Review of the main events of the forex economic calendar for the next trading week (29.08.2022 – 04.09.2022)
Last week was quite volatile for the dollar. After updating a local high (since October 2002) at the beginning of the week at around 109.20, the dollar later went down against the backdrop of disappointing macro statistics from the US, which increased the risks of a recession in the US. “The August PMI data signaled further warning signs for the health of the US private sector,” S&P Global Market Intelligence said.
And so, having reached a local intra-week low of 107.52, on Friday the dollar turned up sharply. The Fed Chairman Jerome Powell confirmed the tough intentions of the leaders of the US central bank to overcome high inflation in the United States.
“The central bank is purposefully moving policy to a tight enough level to bring inflation back to 2%. Restoring price stability will take some time and will require the decisive use of central bank instruments,” Powell said.
The dollar buyers also enjoyed the final release of the consumer sentiment index from the University of Michigan, which was revised upwards in August: 58.2 against preliminary values of 55.1 and expectations at 55.2.
As a result of the past week, the DXY dollar index managed to enter positive territory, remaining above 108.00.
Next week, market participants will study macro statistics from Australia, Germany, China, Eurozone, the US, and Canada. But their focus will be on the publication of the US Department of Labor monthly report with data for August on Friday.
* during the coming week, new events may be added to the calendar and / or some scheduled events may be cancelled.
** GMT time
Monday, August 29
Banks in the UK are closed because of the Summer bank holiday. Trading volumes during the European trading session will be lower than usual.
01:30 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 state of the retail sector in the short term. The growth of the index is usually a positive factor for the AUD; a decrease in the indicator will negatively affect the AUD. The previous value of the index (in June) was +0.2% (after growth in May and April by +0.9%, in March by +1.6%, in February and in January by +1.8%). If the data turns out to be weaker than the previous value, the AUD may drop sharply in the short term, but if it’s above the previous values, the AUD is likely to strengthen. Forecast for July: +0.3%.
Tuesday, August 30
12:00 EUR Harmonized Index of Consumer Prices (HICP) in Germany (preliminary release)
This index is published by the EU Statistics 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 result weakens it.
Previous indicator values: +8.5% in July, +8.2% in June, +8.7% in May, +7.8% in April, +7.6% in March, +5.5% in February, +5.1% in January 2022 (annualized). If the data for August 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 mounting inflationary pressures in Germany, which in turn is putting pressure on the ECB to tighten its monetary policy. Data worse than the previous value will have a negative impact on the euro. Forecast: +8.7% in August (according to preliminary estimates).
Wednesday, August 31
01:00 CNY China Manufacturing and Services PMI from the China Logistics and Purchasing Federation (CFLP)
Manufacturing PMI is an important indicator of the state of the Chinese economy as a whole. A result above 50 is seen as positive and strengthens the CNY, while one below 50 as negative for the yuan. Previous values: 49.0 in July, 50.2 in June, 49.6 in May, 47.4 in April, 50.2 in February, 50.1 in January.
The relative growth of the index and the value of 50 should have a positive effect on the CNY. The data above the value of 50 indicate an increase in activity, which has a positive effect on the quotes of the national currency. Otherwise, and if the value of the indicator is below 50, the yuan will be under pressure and probably will decrease. Forecast for August: 49.2.
Services PMI assesses the state of the services sector in the Chinese economy. A result above 50 is considered positive and strengthens the yuan. Previous values: 53.8 in July, 54.7 in June, 47.8 in May, 41.9 in April, 51.6 in February, 51.1 in January.
Despite the relative decline, the indicator is still above 50, which is likely to have a positive impact on the yuan quotes. Otherwise, and if the value of the indicator is below 50 yuan, it will be under pressure and probably will decrease.
Forecast for August: 52.2.
09:00 EUR Consumer price index. Core CPI (preliminary release)
Consumer Price Index (CPI) is published by Eurostat and measures the change in prices of a selected basket of goods and services over a given period. The index is a key indicator for assessing inflation and changing consumer preferences. A positive result strengthens the EUR, a negative result weakens it.
Forecast for August 2022: +9.0% (yoy) vs. +8.9% in July, +8.6% in June, +8.1% in May, +7.4% in April and March , +5.9% in February, +5.1% in January, +5.0% in December. If the data turns out to be worse than the forecast, the euro may sharply decline in the short term. Data better than the forecast and / or the previous value may strengthen the euro in the short term. The target level of consumer inflation of the ECB is slightly below 2.0%, and the data indicate an acceleration of inflation in the Eurozone.
Core Consumer Price Index (Core CPI) determines the change in prices of a selected basket of goods and services over a given period and is a key indicator for assessing inflation and changing consumer preferences. Food and energy are excluded from this indicator for a more accurate estimate. A high result strengthens the EUR, while a low result weakens it. In January, Core CPI grew by +2.3%, in February – by +2.7%, in March – by +2.9%, in April – by +3.5%, in May – by +3.8 %, in June – by +3.7%, in July – by +4.0%. If the data for August 2022 turns out to be worse than the previous value or forecast, this may negatively affect the euro. If the data turns out to be better than the forecast or the previous value, the euro is likely to react with an increase in quotations. Core inflation in the Eurozone is accelerating, which is positive (under normal economic conditions) for the euro. Forecast for August: +4.1%.
