The aftermath of the August 5 Black Monday continues to affect investor activity. Japan’s Nikkei 225 index plunged 13.47%, partly due to a sharp yen strengthening. This decline then spread to Europe and the United States.
The market has reached below multi-week lows in a matter of days, reinforcing concerns about the risk of the US economy slipping into a recession.
Some market experts describe the event as one of the largest market downturns in the past 40 years, hitting many investors.
The upcoming week of 12.08.2024 – 18.08.2024 may trigger new fluctuations. On Wednesday, the US Bureau of Labor Statistics will release fresh inflation data.
Moreover, market participants will monitor the publication of important macro statistics on the UK, Eurozone, Japan, Australia, and China, as well as the results of New Zealand’s central bank meeting.
Note: During the coming week, new events may be added to the calendar, and / or some scheduled events may be cancelled. GMT time
The article covers the following subjects:
Key facts
- Monday: no important macro statistics is scheduled.
- Tuesday: UK labor market data will lead to fluctuations in the pound’s value.
- Wednesday: RBNZ interest rate decision and the release of the latest UK and US inflation data.
- Thursday: US retail sales data for July.
- Friday: UK retail sales and preliminary US Michigan Consumer Sentiment Index.
- The key event of the week: US CPI indices publication on Wednesday at 12:30 GMT.
Monday, August 12
There are no important macro statistics scheduled to be released.
Tuesday, August 13
06:00 – GBP: Average Weekly Earnings Over the Last Three Months. Unemployment Rate
The UK Office for National Statistics monthly publishes a report on average weekly earnings covering the period for the last three months, including and excluding bonuses.
This report is a key short-term indicator of employee average earnings changes in the UK. An increase in wages is positive for the British pound, whereas a low indicator value is unfavorable. Forecast: The August report suggests that average earnings, including bonuses, rose again in the last three months including April, May, and June, after gaining +5.7%, +5.9%, +5.7%, +5.6%, +5.6%, +5.8%, +6.5%, +7.2%, +7.9%, +8.1%, +8.5%, +8.2%, +6.9%, +6.5%, +5.8%, +5.9%, +6.0%, +6.5%, +6.%, +6.1%, +5.5%, +5.2%, +6.4%, +6.8%, +7.0%, +5.6%, +5.7%, +4.8%, +4.3%, +4.2% in previous periods. The earnings value excluding bonuses also increased with percentages at +6.0%, +6.0%, +6.0%, +6.1%, +6.2%, +6.6%, +7.3%, +7.7%, +7.8%, +7.8%, +7.8%, +7.3%, +7.2%, +6.7%, +6.6%, +6.6%, +6.7%, +6.5%, +6.1%, +5.8%, +5.5%, +5.2%, +4.7%, +4.4%, +4.2%, +4.2%, +4.1%, +3.8%, +3.7%, +3.8% in previous periods. These figures show continued growth in employee earnings levels, which is positive for the British pound. If the data outperforms the forecast and/or previous values, the pound will likely strengthen in the currency exchange market. Conversely, if the data falls short of the forecast/previous values, the pound will be negatively affected.
The UK unemployment data will be released at the same time. Unemployment is expected to stand at 4.4% for the three months of April, May, and June (against 4.4%, 4.4%, 4.4%, 4.3%, 4.2%, 4.0%, 3.8%, 3.9%, 4.0%, 4.1%, 4.2%, 4.2%, 4.3%, 4.2%, 4.0%, 3.9% in previous periods).
Since 2012, the UK unemployment rate has fallen steadily from 8.0% in September 2012. The unemployment decline is a positive factor for the pound, while its growth negatively impacts the currency.
If the UK labor market data appears to be worse than the forecast and/or the previous value, the pound will be under pressure.
In any case, the UK labor market data release is anticipated to cause increased volatility in the pound exchange rate and on the London Stock Exchange.
12:30 – USD: Producer Price Index
The Producer Price Index (PPI) measures the average change in wholesale prices determined by manufacturers at all stages of production. The index is one of the leading inflation indicators in the United States, estimating the average change in wholesale producer prices.
Rising production costs increase wholesale selling prices, which ultimately boosts inflation. In normal economic conditions, growing inflation usually puts upward pressure on the national currency quotes, implying a tighter Central Bank monetary policy.
