Economic calendar for the week 11.05.2020 - 17.05.2020
May 9, 2020
May 10, 2020
Economic calendar for the week 11.05.2020 – 17.05.2020Jana Kane
**Overview of the main events of the Forex economic calendar for the
next trading week 11.05.2020 to 17.05.2020**
Trading on key Forex news: we are expecting the publication of important macro statistics from China, the US, Australia, Great Britain, Germany, the Eurozone, as well as the results of the meeting of the RB of New Zealand and its decision on the interest rate.
Despite the decline on Friday, last week the dollar was still able to strengthen. The DXY dollar index rose another 0.5% (about 50 points) over the week, to 99.80 at the end of the trading day last Friday.
According to the Labor Department last Friday, in April, US unemployment reached a record high of 14.7%, while the Non-Farm Payrolls fell by an unprecedented 20.5 million, as the coronavirus epidemic damaged the economy. It was the sharpest monthly drop since 1939. April unemployment data broke the 1948 record when it reached 10.8%.
According to the US Department of Labor report, nearly 23 million people received unemployment benefits during the week of April 19-25. The most affected Americans were those with lower incomes.
Although companies are already resuming operations in some states, in the longer term, the recovery of the world’s largest economy will depend on factors such as the development of the coronavirus situation and how quickly consumers begin to return to work and spend money.
The US stock indices also rose last week. Investors are in a hurry to jump in the departing train. Their optimism is fueled by hopes for a quick recovery in the US economy after the restrictions on coronavirus are lifted. Meanwhile, medical experts warn of the possibility of a second wave of the epidemic if restrictions and quarantine are lifted prematurely.
Another reason for serious concern for investors may be the growth of geopolitical tensions in relations between Washington and Beijing associated with the actions of China during the outbreak of coronavirus in this country. The US President Donald Trump said last Wednesday that he would “closely monitor” China’s fulfillment of its obligations under the first-phase trade agreement concluded earlier this year, which implies Beijing’s increase in purchases of US goods and services by $200 billion over the next two years.
Next week, investors will pay attention to the publication of important macro statistics from China, the US, Australia, Great Britain, Germany, the Eurozone, as well as the results of the meeting of the RB of New Zealand and its decision on the interest rate.
_ Traders should pay attention to the following significant macroeconomic data expected next week:_
* during the coming week new events may be added to the calendar and scheduled events may be canceled
****** GMT time
Monday, May 11
No important macro statistics planned to be released.
Tuesday, May 12
(publication time not available) AUD Budget Plan
During the Asian trading session, the Australian government will publish an annual budget plan, which is likely to cause increased volatility in the Australian dollar. However, the exact time of publication is unknown.
01:30 CNY Consumer Price Index (CPI)
The National Bureau of Statistics of China will present data reflecting the dynamics of consumer prices in China in April. Rising consumer prices could trigger inflation acceleration, which could force the People’s Bank of China to take measures aimed at tightening monetary policy. The increase in consumer inflation may cause the yuan to rise, a low result will put pressure on the yuan.
China’s economy is the second largest in the world after the American. Therefore, the publication of important macroeconomic indicators of this country has a significant impact on world financial markets, primarily on the position of the yuan, other Asian currencies, the dollar, commodity currencies, as well as Chinese and Asian stock indices. China is the largest buyer of commodities and a supplier to the global commodity market of finished products of a wide range.
In January 2020, the growth of the consumer inflation index was at +1.4% (+5.4% in annual terms), in February +0.8% (+5.2% in annual terms), and in March the CPI index decreased by -1.2%, although it grew in annual terms by +4.3%.
Deterioration of macroeconomic indicators, including a decline in consumer inflation, could negatively affect the yuan and commodity currencies such as Canadian, Australian, and New Zealand dollars. This is most true for the Australian dollar, since China is Australia’s largest trade and economic partner.
According to the forecast, it is expected that the Consumer Price Index will continue to decline in April by -0.5% (+3.7% in annual terms). The growth of the consumer inflation index will positively affect the yuan, as well as commodity currencies, primarily the Australian dollar. However, a relative decrease in CPI may negatively impact them.
