Economic calendar for the week 19.09.2022 – 25.09.2022

Review of the main events of the forex economic calendar for the next trading week (19.09.2022 – 25.09.2022)

The DXY dollar index maintains positive dynamics and growth potential to 20-year levels above 120.00. The breakout of the recent local high at 110.78 will be a confirming signal for our assumption.

The next week promises to be extremely volatile despite its calm start (no important macro statistics are scheduled to be released on Monday).

Volatility in the financial market will rise sharply on Wednesday, when at 18:00 (GMT) the Fed’s decision on the interest rate will be published, and on Thursday, when the meetings of the 3 largest world central banks (Japan, Switzerland, UK) will be held at once.

Only the Fed and the Bank of England are expected to take further steps to tighten their monetary policies. From both central banks, market participants expect an interest rate hike of 0.75%. Although, unexpected solutions are possible.

Next week, market participants will also study important macro statistics from Canada, the US, the UK, Germany, and the Eurozone.

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

** GMT time

Monday, September 19

No important macro statistics scheduled to be released.

Tuesday, September 20

01:30 CNY People’s Bank of China interest rate decision

Since May 2012, the People’s Bank of China has been steadily lowering the interest rate, providing support to Chinese manufacturers. The last time the bank lowered the rate was in August 2022 (by 0.1% to 3.65% at the moment).

In 2020, in the context of international trade conflicts and a slowdown in the global economy, the world’s largest central banks took the path of easing their monetary policies in order to support national economies and increase the competitiveness of goods exported from these countries.

The People’s Bank of China is also in line with this process. The depreciation of the yuan has become especially relevant in the last 4-5 years, when the confrontation between the two most powerful economies in the world began. One of the measures to offset the negative consequences of increased duties on the import of Chinese goods into the United States was the depreciation of the national currency of China. Such a measure was intended, among other things, to maintain the previous volumes of imports of Chinese products to the United States, which would be cheaper for American buyers due to the difference in the exchange rates of the national currencies of the United States and China.

Coronavirus has become an additional strong negative factor.

Probably, at this meeting, the People’s Bank of China will keep the interest rate at the same level of 3.65%, although unexpected decisions are not ruled out.

If the People’s Bank of China makes unexpected statements or decisions, volatility could increase throughout the financial market. Investors will also be interested in the bank’s assessment of the consequences of the coronavirus for the Chinese economy and its policies in the near future.

01:30 AUD Minutes of the September 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 is positive about the state of the labor market in the country, GDP growth rates, and also shows a hawkish attitude towards the inflationary 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 first of all inflation puts pressure on the AUD.

During the recent (September) meeting, the RBA raised the interest rate (for the fifth time since November 2010) by 0.50%, bringing it to 2.35% in order to contain inflation, which reached a 20-year high (in the 1st In the quarter of 2022, Australian headline annual consumer price inflation was 5.1% and core inflation was 3.7%. to 2.6% by the end of this year).

“The Board will do everything necessary to ensure that over time, inflation in Australia returned to the target level – said 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 raise its key rate to 2.6% by December 2022 and keep it at that level next year.

Thus, the Australian dollar received an impulse to grow. However, if the published minutes contain unexpected information regarding RBA monetary policy issues, the volatility in AUD quotes will increase.

12:30 CAD Core Consumer Price Index in Canada

Core Consumer Price Index (Core CPI) from the Bank of Canada reflects the dynamics of retail prices of the corresponding basket of goods and services (ex 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 rising CPI is a harbinger of a rate hike and positive for the CAD. Core CPI increased in July 2022 by +0.5% (+6.1% in annual terms), in June 2022 by +0.3% (+6.2% in annual terms), by +0, 8% (+6.1% in annual terms) in May, by +0.7% (+5.7% in annual terms) in April, in March 2022 by +1.0% (+5.5% in annual terms), in February by +0.8% (+4.8% in annual terms), in January by +0.8% (+4.3% in annual terms). If the expected data turns out to be worse than the previous values, this will negatively affect the CAD. Data better than previous values ​​will strengthen the Canadian dollar.

Wednesday, September 21

18:00 USD The Fed’s interest rate decision. The Fed’s account of monetary policy. Summary of Economic Projections by the Federal Open Market Committee

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 increased by 0.75%, to 3.25% at once. 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 management.

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.

Traders also will pay attention to the report with forecasts for inflation and economic growth for the next two years and, no less important, individual opinions of FOMC members on interest rates.

18:30 USD Press conference of the FOMC (Federal Open Market Committee of the US Federal Reserve)

The press conference of the 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 Fed’s monetary policy will cause an increase in volatility in dollar quotes and in the US stock market.

Thursday, September 22

03:00 JPY Bank of Japan interest rate decision. Bank of Japan press conference and account of monetary policy

The Bank of Japan will decide on the interest rate. At the moment, the main rate in Japan is in negative territory, amounting to -0.1%. Most likely, the rate will remain at the same level. If it is reduced and deepens into negative territory, such a decision will cause a sharp decline in the yen in the foreign exchange market and an increase in the Japanese stock market. In any case, a jump in volatility in the quotations of the yen and in the Asian financial market is expected during this period of time.

Since February 2016, the Bank of Japan has kept the deposit rate at -0.1%. The yield target for 10-year bonds is currently around 0%. One of the recent accompanying statements from the Bank of Japan said that the management of the bank will continue to “increase the monetary base until inflation is stable above 2%.” “We will not hesitate to take additional easing measures if necessary,” the bank also traditionally said in a statement.

