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Economic calendar for the week 29.06.2020 - 05.07.2020

June 28, 2020

June 28, 2020

Economic calendar for the week 29.06.2020 – 05.07.2020Jana Kane

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

next trading week 29.06.2020 to 05.07.2020**

Trading on key Forex news: we are expecting the publication of important macro statistics from Germany, the Eurozone, the US, Great Britain, China, minutes of the June meeting of the Fed, as well as data from the US labor market.

Despite the growth observed on Wednesday and Thursday, the dollar ended last week in negative territory. The DXY dollar index lost 0.3% over the week. The dollar was not supported by a sharp increase in the number of patients infected with coronavirus and a drop in the US stock indices, which also ended the past week in negative territory.

Stock indices, in turn, were under pressure from the rising cases of coronavirus in some states and the worsening of US-Chinese relations after the US Senate passed a bipartisan bill last Thursday. It allows sanctions to be imposed on Chinese officials who prevented Hong Kong’s limited autonomy from Beijing, as well as on banks and firms that do business with them. Representatives of the Trump administration expressed concern that this bill could impede diplomatic negotiations between the countries.

Despite this, some investors remain optimistic about the general lifting of quarantine measures. Leading US indices have already gained more than 35% from March lows.

The stock market is supported by unprecedented stimulus measures by the Fed, which has poured billions of cheap liquidity into the financial system and keeps interest rates close to zero.

Oil quotes also dipped slightly over the past week. Investors take into account the price of rising oil reserves and an increase in the number of new cases of coronavirus in the United States. At the end of the week, in just one day, the number of new cases of coronavirus in the United States was almost 40,000. Almost half of the total number of new cases occurred in four states — Texas, Florida, California, and Arizona.

The next week, which will be transitional between the first and second half of the year, will not have much important macro statistics releases. Nevertheless, investors will closely monitor the Fed Chairman Jerome Powell’s speech in Congress on Tuesday, the publication (Wednesday) of the minutes of the June Fed meeting and the data from the US labor market, which will be published on Thursday, and not on Friday as usual due to the celebration of Independence Day in the US at the end of the week.

_ 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 29

**12:00 EUR Harmonized Consumer Price Index (HICP) in Germany

(preliminary 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 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 January, the HICP index (in annual terms) grew by +1.6%, in February by +1.7%, and in April by +0.8%. Preliminary forecast for June: +0.6%. 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. The data still suggests low inflationary pressures in Germany. Data worse than the forecast and the previous value will negatively affect the euro.

Tuesday, June 30

06:00 GBP UK GDP for the 1st quarter (final 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 a Brexit referendum was held. Then its growth slowed down, and with the onset of the global coronavirus pandemic, the growth rate of British GDP completely switched to negative territory.

The forecast expects 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 could force the Bank of England to keep rates low are weak GDP and labor market growth, as well as low consumer spending. If GDP data are weaker than expected, this will put even more downward pressure on the pound. A strong GDP report will strengthen the pound.

**09:00 EUR Consumer Price Index. Core Consumer Price Index

(preliminary release)**

The Consumer Price Index (CPI) is published by Eurostat and determines the price change of a selected basket of goods and services for a given period. The index is a key indicator for measuring inflation and changing consumer preferences. A positive result strengthens the EUR, a negative result weakens it. In January, the CPI increased by 1.4% (in annual terms), in February - by +1.2%, in March - by +0.7%, in April - by +0.3%, and in May by +0.1%, which indicates a low inflationary pressure and even a slowdown in inflation. Forecast for June: +0.1% (in annual terms). The expected data are below the previous values, which is already negative for the euro. If they turn out to be worse than the forecast, then the euro may sharply decline in the short term. The data better than the forecast and / or the previous value can strengthen the euro in the short term, despite the low value (the target level of consumer inflation of the ECB is slightly below 2.0%).

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 to get a more accurate estimate. A high result strengthens the EUR and a low result weakens it. In January, Core CPI increased by 1.1% (in annual terms), in February - by +1.2%, in March - by +1.0%, in April and May - by +0.9%. If the data for June is worse than the previous value or forecast, this could negatively affect the euro. If the data turn out to be better than the forecast or the previous value, then the euro will most likely react with the growth of quotations, but only in the short term. Eurozone inflation remains low, which is a negative factor for the euro. Forecast for June: +0.8%.

After 14:00 USD Speech by the head of the Fed Jerome Powell

Powell’s comments may affect both short-term and long-term USD trading if he again touches on the Fed’s monetary policy. A more hawkish position on the Fed’s monetary policy is seen as positive and strengthens the US dollar, while a more cautious position is assessed as negative for the USD.

