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Economic calendar for the week 01.06.2020 - 07.06.2020

May 31, 2020

May 31, 2020

Economic calendar for the week 01.06.2020 – 07.06.2020Jana Kane

**Overview of the main events of the Forex economic calendar for the

next trading week 01.06.2020 to 07.06.2020**

Trading on key Forex news: we are expecting the publication of important macro statistics from China, the US, Australia, Germany, Canada, the Eurozone, as well as the results of the meetings of the central banks of Australia, Canada, and the Eurozone.

Last Wednesday, the European Commission presented a draft fund in the amount of 750 billion euros to provide loans and grants to countries in the region. The EU leaders will meet on June 19 to discuss this proposal. This helps mitigate the bearish risks for the euro in the short term, and also lays a stronger foundation for a more sustainable recovery in the future, economists say.

Last week, the EUR/USD pair reached its highest level in almost two months amid the optimism regarding the resumption of economic activity in the Eurozone and the recovery plan proposed by the European Commission. Nevertheless, some experts warn that negotiations between the EU leaders are likely to be difficult and a compromise may invalidate their outcome.

Economists expect the ECB to increase PEPP volume by at least 500 billion euros at the regular meeting on June 4. This will confirm the ECB’s promise to do everything necessary to help restore the Eurozone and will have a positive effect on the euro.

Global stock indices also continued to grow last week, despite another increase in trade and political tensions in relations between the United States and China.

At the same time, the demand for defensive assets such as gold and yen is maintained at a high level.

Next week will be full of important events. Nevertheless, the attention of most investors will be focused on the publication on Thursday of the ECB decision on the rates and QE program, as well as data from the US labor market on Friday.

_ 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, June 1

01:45 CNY Caixin Manufacturing Purchasing Managers Index  (

PMI )

This is a leading indicator of the state of the manufacturing sector in China. The Chinese economy is the second largest in the world, so the publication of important macroeconomic indicators from China can have a strong impact on the entire financial market. Forecast: 49.6 in May (against 49.4 in April, 50.1 in March).

The data indicate a decline in activity in this important sector of the Chinese economy, which is probably also due to the spread of coronavirus in this country. A value below 50 indicates a slowdown. A value below the forecast may have an even greater negative impact on the yuan.

An increase in the indicator and a value above 50 are a positive factor for the yuan. If the data turn out to be better than the forecast and above the value of 50, the yuan will strengthen against the dollar, which is likely to also positively affect commodity currency quotes, such as, for example, New Zealand and Australian dollars.

**14:00 USD Employment Index (from ISM) in the manufacturing sector

of the US economy. PMI (from ISM) in the manufacturing sector of the US economy**

Employment Index, an important indicator of economic conditions in the United States, is published by the Institute for Supply Management (ISM) and reflects business conditions in the US manufacturing sector, taking into account expectations of future production volumes, new orders, stocks, employment, and supplies. The ISM manufacturing sector employment index is considered an important leading indicator that helps the US Department of Labor compile the employment report. A high value of the index strengthens the USD, and a low value weakens it. In April, the value of the indicator was 27.5 against 43.8 in March. Forecast for May: 34.1.

Index growth is a positive factor for the USD. However, the index is much lower than the average annual values, and in the current conditions of the coronavirus and quarantine pandemic, another decrease in the index is possible, which will negatively affect the dollar.

PMI in the manufacturing sector of the US economy 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 seen as positive and strengthens the USD, below 50 - as negative for the US dollar. Forecast: 42.5 in May (against 41.5 in April, 49.1 in March, 50.1 in February). A relative decline in the index and a value below 50 may negatively affect the dollar. The data below 50 indicates a slowdown in activity, which negatively affects the quotes of the national currency.

In the opposite case, and if the indicator grows above the forecast and the value of 50, the dollar will receive support and will probably strengthen.

