Economic calendar for the week 10.08.2020 - 16.08.2020

August 9, 2020

Economic calendar for the week 10.08.2020 – 16.08.2020Jana Kane

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

next trading week (10.08.2020 – 16.08.2020)**

Trading on key Forex news: we are expecting the publication of important macro statistics from China, the US, Australia, Germany, Eurozone, Great Britain, as well as the results of the meeting of the central bank of New Zealand.

Despite the uneven pace, the US economic recovery continues. This was evidenced by the important macro data published last week. For example, production orders in the United States in June grew for the second month in a row, as American manufacturers continued to recover from the first wave of the coronavirus pandemic. This was announced last Tuesday by the US Department of Commerce. The US manufacturing activity continued to recover in July also according to a report from the Institute for Supply Management (ISM) released on Monday. The ISM’s July PMI stood at 54.2, up 1.6 percentage points from 52.6 in June.

The index value reflects the third consecutive month of growth in economic activity after its contraction in April, which was preceded by a continuous period of 131 months of growth, according to ISM.

Data from the US Department of Labor released last Friday also spoke of a recovery in the US labor market, which was hit hard in the first half of the year by the coronavirus pandemic.

Before the pandemic, unemployment was at its lowest level in 50 years at 3.5%.

The unemployment rate fell to 10.2% in July, while peaking at 15% in April, indicating that Americans continue to return to work.

The US employers created about 1.8 million jobs in July, signaling that the US economy continued to recover last month, albeit at a somewhat slower pace. Although unemployment in July is still well above the levels seen before the pandemic, the data is still strong from a historical perspective.

The dollar strengthened significantly on Friday, which allowed the DXY dollar index to end last week in positive territory as well, albeit with a minimal gain of several points.

American stock indices also closed last week in positive territory. In particular, the S&P500 hit a new 6-month high on Friday near 3353.0, continuing to move towards a record high of 3397.0 set in February this year.

Investors are guided by the Fed’s ultra-soft policy and the continued positive corporate reporting of American companies.

However, there are still strong concerns among investors that the infection rates and number of deaths due to coronavirus infection continues to rise in the United States, which is why some states are again imposing quarantine restrictions in an attempt to contain the spread of infection.

“The longer the virus lasts, the greater the risk of long-term damage,” Federal Reserve Vice Chairman Richard Clarida said last Wednesday, but added that “the Fed is ready to adjust its instruments to help the economy if necessary.”

The focus of investors next week will be on the publication of important macro data from China, the US, Australia, Germany, Eurozone, Great Britain, as well as the results of the meeting of the central bank of 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, August 10

01:30 CNY Consumer Price Index (CPI)

The National Bureau of Statistics of China will release data reflecting the dynamics of consumer prices in China in July. The rise in consumer prices could trigger an acceleration in inflation, which could force the People’s Bank of China to take measures aimed at tightening fiscal policy. Increased growth in consumer inflation may cause appreciation of the yuan, while a weak result will put pressure on the yuan.

China’s economy is the second largest in the world after America. Therefore, the publication of important macroeconomic indicators of this country has a significant impact on the world financial markets, primarily on the positions of the yuan, other Asian currencies, the dollar, commodity currencies, as well as on Chinese and Asian stock indices. China is the largest buyer of raw materials and a supplier of a wide range of finished products to the world commodity market.

In January 2020, the growth of the consumer inflation index amounted to +1.4% (+5.4% in annual terms), and in May - the value of the CPI index decreased to -0.8% (+2.4% in annual terms).

Deterioration of macroeconomic indicators, including a decrease in consumer inflation, may negatively affect the positions of the yuan, as well as commodity currencies such as the Canadian, Australian, and New Zealand dollars. To a greater extent, this applies to the Australian dollar, since China is Australia’s largest trade and economic partner.

According to the forecast, another acceleration in the growth rate of the consumer price index is expected in July: +0.4% (+2.6% in annual terms) against -0.1% (+2.5% in annual terms) in June after its sharp fall in the previous months.

The growth of the consumer inflation index will have a positive effect on the quotes of the yuan, as well as commodity currencies, primarily the Australian dollar. However, a relative decline in CPI may negatively affect them.

Tuesday, August 11

**06:00 GBP Report on the average wages of the British citizens for

the last 3 months. Unemployment rate**

On a monthly basis, the UK Office for National Statistics (ONS) publishes a report on average wages covering 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. Earnings growth is positive for the GBP, while a low value is negative. Forecast: The August report suggests that the average wages with bonuses decreased over the last 3 months (April-June) by -0.8% (against -0.3%, +1.0%, +2.4 %, +2.8%, +3.1%, +2.9%, +3.2%, +3.2% in previous periods); without bonuses - increased by +0.4% (against +0.7%, +1.7%, +2.7%, +2.9%, +3.1%, +3.2%, +3.4%, +3.5% in previous periods). Thus, the expected data is below the average values of indicators. If the data turns out to be better than forecast, the pound is likely to strengthen on the foreign exchange market in the short term. The data worse than the forecast will negatively affect the pound.