If he makes unexpected statements, volatility in the financial markets may increase. Any hints about the need to maintain a soft central bank policy will cause a fall in the dollar and the growth of US stock markets.

Participants in the financial market will carefully study his speech in order to catch signals regarding the Fed’s further actions.

**After 14:00 USD Speech by the US Treasury Secretary Stephen

Mnuchin**

As head of the Department of the Treasury, Stephen Mnuchin oversees the implementation of US economic and monetary policies aimed at economic growth, job creation and internal stability. His comments often cause a surge in volatility in the US stock markets, as well as in the dollar quotes.

Wednesday, July 1

01:45 CNY Caixin Manufacturing Activity 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: 50.5 in June (against 50.7 in May, 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 associated with the consequences 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, then 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.

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

unemployed**

German Federal Statistical Office will publish data on the country’s labor market for June. Since May 2019, the country’s unemployment rate remained unchanged at 5%. However, in April this indicator rose to 5.8%, and in May - to 6.3%. 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 growth is a negative factor. Forecast for June: 6.6%.

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 April, the number of unemployed in Germany increased by 373,000, and in May - by 238,000. Forecast for June: +120,000 unemployed.

12:15 USD ADP National Employment Report

ADP Employment Report in the US in June. 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. Employment is expected to have grown in June by 3.5 million the number of workers in the US private sector (after a decrease by -2.76 million in May). The growth of the indicator has a positive effect on the dollar. Deterioration of the indicator will have a negative impact on the dollar.

**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 taken into account when the US Department of Labor compiles the employment report. A high value of the index strengthens the USD, and a low value weakens it. In May, the value of the indicator was 32.1. Forecast for June: 35.0.

The index growth is a positive factor for yhe USD. However, the index is much lower than the average annual values, and in the current conditions of the coronavirus pandemic and quarantine, 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: 49.0 in June (against 43.1 in May, 41.5 in April, 49.1 in March, 50.1 in February). Relative growth of the index may support the dollar. However, the index is still below 50, which could negatively affect the dollar. Data below 50 indicates a slowdown in activity, which negatively affects the quotes of the national currency. With the growth of the indicator above the forecast and the value of 50, the dollar will receive more tangible support and will probably strengthen.

**19:00 USD Minutes of the June meeting of the Federal Open Market

Committee (FOMC minutes)**

The publication of the minutes is extremely important for determining the course of the current Fed policy and the prospects for raising interest rates in the United States. The volatility of trading in financial markets during the publication of the minutes usually increases, since they often contain either changes or clarifying details regarding the outcome of the FOMC Fed meeting.

Following two meetings in March, the Fed sharply reduced its interest rate (to 0.25% from 1.75% in February), and also announced the allocation of $700 billion for the purchase of US government bonds and mortgage-backed securities. Subsequently, the Fed has repeatedly announced additional measures to support the US economy and inject cheap liquidity into the financial system.

In an online session hosted by the Peterson Institute for the World Economy, the Fed Chairman Jerome Powell said that “in terms of scale and speed, this decline has no precedent in modern history and is much worse than any recession since World War II,” adding that the Fed did not consider negative interest rates.

The soft tone of the protocol will have a positive effect on stock indices and negatively on the US dollar. The tough rhetoric of Fed leaders regarding monetary policy prospects will push the dollar toward further growth.

A statement following the Fed meeting on the open market operations committee on June 10 said that the “coronavirus pandemic will put strong pressure on economic growth, inflation, employment in the short term and will pose significant risks for the economy in the medium term. In the coming months, the Fed will increase its portfolio (treasury and mortgage bonds) at least at the current pace to ensure smooth functioning of the market.”

The US Federal Reserve also confirmed that it does not plan to raise interest rates until the end of 2022.

Thursday, July 2

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

rate**

These are the most important indicators of the state of the labor market in the US in June. Forecast: -0.6% (against -1.0% in May) / +3.0 million (against +2.509 million in May and -20.687 million in April) / 12.2% (against 13.3% in May and 14.7% in April), respectively.

In general, the indicators can be described as disappointing but quite understandable due to massive layoffs in American companies and the closure of offices and shops due to the coronavirus. At the same time, the data indicate a gradual improvement in the US labor market after its landslide in previous months at the beginning of the year. 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, during the publication of data from the US labor market, a surge in volatility is expected in trading not only in the USD, but throughout the financial market. The most cautious investors might prefer to stay out of the market during this period of time.

Friday, July 3

Independence Day is celebrated in the US; banks and exchanges in the country are closed. Therefore, trading volumes during the US trading session will be low.

Also no publication of important macro statistics is planned.

Price chart of EURUSD in real time mode

![Economic calendar for the week 29.06.2020 – 05.07.2020][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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