12:15 USD ADP National Employment Report
Usually, the ADP report on the level of employment in the private sector 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. It is expected that the growth in the number of employees in the US private sector in August was +200,000 (against an increase of 128,000 in May, 202,000 in April, 249,000 in March, 601,000 in February, 512,000 in January 2022, by 807,000 in December, 534,000 in November, 571,000 in October, 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 2021). The relative growth of the indicator may have a positive impact on the dollar quotes, and the relative decline of the indicator is negative. The market reaction may be negative, and the dollar may decline if the data also turns out to be worse than the forecast.
Millions of Americans have previously been laid off due to the coronavirus pandemic and related quarantine measures. Most of the layoffs were concentrated in the tourism and retail sectors. Other important sectors of the economy also suffered. The ADP previously reported that the most significant drop in employment was recently noted in the construction sector and the financial services sector.
Although the ADP report does not have a direct correlation with the US Department of Labor official data on the labor market, which will be published on Friday, however, the ADP report is often its harbinger, having a noticeable impact on the market.
12:30 CAD Canada GDP. Canada GDP (Annual Data)
Canada’s GDP report is published by Statistics Canada. A strong report will strengthen the CAD. A weak GDP report will have a negative impact on the CAD. The previous report pointed to zero GDP growth in Canada (in May).
Canada’s quarterly GDP report reflects the total volume of all goods and services produced by Canada for the quarter (in annual terms), and is considered an indicator of the overall health of the Canadian economy. In the previous 1st quarter of 2022, GDP grew by +3.7% (after growing by +6.6% in Q4 2021, +5.5% in Q3, down -3.6% in Q2, up +4.7% in Q1 2021 of the year). If the data for the 2nd quarter of 2022 turns out to be stronger than the previous value and / or forecast, the CAD will strengthen. Forecast for Q2 2022: +4.3%.
Thursday, September 1
06:00 EUR Retail sales in Germany
Retail sales is the main indicator of consumer spending in Germany showing the change in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. Previous values: -1.6% (-8.8% yoy) in June, +0.6% (-3.6% yoy) in May, -5.4% (-0.4% yoy) in April, -0.1% (-2.7% yoy) in March, +0.3% (+7.0% yoy) in February, +2.0% (+10.3% yoy) in January 2022.
The data speaks of the instability of the recovery of this sector of the German economy. Data better than the forecast and / or the previous value is likely to have a positive impact on the euro, but only in the short term. Forecast for July: +0.2% (-8.0% in annual terms).
14:00 USD US Manufacturing PMI (from ISM)
The US Manufacturing PMI published by the Institute for Supply Management (ISM) is an important indicator of the state of the US economy as a whole. A result above 50 is considered positive and strengthens the USD, while one below 50 is considered negative for the US dollar. Forecast: 52.6 in August (against 52.8 in July, 53.0 in June, 56.1 in May, 55.4 in April, 57.1 in March, 58.6 in February, 57.6 in January). The index is above the level of 50 and, despite the relative decline, has a relatively high value, which is likely to support the dollar. The data above the value of 50 indicate 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.
Friday, September 2
12:30 USD Average hourly wages. NFPR. Unemployment rate
This is the most important indicators of the state of the labor market in the US in August. Forecast: +0.3% (against +0.5% in July, +0.3% in June, May and April, +0.4% in March, 0% in February, +0.7% in January 2022 year, +0.6% in December, +0.3% in November, +0.4% in October, +0.6% in September and August 2021) / +0.290 million (against +0.528 million in July, +0.372 million in June, +0.390 million in May, +0.428 million in April, +0.431 million, +0.678 million in February, +0.467 million in January 2022, +0.199 million in December, +0.210 million in November, +0.531 million in October, +0.194 million in September, +0.235 million in August 2021) / 3.5% (against 3.5% in July, 3.6% in June, May, April and March, 3.8% in February, 4.0% in January 2022, 3.9% in December, 4.2% in November, 4.6% in October, 4.8% in September, 5.2% in August 2021), respectively.
In general, the figures can be described as encouraging. The data shows continued improvement in the US labor market after its precipitous fall in the first half of 2020. Before the coronavirus, the US labor market remained strong indicating the stability of the US economy and supporting the dollar quotes.
Predicting the market reaction to the publication of indicators is often difficult 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 US and many other major economies remains controversial due to the coronavirus. In any case, when the data from the US labor market is published, a surge in volatility is expected not only in the USD but also throughout the financial market. The most cautious investors might prefer to stay out of the market during this period of time.
Price chart of EURUSD in real time mode
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