. The previous value of the index (for August) +2.1% after falling in March 2020 by -10%, in April – by -24.8% and growth in May 2020 by +21.2%. If the data for September turns out to be weaker than the forecast and / or the previous value, the CAD may sharply decline in the short term.
Price chart of EURUSD in real time mode
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