Also at this time, data on unemployment in the UK are published. It is expected that in the 3 months from April to June, unemployment was at the level of 4.2% (against 3.9%, 3.9%, 3.9%, 4.0%, 3.9% and 3.8% in previous periods). The unemployment rate in the UK has been steadily declining since 2012 (from 8.0% in September 2012). This is a positive factor for the pound, the rise in unemployment 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, the pound will be under pressure.

In any case, at the time of the publication of data from the British labor market, an increase in volatility is expected in the quotes of the pound and on the London Stock Exchange.

Wednesday, August 12

**02:00 NZD Interest rate decision of the Reserve Bank of New

Zealand. Accompanying statement**

After the bank’s management decided to cut the rate by 0.75% during an unscheduled meeting on March 15, the current interest rate of the RB of New Zealand is at 0.25%. The bank’s management explained its decision by a loss of momentum in the New Zealand economy and a sharp slowdown in the global economy amid the coronavirus pandemic.

“Global economic activity continues to weaken, reducing demand for goods and services from New Zealand. Increased uncertainty and contraction in international trade are contributing to a decline in economic growth in trading partner countries,” - said a recent statement from the RBNZ.

The RBNZ believes that wages 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 escalating international trade wars and a worsening global economic outlook, are forcing the Reserve Bank of New Zealand to keep interest rates low. An additional and unforeseen risk for the global and New Zealand economies is the global coronavirus epidemic.

It is expected that at this meeting, the RBNZ will not yet reduce or increase 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 provide an explanation of the decision on the interest rate and comments on the economic conditions that facilitated this decision.

At this time, volatility in trading in the New Zealand dollar may rise sharply.

Earlier, the RBNZ stated that against the background of “many factors of uncertainty” monetary policy “will remain soft for the foreseeable future,” but “may be adjusted accordingly.” According to the bank’s management, for a stable recovery of the New Zealand economy and inflation growth, a lower rate of the New Zealand dollar is necessary.

Probably, the head of the RBNZ Adrian Orr will reaffirm the bank’s propensity to pursue a soft monetary policy, which will lead to continued pressure on the New Zealand currency.

03:00 NZD RBNZ press conference. Monetary Policy Statement

Earlier, the RBNZ stated that against the background of “many factors of uncertainty” monetary policy “will remain soft for the foreseeable future,” but “may be adjusted accordingly.” For a stable recovery of the New Zealand economy and rising inflation, “a weaker NZ dollar is needed.”

It is likely that the head of the RBNZ Adrian Orr will reaffirm the bank’s propensity to conduct a soft monetary policy. His speeches often serve as an unofficial source of information on the future direction of the RBNZ’s monetary policy. In any case, during the RBNZ press conference, an increase in volatility in the quotations of the New Zealand dollar is expected.

06:00 GBP UK Q2 GDP (preliminary release)

GDP is considered to be an indicator of the overall health of the British economy. The upward trend in GDP is considered positive for the GBP. The UK’s GDP was one of the highest in the world until 2016, when the Brexit referendum was held. Then its growth slowed down, and with the onset of the global coronavirus pandemic, the growth rate of British GDP went into negative territory.

The UK’s annual GDP is forecast to decline by -20.2% in Q2 2020 (after zero in Q4 2019 and a -2.2% drop in Q1 2020). This is a negative factor for the GBP.

The main factors that can force the Bank of England to keep rates low are weak GDP and labor market growth, as well as low consumer spending. If the GDP data turns out to be weaker than the forecast, it will put even more downward pressure on the pound. Strong GDP report will strengthen the pound.

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 changes in consumer preferences. Food and energy have been excluded from this indicator to provide a more accurate estimate. A high score strengthens the US dollar and a low score 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 July: +0.2% and +1.2% (in annual terms), which indicates some improvement in the situation after the fall of the index in March and April. If the data for July turns out to be weaker than the forecast, then the dollar is likely to react with a short-term but strong decline. The data will strengthen the dollar better than the forecast.

Thursday, August 13

01:30 AUD Employment rate. Unemployment rate

The employment rate reflects 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 positive for the AUD, while a low one is negative. Forecast: In July, the number of employed Australian citizens increased by 40,000 (after falling by 594,300 in April, by 227,700 in May and an increase by 210,800 in June).