Previous values: +0.2% (+2.6% YOY) in July, -0.2% (+2.2% YOY) in May, +0.5% (+2.2% YOY) in April, +0.2% (+1.6% YOY) in March, +0.6% (+1.6% YOY) in February, +0.3% (+0.9% YOY) in January 2024, 0% (+0.9% YOY) in December 2023, -0.5% (+1, 3% YOY), +0.5% (+2, 2% YOY), +0.7% (+1, 6% YOY), +0.3% (+0, 8% YOY), +0.1% (+0, 2% YOY), -0.3% (+0, 9% YOY), +0.2% (+2.3% YOY), -0.5% (+2.7% YOY), -0.1% (+4.9% YOY), +0.7% (+5.7% YOY) in January 2023.
If the data exceeds the forecasted value, the US dollar will likely strengthen. Conversely, if the data falls below forecasted and previous values, this will exert pressure on the Fed. This could lead to the Fed’s monetary policy easing, which will negatively impact the US dollar.
Wednesday, August 14
02:00 – NZD: The New Zealand Reserve Bank’s Interest Rate Decision. RBNZ Accompanying Statement
After its meetings in October and November 2021, the Reserve Bank of New Zealand raised its key interest rate for the first time in seven years to 0.50% and then to 0.75%. In February and April 2022, the interest rate was increased again to 1.5% to ease inflation and curb swiftly escalating house prices. Currently, the RBNZ interest rate is at 5.50%.
The regulator previously stated that the economy no longer needed the current level of monetary stimulus.
In July 2024, the RBNZ left the official cash rate at 5.50% again for the eighth consecutive meeting, emphasizing the necessity of implementing a restrictive monetary policy to continue exerting downward pressure on inflation.
At the same time, the decline in inflation to 3.3% in Q2 from 4.0%, 4.7%, 5.6%, and 6.0% in previous quarters may prompt RBNZ policymakers to shift to an easier policy. The decrease may also signal a potential rate cut soon if the country’s inflation continues to drop to the target range of 1.0% – 3.0%.
At this meeting, the RBNZ may either raise the interest rate again and advocate for additional hikes in the future or leave the rate at the current level. Market participants monitoring the NZD quotes should be prepared for a sharp increase in volatility during this period.
In the accompanying statement and commentary, the RBNZ officials will explain the interest rate decision and the economic factors that influenced it.
The New Zealand dollar quotes volatility may rise sharply this time.
Notably, the New Zealand central bank policymakers kept the interest rate at 5.50% after the July 2023 meeting. This marked the first time the RBNZ had halted the tightening of monetary policy since it began in August 2021. The RBNZ noted that the current monetary policy stance is already restrictive in the accompanying statement.
02:00 – NZD: RBNZ Press Conference
RBNZ Governor Adrian Orr will provide commentary on the rate decision. Typically, volatility in NZD quotes increases in the course of the meeting. Orr’s speeches often serve as an unofficial source of information about the future direction of the RBNZ monetary policy. He believes that the country’s monetary policy should be aligned with the country’s employment performance and financial stability, as well as inflation.
06:00 – GBP: Consumer Price Index. Core Consumer Price Index
The Consumer Price Index (CPI) measures the retail prices of a group of goods and services comprising the UK consumer basket. The CPI is a key indicator of inflation. The pound’s movement on the currency market and the London Stock Exchange FTSE 100 index depends on the release of the CPI data.
In June, the UK consumer inflation rose +0.1% (+2.0% YOY) after +0.3% (+2.0% YOY) in May, +0.3% (+2.3% YOY) in April, +0.6% (+3.2% YOY) in March, +0.6% (+3.4% YOY) in February, -0.6% (+4.0% YOY) in January 2024, +0.4% (+4.0% YOY) in December. The data suggests persistent inflationary pressures in the UK, which are expected to bolster the British pound, particularly if the actual data surpasses the forecasted values.
An indicator reading below the forecast/previous value may cause the weakening of the British pound since low inflation will force the Bank of England to stick to the easy monetary policy course.
The Core CPI, published by the Office for National Statistics, measures the price change in a selected basket of goods and services (excluding food and energy) over a given period. It is a key indicator for assessing inflation and changes in consumer preferences. A positive result strengthens the British pound, while a negative outcome weakens it.
