Economic calendar for the week 13.07.2020 - 19.07.2020
July 12, 2020
July 12, 2020
Economic calendar for the week 13.07.2020 – 19.07.2020Jana Kane
**Overview of the main events of the Forex economic calendar for the
next trading week 13.07.2020 to 19.07.2020**
Trading on key Forex news: we are expecting the publication of important macro statistics from the UK, Germany, the US, the Eurozone, China, Australia and New Zealand, as well as the results of the meeting of the central banks of Canada, Japan, and the Eurozone.
Confirmed new coronavirus cases in the US updated the daily high last week at more than 60,000, according to Johns Hopkins University. In total, more than 3.22 million people were infected in the United States and more than 135,000 have already died from coronavirus. The American stock indexes DJIA and S&P500 were under pressure again last week, but on Friday ended the day in positive territory. The future of the US companies is directly dependent on the resumption of economic activity. But new outbreaks of coronavirus in the US are forcing some state leaders to reintroduce restrictive measures.
Last week, the spot price of gold exceeded $1818.00 per ounce, which is the highest mark since October 2009, confirming the prevailing atmosphere of uncertain prospects for the economy and the stock market, while investors fear the second quarantine period.
Next week, the three largest world central banks (Canada, Japan, the Eurozone) will decide on the interest rate. Investors will also pay attention to the publication of important macro data from the UK, Germany, the US, the Eurozone, China, Australia, and New Zealand.
_ 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, July 13
No important macro statistics planned to be released. However, traders should pay attention to the speech of the head of the Bank of England Andrew Bailey, which will begin at 15:30 (GMT). Participants in financial markets are expecting him to clarify the situation regarding the further policy of the British central bank in the context of coronavirus and the slowdown of the British economy. Volatility during his speech could rise sharply in the pound and the London FTSE index if Andrew Bailey gives any hints of tightening or easing monetary policy. He will probably also touch on the Brexit issue. As previously stated by the previous head of the Bank of England Mark Carney, the no-deal exit from the EU would be a “real economic shock”.
Tuesday, July 14
Bastille Day - national holiday in France. Banks in this country will be closed, so trading volumes in the financial market during the European session will be reduced.
06:00 GBP UK GDP
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 GDP was one of the highest in the world until 2016, when the Brexit referendum was held. In the future, 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 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, this will put even more downward pressure on the pound. A strong GDP report will strengthen the pound. According to the forecast, another decrease in UK GDP is expected in May (after falling by -20.4% in April). This is a negative factor for the GBP.
**06:00 EUR Harmonized Index of Consumer Prices (HICP) in Germany
(final release)**
This index is published by the EU Statistical Office and 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 March, the HICP index (in annual terms) grew by +1.3%, and in April - by +0.8%. The preliminary estimate for June was +0.8%. The final value for June is +0.5%. 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 and preliminary estimates, the euro may strengthen in the short term. The growth 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.
08:00 EUR Eurozone Bank Lending Survey
This study of the state of the bank lending system is carried out by the EU financial experts 4 times a year. The main objective of the study is to obtain expanded information on the conditions of bank lending in the Eurozone.
The data obtained are used by the ECB management in making decisions on the monetary policy of the bank. This report may cause an increase in volatility in the quotations of the euro and on the European stock market at the time of its publication if it contains unexpected conclusions regarding the lending conditions for businesses and households in the Eurozone.
09:00 EUR ZEW Institute Business Sentiment Index in Germany
This index reflects the difference between the share of optimistic and pessimistic investors, thus assessing the mood of investors and business. The growth of the indicator and its positive value indicates an optimistic attitude of investors, which is a bullish factor for the EUR. Conversely, a decrease in the indicator and its negative value is a negative factor for the EUR. In February, the indicator value was 8.7 (against 26.7 in January, 10.7 in December), and in March it was already -49.5 (with a forecast of -23.4), although in April, May and June it unexpectedly improved to 28.2, 51.0 and 63.4, respectively. Forecast: the indicator value for July will be 60.0, which is likely to support the euro in the short term. If the data turn out to be worse than the forecast and the previous value, then the euro may decline.