12:30 USD Core Consumer Price Index (ex food and energy)
Core Consumer Price Index (Core CPI) determines the change in prices of a selected basket of goods and services for 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 US dollar, while a low result weakens it. In January, the value of the indicator amounted to +0.2% (+2.3% in annual terms), in February +0.2% and +2.4% (in annual terms), in March -0.1% (+2.1% in annual terms). Forecast for April: -0.2% and +1.7% (in annual terms). If the data for April is weaker than the forecast, then the dollar will most likely respond with a short-term strong decline. Data better than forecast will strengthen the dollar.
Wednesday, May 13
01:30 AUD Wages Index
The Australian Bureau of Statistics will publish the wages index, an indicator that measures the inflation of labor costs and the level of demand for it. Analysis of the dynamics of wages is carried out using the index method. WAGES INDEX is an indicator of the dynamics, increase or decrease in the average monthly wages of workers and employees for a certain period. The Reserve Bank of Australia pays great attention to this indicator when deciding on the interest rate. In general, high indicators are considered a positive factor for the AUD, and vice versa, low index values are a negative factor for the AUD. It is expected that in the 1st quarter of 2020, the index will indicate wages growth in Australia of +0.5% (versus +0.5% in the 1st, 2nd, 3rd and 4th quarters of 2019). The Australian dollar is likely to react poorly to the publication of this indicator if it coincides with the forecast. Volatility may increase if the data differs from the forecast.
**02:00 NZD The decision of the Reserve Bank of New Zealand on the
interest rate. Accompanying statement**
After the bank management made a decision to lower the rate by 0.75% during an unscheduled meeting on March 15, the current interest rate of the Republic of New Zealand is at 0.25%. The management of the bank explained its decision by the loss of momentum in the New Zealand economy and the sharp slowdown in the global economy amid the coronavirus pandemic.
“World economic activity continues to weaken, which reduces the demand for goods and services from New Zealand. Increased uncertainty and a decline in international trade contribute to a decrease in economic growth in the trading partner countries,” the RBNZ said in a recent statement.
The RBNZ believes that wage growth remains weak. At the same time, inflationary expectations are falling, and low levels of business confidence indicate a slowdown in hiring and wages growth.
Restrained economic growth (New Zealand’s GDP growth has slowed since the second half of 2018) and a weakening labor market, as well as an escalation of international trade wars and a worsening global economic outlook, are pushing the Reserve Bank of New Zealand to keep interest rates low. An additional and unforeseen risk for the world and New Zealand economies was the epidemic of coronavirus in the world.
It is expected that at this meeting the RBNZ will not lower or raise the rate, but may speak in favor of lowering it in the coming months in the event of a worsening economic situation in the country and in the world.
In an accompanying statement, the RBNZ management will explain the decision on the interest rate and comment on the economic conditions that contributed to this decision.
At this time, the volatility in trading on the New Zealand dollar could rise sharply.
Earlier, the RBNZ stated that against the backdrop of “a multitude of uncertainty factors,” the monetary policy “will remain soft in the foreseeable future,” but “can be adjusted accordingly.” According to the bank’s management, for a stable recovery of the New Zealand economy and inflation growth “a lower New Zealand dollar rate is needed”.
The head of the RBNZ Adrian Orr is likely to once again confirm the bank’s penchant for pursuing a soft monetary policy, which will preserve the pressure on the New Zealand currency.
03:00 NZD Press conference of the RBNZ
Earlier, the RBNZ stated that against the backdrop of “a multitude of uncertainty factors,” the monetary policy “will remain soft in the foreseeable future,” but “can be adjusted accordingly.” For a stable recovery of the New Zealand economy and rising inflation “a lower New Zealand dollar rate is needed.”
The head of the RBNZ Adrian Orr is likely to once again confirm the bank’s penchant for pursuing a soft monetary policy. His speeches often serve as an unofficial source of information on the future direction of the monetary policy of the RBNZ. In any case, an increase in volatility in New Zealand dollar quotes is expected during the RBNZ press conference.
06:00 GBP Industrial production
This is a leading indicator of the manufacturing sector of the UK economy. And since industrial production, together with consumer spending, is the basis of the UK’s GDP, the publication of this indicator may cause a surge in volatility in the pound and the London Stock Exchange. A high value is a positive factor for the GBP, and a low value is negative. Forecast: industrial production declined in March by -5.8% (against growth by +0.1% in February). If the data is confirmed or is worse than the forecast, the pound will weaken in the foreign exchange market.