In June, the core CPI growth rate was +3.5% (YOY) after gaining +3.5% in May, +3.9%, +4.2%, +4.5%, +5.1% in January 2024, December and November, and +5.7% +6.1%, +6.2% three months earlier. The publication will likely positively impact the British pound in the short term if it exceeds the forecasted and previous values. A reading below the forecast and/or previous values may weaken the pound.
09:00 – EUR: Eurozone GDP Q2 (Second Estimate)
GDP is considered to be an indicator of the overall economic health. A rising trend of the GDP indicator is positive for the euro, while a low reading weakens the currency.
Recent Eurozone macro data has shown a gradual recovery in the growth rate of the European economy after a sharp decline in early 2020.
Previous values: +0.3% (+0.4% YOY) in Q1 2024, 0% (+0.1% YOY) in Q4 2023, -0.1% (0% YOY) in Q3, +0.1% (+0.5% YOY) in Q2, -0.1% (+1.0% YOY) in Q1 2023, 0% (+1.9% YOY) in Q4 2022, +0.7% (+4,0% YOY) in Q3, +0.8% (+4.1% YOY) in Q4 2022, +0.7% (+4,6% YOY) in Q3, +2.2% (+3.9% YOY) in Q3, +2.2% (+14.3% YOY) in Q2, and -0.3% (-1.3% YOY) in Q1 2021.
If the data is below the forecasted and/or previous values, the euro may decline. Conversely, readings exceeding the predicted values may strengthen the euro in the short term. However, the European economy is still far from fully recovering even to pre-crisis levels.
According to the first estimate, the GDP rate was expected to grow by 0.3% (0.6% YOY).
12:30 – USD: Consumer Price Indexes
The Consumer Price Index (CPI) measures 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 changes in consumer preferences. Food and energy are excluded from the Core CPI to provide a more accurate assessment.
A high index reading strengthens the US dollar because the probability of a Fed interest rate hike increases, while a low reading weakens the currency.
Previous values (YOY):
- CPI: +3.0%, +3.3%, +3.4%, +3.5%, +3.2%, +3.1%, +3.4%, +3.1% +3.2%, +3.7%, +3.7%, +3.2%, +3.0%, +4.0%, +4.9%, +5.0%, +6.0%, +6.4% in January 2023;
- Core CPI: +3.3%, +3.4%, +3.6%, +3.8%, +3.8%, +3.9%, +3.9%, +3.9%, +4.0%, +4.0%, +4.0%, +4.1%, +4.3%, +4.7%, +4.8%, +5.3%, +5.5%, +5.6%, +5.5%, +5.6% in January 2023.
The data indicates a continued slowdown in consumer inflation, albeit at a slower pace than anticipated by the Fed. It remains markedly below the 2022 reading when US annual inflation hit a 40-year high of 9.1% in June. On the other hand, US inflation is still significantly above the Fed’s 2% target, which will force US central bank policymakers to keep the interest rate elevated.
If the figures are confirmed or prove to be lower than expected, the US dollar will likely decline in value in the short term. Readings higher than estimated will strengthen the currency, as it will increase the probability of the Fed keeping the interest rate at high levels for longer.
23:50 – JPY: Japan GDP for Q2 2024 (Preliminary Estimate)
GDP is a measure of a country’s overall economic condition, which assesses the rate of growth or decline of a country’s economy. The Gross Domestic Product report, published by the Cabinet Office of Japan, represents the total value of all final goods and services produced by Japan over a certain period in monetary terms. A rising trend in GDP is seen as positive for the yen, while a low reading is seen as negative.
The country’s previous Q1 GDP was -0.5% (-1.8% YOY), after 0% (0% YOY) in Q4 2023, -0.8% (-3.2% YOY) in Q3, +1.0% (+4.2% YOY) in Q2, +1.0% (+4.0% YOY) in Q1 2023.
The data suggests a bumpy recovery for the Japanese economy after it collapsed due to the coronavirus pandemic in 2020.
The forecast (preliminary estimate) implies that Japan’s GDP contracted again in Q2 2024, which is negative for the yen.
Readings that exceed expectations will undoubtedly bolster the yen and Japanese stock indices. Conversely, underperformance will exert pressure on them.