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 was +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), in April -0.4% (+1.4% in annual terms). Forecast for June: +0.1% and +1.3% (in annual terms), which indicates a slight improvement in the situation after the index fell in March and April. If the data for June is weaker than the forecast, then the dollar will most likely respond with a short-term but strong decline. Data better than forecast will strengthen the dollar.
13:30 CHF Speech by SNB Chairman Thomas Jordan
During his speech, the volatility of the CHF trade increases, and traders are waiting for signals regarding further plans of the monetary policy of the SNB. The Central Bank of Switzerland has consistently advocated for a soft monetary policy in the country, and the national currency has traditionally been considered “overvalued”. Jordan’s tough rhetoric will strengthen the franc. The soft tone of the speech and the intention to continue the extra soft monetary policy of the SNB will negatively affect the franc.
Wednesday, July 15
**03:00 JPY Bank of Japan’s decision on the interest rate. Bank of
Japan’s press conference and monetary policy comments**
The Bank of Japan will decide on the interest rate. Currently, the main interest rate in Japan is in negative territory, amounting to -0.1%. Most likely, the rate will remain the same. If it is reduced and goes deeper into negative territory, such a decision will cause a sharp decrease in the yen in the foreign exchange market and growth in the Japanese stock market. In any case, during this period of time, a jump in volatility is expected in trading on the yen and on the Asian financial market.
In June, during its next meeting, the Bank of Japan left the deposit rate at -0.1%, and the target level of 10-year bond yields at 0%, and kept the annual target level of ETF purchases at 12 trillion yen. The Bank of Japan has expanded its program of assistance to companies affected by the virus to 110 trillion yen from 75 trillion yen. Under this program, companies can receive loans without collateral and at a zero interest rate. The goal of the program is to support commercial companies whose bankruptcy rates have accelerated rapidly in Japan over the past month, due to the coronavirus pandemic among other reasons. A related statement from the Bank of Japan said the bank’s management will continue to “increase the monetary base until inflation is stable above 2%.” “Without hesitation, we will take additional monetsry easing measures if necessary,” the bank’s statement also said.
During the press conference, the head of the Bank of Japan Haruhiko Kuroda will give comments on the monetary policy of the bank. The Bank of Japan continues to adhere to its super soft monetary policy. As Kuroda has repeatedly stated before, “it is appropriate for Japan to patiently continue the current soft monetary policy.” Markets usually react actively to Kuroda’s speeches. Surely, he will again touch upon the topic of monetary policy during his speech, which will cause increased volatility not only in yen trading, but throughout the Asian and world financial markets.
If the bank’s leaders decide that the Japanese economy is stable, and the momentum of inflation to the target level of 2% does not decrease, then they will refrain from changing the policy.
06:00 JPY Bank of Japan press conference
During the press conference, head of the Bank of Japan Haruhiko Kuroda will give comments on the monetary policy of the bank. Despite earlier measures taken by the bank to stimulate the Japanese economy, inflation remains low, production and consumption are falling, which negatively affects export-oriented Japanese producers. Markets usually react actively to Kuroda’s speeches. If he touches on the topic of monetary policy during his speech, volatility will increase not only in yen trading, but also throughout the Asian and world financial markets.
06:00 GBP Consumer Price Index. Core Consumer Price Index
Consumer Price Index (CPI) reflects the dynamics of retail prices for a group of goods and services that are part of the British consumer basket. CPI is a key indicator of inflation. Its publication causes active movement of the pound in the foreign exchange market, as well as the London Stock Exchange Index FTSE100.
In the previous reporting month (in May), consumer inflation (in annual terms) grew by 0.5%.
Forecast for June: +0.5% (in annual terms). This value is unlikely to provide significant support to the pound. An indicator below the forecast may trigger the weakening of the pound, as low inflation will force the Bank of England to maintain a soft monetary policy.
Core CPI is published by the Office for National Statistics and determines the change in prices of a selected basket of goods and services (except food and energy) for a given period. It is a key indicator for assessing inflation and changing consumer preferences. A positive result strengthens the GBP, a negative result weakens it.
In May, Core CPI (in annual terms) grew by +1.2%. It is likely that the publication of the indicator will positively affect the pound if its value is higher than the forecast and the previous value. Forecast for June: +1.3% (in annual terms). An indicator below the forecast and / or previous values can trigger the weakening of the pound.