Tuesday, June 2

04:30 AUD Interest rate decision. RBA’s accompanying statement

In March, the RBA made 2 rate cuts, bringing it to its current level of 0.25%, and launched a quantitative easing program. At the same time, 3-year Australian government bonds have a target yield of 0.25%. RBA will start a program of lending to the banking system in the amount of at least 90 billion Australian dollars and will buy bonds worth 5 billion Australian dollars.

Negative forecasts of economists suggest that the Australian economy will decline by 6% in 2020, which will be the sharpest annual decline in GDP since the great depression of the 1920s. The unemployment rate, apparently, will increase to about 8.5%.

Some economists have spoken about Australia entering its first recession in nearly 30 years, which could turn into depression.

“We live in extraordinary and difficult times,” said the head of the central bank Philip Lowe. In his opinion, “further stimulation is needed.” He said this at the press conference on March 19, when the RBA lowered the interest rate during its unscheduled meeting.

Philip Lowe has repeatedly stated that the central bank is ready to lower the rate again if necessary, although the likelihood of introducing negative rates, in his opinion, is “extremely small.”

The main negative factors for the Australian economy are weak wages growth, a weak labor market and a slowdown in growth. Annual inflation has been below the target range of 2-3% established by the RBA for almost four years.

Unemployment in the country has remained above 5% for many years, reluctant to decline. Now, the coronavirus pandemic has already added to the above negative factors and damaged Australia’s economy and tourism industry. The RBA also expresses concern that unemployment could rise to the level of 8%, or even 10%.

In this regard, we cannot eliminate the possibility that on Tuesday June 2, the RBA may again cut the rate, although most economists believe that the bank will leave the key rate unchanged at this level of 0.25%, while expressing concern over global economic outlook with the ongoing epidemic of coronavirus.

In an accompanying statement, the RBA leaders will explain the reasons for the decision on the rate. If the RBA signals a possibility of further easing of monetary policy, then a further fall in the Australian dollar will become inevitable.

Wednesday, June 3

01:30 AUD Australia’s GDP (Q1)

This is a report for the 1st quarter of the Australian Bureau of Statistics on the country’s GDP, which is the main indicator of the state of the Australian economy. A strong report will strengthen the AUD. A weak GDP report will negatively impact the AUD. Forecast: -0.3% (against +0.5% in the 4th quarter, +0.4% in the 3rd quarter of 2019). The decline is a negative factor for the AUD. If the data turn out to be worse than the forecast, the AUD will decrease even more.

**07:55 EUR Unemployment rate in Germany. Change in the number of

unemployed**

Federal Statistical Office of Germany will publish data on the country’s labor market for May. Since May 2019, the country’s unemployment rate has remained unchanged at 5%. However, in April this indicator rose to 5.8%. In the event of further growth in unemployment, the euro will decline. If the data turn out to be better than the previous value, the euro will strengthen. A decrease in unemployment is a positive factor for the national economy and the country’s currency, and unemployment is a negative factor. Forecast for May: 6.2%.

Change in the number of unemployed. This indicator estimates the change in the number of unemployed in Germany. The growth of the indicator is a negative factor for the euro, and vice versa, a decrease in the indicator will have a positive effect on the euro. In February, the number of unemployed in Germany fell by 8,000, rose by 1,000 in March, and by 373,000 in April. Forecast for May: +200,000 unemployed.

09:00 EUR Unemployment rate in the Eurozone

Eurostat will publish data on the unemployment rate in the Eurozone in April. Since November 2018, the unemployment rate in the region has remained below the level of 8%, falling to 7%. If unemployment rises, the euro will decline. If the data turn out to be better than the previous value, the euro will strengthen. A decrease in unemployment is a positive factor for the economy and the currency, and unemployment is a negative factor. Forecast for April: 8.2% (against 7.4% in March, 7.3% in February).