Thursday, August 15
Catholics in Europe and around the world celebrate the Assumption of the Virgin Mary. Banks and stock exchanges in these countries will not operate, affecting trading volumes, especially during the European trading session.
01:30 – AUD: Employment Rate. Unemployment Rate
The employment rate reflects the monthly change in the number of employed Australian citizens. The indicator value increase positively impacts consumer spending, stimulating economic growth. A high reading is positive for the Australian dollar, while a low reading is negative. Previous indicator values: +50,200 in June, +39,700 in May, +38,500 in April, -6,600 in March, +500 in February, -65,100 in January 2024, +61,500 in December 2023, +55,000 in October, +6,700 in September, +64,900 in August, -14,600 in July, +32,600 in June, +75,900 in May, -4,300 in April, +53,000 in March, +64,600 in February, -11,500 in January, +14,600 in December, +64,000 in November, +32,200 in October, +900 in September, +33,500 in August, -40,900 in July, +88,400 in June, +60,600 in May, +4,000 in April, +17,900 in March, +77,400 in February, +12,900 in January 2022.
Besides, the Australian Bureau of Statistics will publish a report on the unemployment rate. It is an indicator that estimates the ratio of the share of the unemployed population to the total number of working-age citizens. The rise in the indicator readings demonstrates the weakening of the labor market, negatively impacting the national economy. A decrease in the indicator is positive for the Australian dollar.
Forecast: Australian unemployment remained at its lowest level of 4.1% in July (against 4.1% in June, 4.0% in May, 3.8% in April, 3.7% in March and February, 4.1% in January, 3.9% in December and November, 3.8% in October, 3.6% in September, 3.7% in August and July, 3.5% in June, 3.6% in May, 3.7% in April, 3.5% in March and February, 3.7% in January, 3.5% in December, 3.4% in November and October, 3.5% in September and August, 3.4% in July, 3.5% in June, 3.9% in May and April, 4.0% in March and February, 4.2% in January), while the employment rate increased.
The Reserve Bank of Australia has repeatedly stated that the Australian economy and the central bank’s plans are influenced by key indicators like the level of household debt and spending, wage growth, and the state of the labor market, in addition to the international trade situation. If the indicator readings are lower than expected, the Australian dollar may decline significantly in the short term, while higher data will strengthen the currency in the short term.
02:00 – CNY: Industrial Production. Retail Sales Index
China’s National Bureau of Statistics report containing industrial production data shows the output of Chinese industrial enterprises, such as factories and manufacturing facilities. The growth of industrial production volume is a positive factor for the yuan, indirectly signaling the possibility of accelerating inflation, which may put pressure on the People’s Bank of China to tighten monetary policy.
Conversely, a decrease may have a negative impact on the yuan.
Previous values (YOY): +5.3%, +5.6%, +6.7%, +4.5%, +7.0%, +6.8%, +6.6%, +4.5%, +3.7%, +4.4%, +3.5%, +5.6%, +3.9%, +2.4% in February 2023.
The Retail Sales Index, published monthly by China’s National Bureau of Statistics, measures total retail sales volume and revenue. The index is often considered an indicator of consumer confidence and economic well-being and reflects the state of the retail sector in the near term. An increase in the index is usually positive for the yuan, while a decline in the index will negatively affect the currency. Previous index values (YOY): +2.0%, +3.7%, +2.3%, +3.1%, +5.5%, +7.4%, +10.1%, +4.6%, +2.5%, +3.1%, +12.7%, +18.4%, +10.6%, +3.5%, -1.8%, and -5.9% recorded after growing by 8% in the last months of 2019 and dropping by 20.5% in February 2020.
The data suggests that this sector of the Chinese economy continues to recover after a substantial decline between February and March 2020. If the reading is lower than forecasted or previous values, the CNY may weaken, sometimes drastically.
06:00 – GBP: UK GDP for Q2 2024 (Preliminary Estimate)
GDP is viewed as an indicator of the UK economy’s condition. The growing GDP indicator is considered positive for the British pound. The UK GDP rate was one of the highest in the world until 2016 when the Brexit referendum occurred. Subsequently, its growth decelerated, and with the onset of the COVID-19 pandemic, the UK GDP rate dropped.