08:30 GBP UK’s GDP for the 1st quarter (preliminary release)
GDP is considered an indicator of the general state of the British economy. A growing trend in GDP is considered positive for the GBP. UK’s GDP was one of the highest in the world until 2016, when the Brexit referendum was held. After its growth slowed down, and with the onset of the global coronavirus pandemic, the rate of growth of British GDP switched to negative territory.
The forecast expects the UK annual GDP to have decreased by -2% in the 1st quarter of 2020 (after zero in the 4th quarter of 2019). This is a negative factor for the GBP.
The main factors that can force the Bank of England to keep rates low are weak growth in GDP, the labor market, and low consumer spending. If GDP data are weaker than expected, then this will put even more downward pressure on the pound. A strong GDP report will strengthen the pound.
Simultaneously with the quarterly report, a monthly report on GDP (for March) will be released. In February, the decline in GDP amounted to -0.1%. Forecast: in March, UK GDP fell by -7%.
Thursday, May 14
01:00 NZD Budget publication
The New Zealand Treasury is publishing a preliminary government budget for next year. The volatility of the national currency usually increases at the time of publication of such documents regarding the state of the financial sector of the country’s economy.
01:30 AUD Employment rate. Unemployment rate
Employment rates reflect a monthly change in the number of employed Australian citizens. The growth of the indicator has a positive effect on consumer spending, which stimulates economic growth. A high value is a positive factor for the AUD, and a low value is negative. Forecast: in April, the number of employed Australian citizens decreased by 575,000 (after rising in March by 5,900 and by 26,700 in February).
Also at the same time, the Australian Bureau of Statistics will publish a report on the unemployment rate - an indicator that estimates the share of the unemployed to the total number of able-bodied citizens. The growth rate indicates a weak labor market, which leads to a weakening of the national economy. The decline is a positive factor for the AUD. Forecast: unemployment in Australia in April was at the level of 8.3% (against 5.2% in March, 5.1% in February). In general, the indicators can be described as negative. However, in other large economies, the labor market has deteriorated on a large scale due to coronavirus.
The RBA leaders have repeatedly stated that in addition to the international trade situation, the Australian economy and central bank monetary policy plans are influenced by the level of debts and household expenses, the growth of workers’ wages, as well as the state of the country’s labor market.
In March 2020, the Reserve Bank of Australia lowered its key interest rate by 0.50% to a new record low of 0.25% due to coronavirus, which was the 5th rate cut in the last year. According to the RBA management, for the growth of salaries and acceleration of inflation to the target range, an unemployment rate of 4.5% or lower is required. Unemployment in the country is not declining, and the return of inflation to the middle of the target range of 2-3% is not even on a distant horizon.
The AUD is unlikely to respond positively to the publication of data from the country’s labor market. If the values of the indicators turn out to be worse than the forecast, then the Australian dollar may decrease significantly in the short term. Data better than forecast will strengthen AUD in the short term.
**06:00 EUR Harmonized Consumer Price Index (HICP) in Germany
(final release)**
This index is published by the EU Statistical 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.
In March, the HICP index (in annual terms) grew by +1.3%. The preliminary estimate for April was +0.8%. The final mark for April is also +0.8%. Probably, the euro is unlikely to react very positively to the publication of this indicator. If the data turn out to be better than the forecast, then the euro may strengthen in the short term. The growth rate is a positive factor for the euro. However, this is still not enough to break the negative trend of the euro. Data suggests low inflationary pressures in Germany.
12:30 USD Initial jobless claims in the US over the past week
The situation on the country’s labor market continues to deteriorate rapidly. Back in February, the indicator of primary claims for unemployment benefits was within its average values of 193-252 thousand. However, then the situation began to deteriorate sharply. Over the week of March 22-28, 6.9 million claims were submitted, then 6.606 million, shocking the observers and market participants. A similar indicator published last Thursday (for the week of April 26-May 01) came out with a value of 3.169 million claims.
The US Department of Labor data published earlier this month showed an increase in unemployment in the country in May to the level of 14.7%.