Also at the same time, the Australian Bureau of Statistics will publish a report on the unemployment rate - an indicator that assesses the ratio of the proportion of the unemployed population to the total number of able-bodied citizens. The growth of the indicator indicates the weakness of the labor market, which leads to a weakening of the national economy. The decline in the indicator is a positive factor for the AUD. Forecast: unemployment in Australia in July was at the level of 7.8% (against 7.4% in June, 5.2% in March, 5.1% in February). In general, the indicators cannot be described as positive yet. However, in other large economies, the labor market has deteriorated on an even larger scale due to the coronavirus.

The leaders of the RBA have repeatedly stated that, in addition to the situation in international trade, the Australian economy and the central bank’s monetary policy plans are influenced by the indicators of the level of household debt and expenditures, the growth of workers’ wages, as well as the state of the country’s labor market.

In March 2020, the RB of Australia cut its key interest rate by 0.50% to a new record low of 0.25% due to the coronavirus, which was the 5th rate cut in the last year. In the opinion of the RBA management, an unemployment rate of 4.5% or lower is required to raise wages and accelerate inflation to the target range. Unemployment in the country is not decreasing, and a return of inflation to the middle of the target range of 2-3% is not even on the distant horizon.

The AUD is unlikely to react positively to the publication of data from the country’s labor market. If the values of the indicators turn out to be worse than forecast, then the Australian dollar may significantly decline in the short term. Better-than-expected data will strengthen AUD in the short term.

**06:00 EUR Harmonized Index of Consumer Prices (HICP) in Germany

(final release)**

This index is published by the EU Statistics 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 one weakens it.

In May, the HICP index (in annual terms) increased by +0.5%, in June by +0.8%. The preliminary forecast for July was +0.6% and amounted to 0%. The euro is unlikely to react 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 of the indicator is a positive factor for the euro. The data show that inflationary pressures are still low in Germany. The data is worse than the forecast and the previous value will negatively affect the euro.

Friday, August 14

02:00 CNY Retail Sales Index

This index is published monthly by the National Bureau of Statistics of China and measures total retail sales and cash receipts. The index is often considered an indicator of consumer confidence and economic well- being and reflects the health of the retail sector in the near term. A rise in the index is usually positive for the CNY; a decrease in the indicator will negatively affect the CNY. The previous value of the index (in annual terms) was -1.8% (after rising +8% in the last months of 2019 and falling by -20.5% in January 2020). Outlook: In July, retail sales rose +0.3% in China, suggesting a still weak recovery from a strong drop earlier this year. If the data turns out to be even weaker, the CNY will decline.

09:00 EUR Eurozone GDP for the 2nd quarter (second estimate)

GDP is considered an indicator of the overall health of the Eurozone economy. The growing trend in the GDP indicator is considered positive for the EUR; a low result weakens the EUR.

Recently, macro data from the Eurozone have been showing a gradual recovery in growth in the European economy after a sharp drop earlier this year. However, the decision made by the EU leaders in July to provide additional support to the economy (a package of spending on the economic recovery of the bloc in the amount of 1.8 trillion euros was approved) will help stabilize the economy of the Eurozone, which, as a result of quarantine restrictions, restraint in spending by companies and consumers, as well as a collapse exports are on the cusp of the deepest recession since World War II.

The euro reacted positively to this decision. Nevertheless, according to the forecast of economists, the GDP of the Eurozone is expected to decrease in the 2nd quarter by -12.1% (-15.0% in annual terms) after an increase of +0.1% (+1.0% in annual terms) in Q4 2019 and a decline of -3.6% (-3.1% YoY) in Q1 2020. The preliminary (first) estimate of the Eurozone GDP in the 2nd quarter also amounted to -12.1% (-15% in annual terms).

If the data turns out to be weaker than the first estimate, then the euro may decline. Data better than the first estimate may strengthen the euro in the short term, although there is still a long way to a full recovery of the European economy even to pre-crisis levels (quarterly growth within 0.2% - 0.4%).

12:30 USD Core 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, excluding car dealerships. Changes in retail sales are the main indicator of consumer spending. The report is forward-looking, and in the future the data may 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, while an increase in the indicator will have a positive effect on the USD. In the previous month (June), the indicator increased by +7.3% (against a decline of -17.2% in April, -4.5% in March, -0.4% in February).

Retail sales is the leading indicator of consumer spending in the United States showing changes in retail sales. The Retail Control Group metric measures volume across 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 accelerate the growth of the dollar. Data worse than the values of the previous period (+5.6% in June, +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.

**14:00 USD University of Michigan Consumer Confidence (preliminary

release)**

This indicator reflects the confidence of American consumers in the country’s economic development. A high level indicates economic growth, while a low level 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, 72.5 in July. An increase in the indicator will strengthen the USD, while a decrease in the value will weaken the dollar. This indicator is expected to be released in August with a reading of 71.5. There is still a weak trend towards a gradual recovery in the growth of the indicator. 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 10.08.2020 – 16.08.2020][1]

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