Economic calendar for the week 20.12.2021 – 26.12.2021

Review of the main events of the Forex economic calendar for the next trading week (20.12.2021 – 26.12.2021)

During the last trading week this year the dollar went up while maintaining a positive dynamics. This year, the DXY dollar index rose by about 6.8%, almost as much as last year (by +6.5%), and American stock indices established new absolute records.

The dollar will probably retain the positive dynamics next year, which will be facilitated by the recent Fed solutions regarding the curtailing of stimulating programs. At the December meeting, which ended last week, the Fed reduced the volume of monthly purchases of treasury bonds by $20 billion and mortgage securities by $10 billion to $40 billion and $20 billion, respectively. Starting January, purchases will decrease by $30 billion a month. The decision to accelerate the curtailing of stimulation is explained by the “inflation dynamics and further improvement of the state of the labor market.” Now the majority of the heads of the US Federal Reserve System signalled that they were ready to raise a short-term interest rate next year to slow down inflation, and probably such a decision would be made in the spring of next year. Most economists are counting on further strengthening the dollar, since the importance of higher Fed interest rates and the prospect of increasing discrepancies of interest rates in the United States (in comparison with other economically developed countries of the world) enters the fore.

The new trading week has few important macroeconomic releases, but they will still be published (market participants will pay attention to the publication of an important macro of statistics from Canada, UK, US, Australia). The Catholic world will celebrate Christmas and prepare for the New Year. Starting Friday on December 24, the Christian world will celebrate Catholic Christmas. Financial markets in many countries will be closed. Trading volumes next week and by the end of the year will be significantly reduced, and will be restored only after the new year. Thus, last week was the last full and active trading week this year.

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

**GMT time

Monday, December 20

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

Since May 2012, China’s People’s Bank has been steadily reducing the interest rate, providing support to Chinese manufacturers. The last time the bank lowered the rate was in April 2020 (by 0.20% to 3.85% at the moment).

In 2020, in the context of international trade conflicts and slowdown in the global economy, the largest world central banks went along the path of mitigating their monetary policies to support national economies and increase the competitiveness of goods exported from these countries.

People’s Bank of China is also in line with this process. The decline in the rate of the yuan has become уspecially relevant in the last 2 years, when the opposition began two most powerful economies in the world. One of the measures to level the negative consequences of increased fees for the import of Chinese goods in the United States was the decline in China’s national currency. Such a measure was intended, among other things, to maintain the previous volumes of the import of Chinese products in the United States, which would be cheaper for American buyers due to the difference in the rates of national currencies in the United States and China.

The coronavirus pandemic became an additional strong negative factor.

Probably, at this meeting, the People’s Bank of China will retain the interest rate at the same level of 3.85%, although the rate cut is also possible.

Nevertheless, if the People’s Bank of China makes unexpected statements or decisions, volatility can increase throughout the financial market. Also, investors will be interested in the assessment by the bank of the consequences of the coronavirus pandemic for the economy of China and its policy in the near future.

Tuesday, December 21

00:30 AUD Minutes of the December meeting of the Reserve Bank of Australia

This document is published two weeks after the meeting and the decision on the interest rate. If the RBA is positively assesses the state of the labor market in the country, the growth rate of GDP, and also exhibits hawkish attitude to the inflationary forecast in the economy, markets regard this as a higher probability of a rate hike at the next meeting, which is a positive factor for AUD. The mild rhetoric of the bank in relation to inflation puts pressure on the AUD.

During the last (December) meeting of the Reserve Bank, it retained the key interest rate and target level of profitability of three-year bonds without change, at a level of 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. The RBA head 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 higher interest rates 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.

13:30 CAD Retail Sales Index

The 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 September) was -0.6% after growing by +1.8% in August. If the data for October turns out to be weaker than the forecast and / or the previous value, the CAD may sharply decline in the short term. Forecast: -1.7%.