Economists attribute this to the coronavirus, which has hit the US economy. Many US companies announced layoffs, and authorities ordered non-vital companies to close their offices and stores in the wake of the coronavirus epidemic. Eventually, the weekly growth rate of applications far exceeded the previous record level of 695,000, reached in October 1982. Then the number of initial claims filed in four weeks was 2.7 million.
This indicator reflects the state of the labor market. An increase in value negatively affects consumption and economic growth. Under normal conditions, a high result weakens the US dollar, while a low one strengthens it. However, in the current environment (the coronavirus pandemic and a sharp economic slowdown), the reaction of market participants to the publication of this report by the US Department of Labor can be completely unpredictable.
Forecast: the number of new jobless claims (in the week of May 3-8) amounted to 2.5 million.
Friday, May 15
**06:00 EUR Germany’s GDP for the 1st quarter (preliminary
release)**
GDP is considered the most important indicator of the general state of the economy. The growing trend of GDP is considered positive for the national currency. The German economy is the engine of the entire European economy. A high value of GDP is considered a positive factor for the EUR, and a low value is negative.
The growth of the European and German economies slowed sharply in 2019, and in 2020 the European economy has already entered a recession in many respects. The domestic risks are complemented by the risk of no-deal Brexit and the coronavirus pandemic.
If GDP data are weaker than expected, this will put even more bearish pressure on the euro. Data better than forecast can strengthen the euro in the short term. However, the risks for the euro are directed towards its further weakening. Forecast: German GDP fell in the 1st quarter by -2.1%.
09:00 EUR Eurozone GDP for the 1st quarter (second estimate)
GDP is considered an indicator of the general state of the Eurozone economy. The growing trend of GDP is considered positive for the EUR; low result weakens the EUR.
Recently, macro data from the Eurozone have been indicating a slowdown in the growth of the European economy. Amid persistently low inflation, the risks of a slowdown in economic growth may force the ECB to resume easing monetary policy.
Against the background of downward pressure from the economic and political situation in the Eurozone, the balance of risks for the euro is shifted downward, and its recovery in the short term is not expected. The coronavirus that reached Europe has also become an unforeseen and strong factor that already has an additional negative impact on the world and European economies.
According to the forecast of economists, the Eurozone’s GDP is expected to fall in the 1st quarter by -3.8% (-3.3% in annual terms) after growing by +0.1% (+1.0% in annual terms) in the previous 4- m quarter of 2019.
If the data turn out to be weaker than the forecast, then the euro may drop significantly. Data better than forecast will strengthen the euro in the short term.
12:30 USD Retail sales (ex Autos). Retail Control Group
This report (Core Retail Sales Ex Autos) reflects the total sales of retailers of all sizes and types, with the exception of car dealerships. Changes in retail sales are a major indicator of consumer spending. The report is leading, and in the future the data can 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, and an increase in the indicator will positively affect the USD. Forecast for April:
-8.6% (versus -4.5% in March, -0.4% in February).
Retail sales are a major consumer spending indicator in the United States showing changes in retail sales. The Retail Control Group measure measures the volume of 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 performance is unlikely to accelerate the growth of the dollar. Data worse than the previous period (+1.7% in March, 0.0% in January and February) will negatively affect the dollar in the short term. Forecast for April: -3.9%.
12:30 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 state of the retail sector in the near future. Index growth is usually a positive factor for the CAD; a decrease in the indicator will negatively affect the CAD. Previous index values: 0.3% in February and 0.6% in January. If the data for March is weaker than the previous values, the CAD may drop sharply in the short term.
**14:00 USD University of Michigan Consumer Confidence (preliminary
release)**
This indicator reflects the confidence of American consumers in the economic development of the country. A high level indicates economic growth, while a low indicates stagnation. Previous indicator values: 99.8 in January, 101.1 in February, 89.1 in March, 71.8 in April. An increase in the indicator will strengthen the USD, and a decrease in the value will weaken the dollar. This indicator is expected to be released in May with a value of 68.0. There is a clear downward trend, which is a negative factor for the USD. Data worse than forecast may even more negatively affect the dollar in the short term.
Price chart of NZDUSD in real time mode
![Economic calendar for the week 11.05.2020 – 17.05.2020][1]
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