12:15 USD ADP National Employment in the Private Sector Report

ADP Employment Report in May. Usually, the publication of this indicator has a strong impact on the market and dollar quotes. Although there is usually no direct correlation with Non-Farm Payrolls, the ADP report is considered a harbinger of the official report of the US Department of Labor on the general state of the labor market in the country. The growth of the indicator has a positive effect on the dollar. A decrease of 9.5 million in the number of workers in the US private sector is expected (after a decrease of -20.236 million in April and -149,000 in March). Deterioration will have a negative impact on the dollar.

**14:00 USD Employment Index (from ISM) in the services sector. PMI

(from ISM) in the US services sector**

This is an important indicator of economic conditions in the United States published by the Institute for Supply Management (ISM) that reflects business conditions in the US services sector, taking into account the expectations of new orders, stocks, employment, and supplies. The ISM employment index in the services sector is considered an important leading indicator for the US Department of Labor when compiling the employment report. A high value of the index strengthens the USD, and a low value weakens it. In April, this indicator came out with a value of 30.0. A relative decline in the index may negatively affect the dollar in the short term. A result below 50 is also seen as a negative factor for the USD.

PMI in the services sector assesses the state of the services sector in the US economy. The data of the services sector (unlike the manufacturing sector) have practically no effect on the country’s GDP. The growth of the indicator and the result above 50 are considered as a positive factor for USD. At the same time, a relative decrease in the indicator or data worse than the forecast may have a short-term negative impact on the dollar.

Forecast for May: 43.0 (against 41.8 in April, 52.5 in March, 57.3 in February). A relative decline in the index may negatively affect the dollar in the short term. At the same time, results below 50 are considered a negative factor for USD.

**14:00 CAD Bank of Canada’s interest rate decision. Accompanying

statement**

The Bank of Canada will decide on the interest rate. In March, the bank lowered the rate 3 times, bringing it to the level of 0.25%, to mitigate the economic damage from the pandemic of the novel coronavirus.

In the accompanying statement, the Central Bank of Canada stated that this “decision is aimed at supporting the financial system, which plays a central role in lending to the economy, as well as creating the foundation that will allow the economy to return to normal.” A press release from the central bank also said that the spread of coronavirus and the sharp drop in world oil prices in the aggregate are putting serious pressure on Canadians and the Canadian economy.

“I will not argue about these actions qualifying as QE,” said the head of the Bank of Canada Stephen Poloz. If the government bond market “does not work smoothly, with a narrow spread of supply and demand, then the rest of the system also does not work as it should,” said Poloz, explaining the need for QE.

Initially, at least 5 billion Canadian dollars per week will be allocated for these purposes (purchase conditions will be adjusted to reflect the changing situation).

Quantitative easing and a significant reduction in interest rates are supposed to help weaken the national currency.

The consequences of coronavirus on the Canadian economy and the country’s labor market (in March, unemployment rose to 7.8% from 5.6% in February, and the number of employees, according to Statistics Canada, decreased by 1.01 million people), as well as weakness of the housing market is putting pressure on the Bank of Canada to further soften its monetary policy.

However, it is expected that at a meeting on Wednesday, the Bank of Canada will maintain the interest rate of 0.25%.

In their accompanying statement and report on changes in monetary policy, Bank of Canada representatives will explain the bank’s position and assess the current economic situation in the country. The tough tone of the Bank of Canada’s accompanying statement regarding rising inflation and the prospects for further monetary tightening will trigger a strengthening of the Canadian dollar. If the Bank of Canada signals a soft monetary policy, the Canadian currency will decline.

Thursday, June 4

11:45 EUR ECB’s decision on the rates

The ECB will publish its decision on the key rate and deposit rate. The ECB’s tough stance on inflation and the level of key interest rates contributes to the strengthening of the euro; a soft stance and a reduction in rates weakens the euro. In September 2019, the European Central Bank lowered its key interest rate on deposits by 0.1% to -0.5% and began buying bonds by 20 billion euros per month, renewing the so- called quantitative easing program.

At the subsequent press conference, former President of the European Central Bank Mario Draghi said that the balance of risks for the economic outlook of the Eurozone “is still shifted in the negative direction”, implying the possibility of additional stimulation if necessary.