23:50 JPY Bank of Japan Monetary Policy Committee Meeting

At this meeting, the Bank of Japan’s Monetary Policy Committee will once again summarize the results of the bank’s regular meeting last week, analyze the economic situation in Japan and give indications of 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, mild rhetoric about the bank’s monetary policy prospects will contribute to the weakening of the yen and the growth of the Japanese stock market.

Wednesday, October 22

07:00 GBP UK 3rd Quarter GDP (Final Estimate)

GDP is considered to be an indicator of the overall health of the British economy. The upward trend in GDP is considered positive for the GBP. The UK’s GDP was one of the highest in the world until 2016, when the Brexit referendum was held. Afterwards its growth slowed down, and with the onset of the global coronavirus pandemic, the growth rate of British GDP went into negative territory altogether.

Previous GDP figures: +5.5% in the 2nd quarter after falling by -1.6% in the 1st quarter of 2021, -19.8% in the 2nd quarter and an increase of +1.3% in the 4th quarter of 2020). The main factors that could force the Bank of England to keep rates low are weak GDP and labor market growth, as well as low consumer spending. If the GDP data turns out to be significantly worse than the previous values, it will put downward pressure on the pound. Strong GDP report will strengthen the pound. The preliminary estimate was +1.3%.

13:30 USD US Annual GDP for 3rd Quarter (Final Estimate)

GDP data is one of the key indicators (along with data on the labor market and inflation) for the Fed in terms of its monetary policy. Strong result strengthens the US dollar; weak GDP report negatively affects the US dollar. In the previous 2nd quarter, GDP grew by +6.7%, in the 1st quarter of 2021 by +6.4%, in the 4th quarter of 2020 – by +4.3% after an increase of +33.4% in Q3 2020, and after falling -31.4% in Q2 and -5.0% in Q1 2020.

If the data points to a decline in GDP in the 3rd quarter, the dollar will come under pressure. The positive data on GDP will support the dollar and the American stock indices, although they are already mostly priced in. The first preliminary forecast for the 3rd quarter of 2021 was +2.5%, but the actual figure is +2.0%. The second estimate was +2.1%.

Thursday, December 23

13:30 USD Durable goods orders. Capital goods orders (ex defense and aviation)

This indicator reflects the value of orders received by manufacturers of durable goods and capital goods (capital goods are durable commodities used to produce durable goods and services), involving large investments. The goods produced in the defense and aviation sectors of the US economy are not included in this indicator. A strong result strengthens the USD. Previous values ​​of the indicator “durable goods orders”: -0.4% in October, -0.3% in September, + 1.8% in August, -0.1% in July, +0.9% in June , +2.3% in May, -1.3% in April, +1% in March, -1.2% in February, +3.4% in January 2021.

Previous values ​​of the indicator “capital goods orders ex defense and aviation”: +0.7% in October, +0.8% in September, +0.6% in August, 0% in July, +0.7% in June, +0.1% in May, +2.2% in April, +1% in March, -0.9% in February, +0.6% in January 2021.

In theory, the relative growth of the indicator has a positive effect on the dollar, while the decline in the indicator is negative. The market reaction to its negative value can also be negative for the dollar in the short term. Data worse than the previous value and / or forecast will also negatively affect the dollar quotes.

Forecast for November: +1.5% (durable goods orders).

Better-than-expected data will have a positive impact on the dollar.

Friday, December 24

Banks and exchanges in most of the largest economies will be closed and trading volumes will be low. The world is preparing to celebrate Catholic Christmas.

00:30 AUD Retail Sales Index

The 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 health of the retail sector in the near term. A rise in the index is usually positive for the AUD; a decrease in the indicator will negatively affect the AUD. The previous value of the index (for October) was +4.9% (after an increase of +1.3% in September and a decrease of -2.7% in July and -1.8% in June). If the data turns out to be weaker than the previous value, the AUD may sharply decline in the short term, but if it’s above the previous values, the AUD is likely to strengthen.

 

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 LiteFinance. 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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