Previous GDP values: +0.7% in Q1 2024, -0.3% in Q4, -0.1% in Q3, 0% in Q2, +0.2% in Q1 2023, +0.1% in Q4 2022, -0.1% in Q3, +0.1% in Q2, +0.5% in Q1 2022, +1.5% in Q4 2022.
The key factors that may force the Bank of England to keep the rate low include weak GDP, slow labor market growth, and low consumer spending. Should the GDP data fall significantly below previous values, the pound will face downward pressure. Conversely, high GDP readings will bolster the currency.
12:30 – USD: Retail Sales. Retail Sales Control Group
This Census Bureau report on retail sales reflects the total sales of US retailers of all sizes and types. The change in retail sales is a key indicator of consumer spending. The report is a leading indicator, and the data may be subject to significant revisions in the future. High indicator readings strengthen the US dollar, while low readings weaken it. A relative decline in the indicator may have a short-term negative impact on the US dollar, while a rise in the indicator will positively impact the currency. In June, the value of the indicator was 0% after +0.1% in May, 0% in April, +0.7% in March, +0.6% in February, -0,8% in January 2024, +0.6% in December 2023, +0.3%, -0.1% +0.7%, +0.6%, +0.7%, +0.2%, +0.3%, +0.4%, -1.0%, -0.6%, +3.2%, -0.8%, -1.1%, +1.1%, -0.2%, +0.7%, -0.4%, and +1.0% in the previous months.
Retail sales is the main indicator of consumer spending in the United States, showing the change in the retail industry.
Retail sales serve as an indicator of domestic consumption, contributing the most to the US GDP and being one of the main factors of inflation risks increase or decrease. Deterioration of the indicator values is a negative factor for the US dollar.
Inflation deceleration may prompt the Fed to begin the process of easing monetary policy in September, according to economists. At the same time, most market participants still expect two interest rate cuts this year.
The Retail Control Group indicator gauges volume in the retail industry and is used to calculate price indexes for most commodities. High readings strengthen the US dollar, while low results weaken the currency. A slight increase in the figures is unlikely to boost the dollar. If the data is lower than the previous readings, the dollar may be negatively impacted in the short term. Previous values: +0.9%, +0.4%, -0.3%, +1.1%, 0%, -0.4% in January 2024, +0.8%, +0.4%, +0.2%, +0.6%, +0.1%, +1.0%, +0.6%, +0.2%, +0.7%, -0.3%, +0.5%, +2.3%, -0.3%, -0.5%, +0.4%, +0.5%, +0.4%, +1.1% in the earlier months of 2022.
Friday, August 16
06:00 – GBP: Retail Sales
The Retail Sales economic indicator is a key metric that tracks the level of consumer demand and significantly impacts market performance and the national currency. Additionally, it serves as an indirect indicator of inflation, making it a key concern for a country’s central bank and market participants.
The Retail Sales report is released by the UK Office for National Statistics. The Retail Sales change is considered to indicate the consumer spending level. High indicator values are positive for the British pound, while low readings are negative.
Previous values (YOY): -1.2%, +1.3%, -2.3%, +0.4%, -0.3%, +0.4% in January 2024, -2.8% in December 2023, +0.0%, -2.3%, -1.1%, -1.2%, -3.1%, -1.8 in June 2023.
14:00 – USD: University of Michigan Consumer Sentiment Index (Preliminary Release)
This indicator reflects American consumers’ confidence in the country’s economic development. A high level indicates economic growth, while a low level points to stagnation. Previous indicator values: 66.4 in July, 68.2 in June, 69.1 in May, 77.2 in April, 79.4 in March, 76.9 in February, 79.0 in January 2024, 69.7 in December 2023, 61.3 in November, 63.8 in October, 68.1 in September, 69.5 in August, 71.6 in July, 64.4 in June, 59.2 in May, 63.5 in April, 62.0 in March, 67.0 in February, 64.9 in January 2023, 59.7 in December, 56.8 in November, 59.9 in October, 58.6 in September, 58.2 in August, 51.5 in July, 50.0 in June, 58.4 in May, 65.2 in April, 59.4 in March, 62.8 in February, 67.2 in January 2022. An increase in the indicator will strengthen the US dollar, while a decrease will weaken the currency. The data shows that the recovery of this indicator is uneven, which is unfavorable for the greenback. A decline below previous values will likely negatively impact the US dollar in the near term.
Price chart of NZDUSD in real time mode
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