The ECB rate cut in September was the first since March 2016, and “until inflation complies” with the target level, which is slightly below 2%, the rate will remain low. Now inflation in the Eurozone is stuck around 1%, and the ECB’s new forecasts on rates and the QE program can be seen as a signal of a tendency to further soften the policy.

After Brexit, the escalation of trade conflicts and factors of political instability in the Eurozone are the main threats to the European economy.

Speaking earlier in the European Parliament, Christine Lagarde, who in November became the new president of the European Central Bank, said that the stimulus measures of the ECB’s monetary policy continue to have a beneficial effect on the economy of the Eurozone. “I agree with the ECB Governing Council that a stimulating monetary policy will remain relevant for a long period of time,” Lagarde said.

An additional factor that could put pressure on the ECB towards further easing of monetary policy was the coronavirus. Back in March, the ECB signaled the possibility of easing the policy, and the bank representative admitted that the bank’s management may lower already negative interest rates even lower.

It is likely that following the meeting of the ECB, the key interest rate will remain at the same level of 0%. The ECB deposit rate for commercial banks is also likely to remain at -0.5%. At the same time, it is highly likely that at this meeting the ECB will announce a new program to stimulate the economy.

12:30 EUR Press conference of the ECB

During the press conference, a surge in volatility is possible not only in the euro quotes, but also across the entire financial market, if the ECB leaders make an unexpected statement. Similar ECB interest rate decisions and subsequent press conferences moved the euro by 3-5% in a short time. The ECB executives will assess the current economic situation in the Eurozone and comment on the ECB’s decision on rates.

The soft tone of the statements will have a negative effect on the euro. And, on the contrary, the harsh tone of the speech of the representatives of the ECB leadership regarding the monetary policy of the central bank will strengthen the euro.

**12:30 USD Initial jobless claims in the United States over the

past week. Orders for capital goods (ex defense and aviation). US annual GDP for the 1st quarter (second estimate)**

The situation on the country’s labor market is still deteriorating. Back in February, the indicator of initial 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 observers and market participants. A similar indicator published last Thursday (for the week of May 17-22) came out with a value of 2.123 million claims.

The US Department of Labor data published in early May showed an increase in unemployment in the country to the level of 14.7%. Economists attribute this to the coronavirus, which has damaged 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. Current weekly growth rates of claims far exceed 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.

Friday, June 5

**12:30 USD Average hourly wages. Non-Farm Payrolls. Unemployment

rate**

These are most important indicators of the state of the labor market in the US in May. Forecast: +0.7% (against +4.7% in April) / -10,000,000 (against -20,500,000 in March) / 19.6% (against 3.5% in February, 4.4% in March and 14.7% in April), respectively.

In general, the indicators can be described as disappointing, but quite understandable in view of the massive layoffs in American companies and the closure of offices and shops due to the coronavirus.

Prior to coronavirus, the US labor market remained strong, indicating the stability of the US economy and supporting dollar quotes.

Predicting market reactions to the publication of indicators is often difficult, because many indicators for previous periods may be revised. Now it will be even more difficult to do this, as the economic situation in many other large economies is no better. In any case, when publishing data from the US labor market, a surge in volatility is expected in trading not only in USD, but throughout the financial market. The most cautious investors might prefer to stay out of the market during this period of time.

12:30 CAD Unemployment rate in Canada

Statistics Canada will release data on the country’s labor market for May.

Unemployment has grown in Canada in recent months, amid massive closure of businesses due to coronavirus and layoffs among other things. Unemployment rose from the usual 5.6% - 5.7% to 7.8% in March and to 13% in April. If unemployment continues to rise, the Canadian dollar will decline. If the data turn out to be better than the previous value, the Canadian dollar will strengthen. A decrease in unemployment is a positive factor for the CAD, an increase in unemployment is a negative factor.

Price chart of EURUSD in real time mode

![Economic calendar for the week 01.06.2020 – 07.06.2020][1]

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. 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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