**14:00 CAD Bank of Canada’s interest rate decision. Bank of
Canada’s 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 a companion 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 of the central bank also said that the spread of coronavirus and a sharp drop in world oil prices in the aggregate are putting serious pressure on Canadians and the Canadian economy.
“I will not argue about describing these actions as QE,” said Stephen Poloz, the head of the Bank of Canada at that time (since June 3, 2020, this post has been held by Tiff Macklem). 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 should 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 weak housing market are putting pressure on the Bank of Canada to further soften its monetary policy.
Nevertheless, it is expected that at a meeting on Wednesday the Bank of Canada will maintain an interest rate of 0.25%.
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.
14:00 CAD Bank of Canada Monetary Policy Report
The Bank of Canada’s Monetary Policy Committee will issue a regular quarterly report on current monetary policy issues containing information on changes in monetary policy. In this report, representatives of the Bank of Canada will explain the bank’s position and assess the current economic situation in the country. The harsh tone of the report will cause the strengthening of the Canadian dollar. If signals from the Bank of Canada extend the period of soft monetary policy, the Canadian currency will decline.
15:15 CAD Bank of Canada’s press conference
During the press conference, the head of the Bank of Canada Tiff Macklem will explain the position of the bank and assess the current economic situation in the country. If the tone of his speech is tough in relation to the monetary policy of the Bank of Canada, the Canadian dollar will strengthen in the foreign exchange market. If Macklem favors maintaining a soft monetary policy, the Canadian currency will decline. In any case, during his speech, high volatility in the CAD quotes is expected.
22:45 NZD CPI (Consumer Price Index) for the 2nd quarter
Consumer Price Index (CPI) is a key indicator for assessing inflation that reflects the dynamics of retail prices for a group of goods and services that are part of the consumer basket. A positive result strengthens the NZD, a negative result weakens it. Forecast: +0.4% (versus +0.8% in the 1st quarter, +0.5% in the 4th quarter, +0.7% in the 3rd quarter). A relative decrease in the indicator may adversely affect the NZD quotes. In annual terms, CPI grew in the 2nd quarter, as expected, by +2.1% (against +2.5% in the 1st quarter, +1.9% in the 4th quarter, +1.5% in 3rd quarter). Data worse than forecast will negatively affect the NZD.
Thursday, July 16
01:30 AUD Employment rate. Unemployment rate
Employment rates reflect the monthly change in the number of Australian citizens employed. 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 June, the number of employed Australian citizens decreased by another 100,000 (after rising in March by 5,900 and falling in April by 594,300 and in May - by 227,700).
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 June was at the level of 7.0% (against 6.2% in April, 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 an even larger scale due to coronavirus.
The RBA’s leaders have repeatedly stated that in addition to the situation in international trade, the Australian economy and central bank monetary policy plans are influenced by the level of debts and household expenses, the growth of workers’ salaries, as well as the state of the country’s labor market.
In March 2020, the RB 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 leaders, an unemployment rate of 4.5% or lower is needed to increase wages and accelerate inflation to the target range. 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 the AUD in the short term.
02:00 CNY Q2 China’s GDP
The National Bureau of Statistics of China will present data on GDP growth in the 2nd quarter.
In the 1st quarter of China’s GDP decreased by -9.8% (-6.8% in annual terms), in the 3rd and 4th quarters of 2019 GDP growth was +1.5% and +6.0%, respectively. Chinese GDP is expected to decline in the 2nd quarter of 2020 by -9.9 %% (-6.5% year on year).
China is the largest buyer of commodities and a supplier to the global commodity market of finished products of a wide range. China’s economy is the second largest in the world after the American one. Therefore, the publication of important macroeconomic indicators from China can have a strong impact on the entire financial market.
The relative decline in GDP may negatively affect the yuan quotes, as well as the prices of commodity currencies and currencies of the Asia- Pacific region, as may indicate a slowdown in the Chinese economy.
The growth of the indicator will positively affect the Chinese yuan, as well as the world, primarily Asian stock indices, as well as commodity currencies, such as New Zealand and Australian dollars. China is the largest trade and economic partner of Australia and New Zealand and a buyer of commodities from these countries.