During the press conference, the head of the Bank of Japan Haruhiko Kuroda will comment on the bank’s monetary policy. The Bank of Japan continues to adhere to its ultra-soft monetary policy. As Kuroda has repeatedly stated earlier, “it is appropriate for Japan to patiently continue the current loose monetary policy.” Markets usually react actively to Kuroda’s speeches. He will surely again touch upon the topic of monetary policy during his speech, which will cause an increase in volatility not only in yen trading, but throughout the Asian and global financial markets.

If bank officials decide that the Japanese economy is stable and inflation momentum towards the 2% target is not diminishing, they will refrain from changing policy.

06:00 JPY Bank of Japan press conference

During the press conference, the head of the Bank of Japan Haruhiko Kuroda will comment on the bank’s monetary policy. The Bank of Japan continues to adhere to its ultra-soft monetary policy. As Kuroda has repeatedly stated earlier, “it is appropriate for Japan to patiently continue the current loose monetary policy.” Markets usually react actively to Kuroda’s speeches. He will surely again touch upon the topic of monetary policy during his speech, which will cause an increase in volatility not only in yen trading, but throughout the Asian and global financial markets.

07:30 CHF SNB’s decision on the interest rate. SNB’s monetary policy statement

The current deposit rate is in negative territory and before the June meeting of the SNB was -0.75%. However, as a result of this meeting of the central bank, the rate was raised to the level of -0.25%.

In the accompanying statement, the head of the Swiss National Bank Thomas Jordan noted that the Swiss franc is no longer grossly overvalued and that “tighter monetary policy aims to prevent inflation from spreading more widely in Switzerland.”

The franc has largely lost its status as a safe-haven currency lately, and the threat of intervention is certainly holding back the franc from excessive growth. According to the leaders of the SNB, intervention in the foreign exchange market remains “an important means of maintaining the low attractiveness of investments in francs and easing upward pressure on the currency.”

Traders will also scrutinize the SNB’s statement for signals regarding the SNB’s future monetary policy plans. Tough rhetoric of the statement will help strengthen the franc. The SNB’s soft tone and propensity to continue its extra loose monetary policy will have a negative impact on the franc. High volatility is expected in the foreign exchange market and, above all, in trading in the franc, if the SNB management makes unexpected statements.

11:00 GBP Bank of England’s interest rate decision. Minutes of the meeting of the Bank of England. The planned volume of asset purchases 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 August to 1.75%. 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 1.75%, 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. And in trading 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, then 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.

Friday, September 23

07:30 EUR German Manufacturing PMI according to S&P Global (preliminary release). German Composite PMI according to S&P Global (preliminary release)

Manufacturing PMI is an important indicator of the business environment and the general state of the German economy. This sector of the economy forms a significant part of Germany’s GDP. A result above 50 is considered positive and strengthens the EUR, one below 50 is considered negative for the euro.

Previous monthly values: 49.1, 49.3, 52.0, 54.8, 54.6, 56.9, 58.4, 59.8, 57.4, 57.4, 57.8, 58, 4, 62.6, 65.9, 65.1, 64.4, 66.2, 66.6, 60.7, 57.1, 58.3, 57.8. The growth of the indicator above the previous values ​​will support the euro (in the short term). Data worse than the forecast and / or the previous value will have a negative impact on the euro.

Composite PMI for the German Economy is an important indicator of business conditions and the overall health of the German economy. A result above 50 is considered positive and strengthens the EUR, below 50 is considered negative for the euro. Previous monthly values: 46.9, 48.1, 51.3, 53.7, 54.3, 55.1, 55.6, 49.9, 52.2, 52.0, 55.5, 60, 0, 62.4, 60.1, 56.2, 55.8, 57.3, 51.1, 50.8, 52.0, 51.7. Data worse than the forecast and / or the previous value will have a negative impact on the euro.

08:00 EUR Eurozone Composite Manufacturing PMI according to S&P Global (preliminary release)

Manufacturing PMI is an important indicator of the state of the entire European economy. A result above 50 is considered positive and strengthens the EUR, one below 50 is considered negative for the euro. Previous monthly values: 48.9, 49.9, 52.0, 54.8, 55.8, 54.9, 55.5, 52.3, 53.3, 55.4, 54.2, 56.2, 59.0, 60.2, 59.5, 57.1, 53.8, 53.2, 62.5, 48.8, 47.8, 49.1, 45.3. Data worse than the forecast and / or the previous value will have a negative impact on the euro.

08:30 GBP UK Services PMI according to S&P Global (preliminary release)

PMI in the UK services sector is an important indicator of the state of the British economy. The services sector employs the majority of the UK’s working-age population and contributes approximately 75% of GDP. The most important part of the services industry is still financial services. If the data turns out to be worse than the forecast and the previous value, the pound is likely to fall sharply in the short term. Data better than the forecast and the previous value will have a positive impact on the pound. At the same time, a result above 50 is considered positive and strengthens the GBP, one below 50 is considered negative for the GBP.

Previous values ​​of the indicator: 50.9 in August, 52.6 in July, 54.3 in June, 53.4 in May, 58.9 in April, 62.6 in March, 60.5 in February, 54.1 in January, 53.6 in December, 58.5 in November, 59.1 in October, 55.4 in September, 55.0 in August, 59.6 in July, 62.4 in June 2021 after falling to levels 29.0 in May, 13.4 in April, 34.5 in March 2020.

12:30 CAD Retail Sales Index

The Retail Sales Index is published monthly by Statistics Canada 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 CAD; a decrease in the indicator will negatively affect the CAD. The previous value of the index (for June) +1.1%. If the data for July turns out to be weaker than the forecast and / or the previous value, the CAD may drop sharply in the short term.

Price chart of EURUSD in real time mode

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