Therefore, negative macro statistics from China may also negatively affect the quotes of these commodity currencies.
**06:00 GBP Report on the average wages of the British citizens
over the past 3 months. Unemployment rate**
Every month, the UK Office for National Statistics (ONS) publishes an average earnings report that includes the period for the last 3 months, with and without bonuses.
This report is a key short-term indicator of the dynamics of changes in the level of wages of employees in the UK. Wages growth is a positive factor for the GBP, and a low indicator value is negative. Forecast: the July report suggests that the average wages with bonuses have grown over the past 3 months (March-May) by 1.4% (against +1.0%, +2.4%, +2.8% , +3.1%, +2.9%, +3.2%, +3.2% in previous periods); without bonuses - by 1.9% (against +1.7%, +2.7%, +2.9%, +3.1%, +3.2%, +3.4%, +3.5 % in previous periods). These are still positive data despite the fact that they are below average values. If the data is better than expected, the pound is likely to strengthen in the foreign exchange market.
Also at this time, the office publishes data on unemployment in the UK. Over the 3 months from March to May, unemployment is expected to be at 4.7% (against 3.9%, 4.0%, 3.9% and 3.8% in previous periods). Since 2012, the UK unemployment rate has been steadily declining (from 8.0% in September 2012). This is a positive factor for the pound, however, unemployment growth over the last reporting period is a negative factor.
If the data from the UK labor market turn out to be worse than the forecast and / or the previous value, then the pound will be under pressure.
In any case, at the time of publication of data from the British labor market, volatility is expected to increase in pound quotes and on the London Stock Exchange.
11:45 EUR ECB’s decision on the interest 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 helps strengthen the euro, while the soft stance and lower interest rates weaken 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 a subsequent press conference, the 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’s 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 stubbornly remaining 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 the stimulus measures of the ECB 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 appropriate 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 pandemic. 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 ECB’s press conference
During the press conference, a surge in volatility is possible not only in euro quotes, but also across the entire financial market, if the ECB leaders make an unexpected statement. Similar previous decisions by the ECB on interest rates 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 impact on the euro. And, on the contrary, the tough tone of the speech of the representatives of the ECB leaders regarding the monetary policy of the central bank will strengthen the euro.
**12:30 USD Initial jobless claims in the US over the past week.
Retail sales (ex autos). Retail Control Group**
The situation on the country’s labor market is still deteriorating. Back in February, the value of initial jobless claims 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 claims, shocking observers and market participants. A similar indicator published last Thursday (for the week of June 28-July 03) came out with a value of 1.344 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 applications 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.
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. The change in retail sales is a major indicator of consumer spending. The report is leading, and in the future the data can be greatly 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. In the previous month (May), the indicator increased by +12.4% (against a decrease of -17.2% in April, -4.5% in March, -0.4% in February).
Retail sales are the main indicator of consumer spending 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 indicators is unlikely to give acceleration to the growth of the dollar. Data is worse than the previous period (+11% in May, -15.3% in April, +1.7% in March, 0.0% in January and February) will negatively affect the dollar in the short term.
Friday, July 17
00:00 EUR Special European Council
This summit will gather finance ministers and EU leaders. The purpose of this summit will be to discuss the situation in the global economy and a plan to save Greece from the debt crisis. The summit will last all day. After the summit, an official statement is published on the objectives and results of the meeting, which may have an impact on European and global financial markets.
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 value (for April): 19.1% (after -26.4% in March). If the data for May is weaker than the previous value, the CAD may drop sharply in the short term.
**14:00 USD University of Michigan Consumer Confidence Index
(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 one indicates stagnation. Previous indicator values: 99.8 in January, 101.1 in February, 89.1 in March, 71.8 in April, 72.3 in May, 78.1 in June. An increase in the indicator will strengthen the USD, and a decrease in the value will weaken the dollar. It is expected that this indicator will be released in July with a value of 80.0. There is a tendency toward the recovery the growth rate, which is a positive factor for the USD. Data worse than forecast may negatively affect the dollar in the short term.
Price chart of EURUSD in real time mode
![Economic calendar for the week 13.07.2020 – 19.07.2020][1]
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