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Economic calendar for the week 31.08.2020 - 06.09.2020

August 30, 2020

August 30, 2020

Economic calendar for the week 31.08.2020 – 06.09.2020Jana Kane

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

next trading week (31.08.2020 – 06.09.2020)**

Trading on key Forex news: next week we expect the publication of important macro statistics from China, Germany, Eurozone, the US, Australia, Canada, as well as the results of the meeting of the RB of Australia.

The dollar fell sharply last week, while the DXY dollar index lost another 0.9%, dropping to the lows of more than 2 years ago near the level of 92.40. Investors wanted to hear the Fed Chairman Jerome Powell say something that could influence their sentiment, determining the immediate prospects for the dollar. And Powell did not disappoint. Speaking at the annual economic forum in Jackson Hole, Powell said that now the Fed will abandon its policy of preempting inflation. Now the Fed will keep interest rates low instead of raising them in advance to contain inflation. This approach is likely to stimulate consumption and economic growth, but at the same time will put pressure on the dollar quotes. And since inflation in the United States in recent months and years has been reluctant to steadily rise to the target level of 2%, then, most likely, the same trend will continue in the future. This means that the Fed will not return to the issue of policy tightening for a long time, which implies a weak dollar. It may nevertheless remain resilient if other major global central banks also move towards further easing of their monetary policies, as well as increasing uncertainty in the global economy or exacerbating international trade conflicts, when demand for the dollar as a defensive asset grows.

But for now, the dollar is declining, maintaining negative dynamics and a tendency to further weakening, which is likely to lead to an increase in the commodity market and a continued rally in the stock market.

The next week will be transitional between the coming end of August and the beginning of September and autumn. It will be marked by the publication of important macro statistics from China, Germany, Eurozone, the US, Australia, Canada. Investors will also pay attention to the results of the meeting of the RB of Australia, but their focus will be on the publication on Friday of monthly data from the US labor market, which, along with inflation and GDP data, are key for the Fed in determining the prospects for its monetary policy.

Traders should pay attention to the publication of the following macro indicators:

*during the coming week, new events may be added to the calendar and / or some scheduled events may be canceled

****** GMT time

Monday, August 31

**01:00 CNY Manufacturing PMI by China Federation of Logistics &

Purchasing (CFLP)**

This is an important indicator of the state of the Chinese economy as a whole. A result above 50 is seen as positive and strengthens the CNY, one below 50 as negative for the yuan. Forecast: 48.7 in August (against 51.1 in July and 50.9 in June).

The relative decline in the index and a value below 50 could negatively affect the CNY. 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 yuan will receive support and will probably strengthen.

**01:00 CNY Services PMI by China Federation of Logistics &

Purchasing (CFLP)**

This indicator assesses the state of the services sector of the Chinese economy. A result above 50 is considered positive and strengthens the yuan. Forecast: 52.1 in August (against 54.2 in July and 54.4 in June).

Despite the relative decline, the indicator is still above 50, which is likely to have a positive impact on the yuan quotes.

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

(preliminary 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 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%, in July - by 0%. Preliminary forecast for August: +0.4%. 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 of the indicator is a positive factor for the euro. The data indicate that inflationary pressures are still low in Germany. The data is worse than the forecast and the previous value will negatively affect the euro.

Tuesday, September 1

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

statement**

In March, the RBA made 2 rate cuts, bringing it to the current level of 0.25%, and launched a quantitative easing program. At the same time, for 3-year government bonds of Australia, the target level of yield is set at 0.25%. The RBA has launched a program to lend to the banking system in the amount of at least A$ 90 billion and intends to buy bonds for A$ 5 billion.

The negative forecasts of economists suggest that the Australian economy will contract by 6% in 2020, which will be the sharpest annual GDP contraction since the Great Depression of the 1920s. The unemployment rate is likely to rise to around 8.5%.

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

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

Philip Lowe has repeatedly stated that the central bank is ready to cut 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 remained below the 2-3% target set by the RBA for almost four years.

Unemployment in the country remains above the 5% level for many years, unwilling to decline. Now another problem is the coronavirus pandemic, which has already hit the tourism and transport sectors hard. The RBA also expresses concern that unemployment may rise to 8% or even 10%.

In this regard, we cannot eliminate the possibility that on Tuesday, September 1, the RBA may again cut the rate, although most economists believe that the bank will leave the key rate unchanged at this meeting, at 0.25%, while expressing concerns about the outlook for the global economy due to the ongoing coronavirus epidemic.

In the accompanying statement, the RBA executives will explain the reasons for the rate decision. If the RBA signals the possibility of further easing of monetary policy in the near future, the risks of a fall in the Australian dollar will increase.

09:00 EUR Consumer price index. Core CPI (preliminary release)

Consumer Price Index (CPI) is published by Eurostat and measures the price change of a selected basket of goods and services over a given period. The index is a key indicator for assessing inflation and changing purchasing habits. A positive result strengthens the EUR, a negative one weakens it. In January, the CPI index increased by 1.4% (in annual terms), in February - by +1.2%, in March - by +0.7%, in April - by +0.3%, in May - by +0.1%, and in July - by +0.4%, which indicates low inflationary pressure and even a slowdown in inflation. Forecast for August: +0.2% (annualized). If the data turns out to be worse than forecast, then the euro may fall sharply in the short term. The data better than the forecast and / or the previous value may strengthen the euro in the short term, despite the low value (the target level of the ECB’s consumer inflation is just 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 changes in consumer preferences. Food and energy have been excluded from this indicator to provide a more accurate estimate. A high result strengthens the EUR, while 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%, and in July - by +1.2%. If the data for August turn out to be worse than the previous value or forecast, it may negatively affect the euro. If the data turn out to be better than the forecast or the previous value, then the euro is likely to react with an increase in quotations, but only in the short term. Inflation in the Eurozone remains low, which is a negative factor for the euro. Outlook for August: +1.0%.

14:00 USD ISM Manufacturing PMI

The Institute for Supply Management (ISM) Manufacturing PMI is an important indicator of the health of the American economy as a whole. A result above 50 is seen as positive and strengthens the USD, one below 50 as negative for the US dollar. Forecast: 54.0 in August (against 54.2 in July, 43.1 in May, 41.5 in April, 49.1 in March, 50.1 in February). A relative decline in the index could negatively affect the dollar. However, the value of the index itself is above 50, which may support the dollar in the short term. Data above 50 indicates an acceleration in activity, which has a positive effect on the quotes of the national currency. If the indicator falls below the forecast and the value of 50 may drop sharply.

Wednesday, September 2

01:30 AUD Australia GDP (Q2)

Report of the Australian Bureau of Statistics on the country’s GDP, which is the main indicator of the state of the Australian economy, for the 2nd quarter. Strong report will strengthen the AUD. Weak GDP report will negatively affect the AUD. Forecast: -0.3% (against -0.3% in Q1 2020, +0.5% in Q4, +0.4% in Q3 2019). The decline in the indicator is a negative factor for the AUD. If the data turns out to be worse than forecast, the AUD will decline even more.

06:00 EUR Retail sales in Germany

Retail sales is the main indicator of consumer spending in Germany showing changes in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. Forecast: -3.3% (+3.0% yoy) in July against -1.6% (+5.9% yoy) in June, +13.9% and +3.8% ( in annual terms) in May.

**GBP Inflation report (the exact time has not been announced

yet)**

The Governor of the Bank of England and members of the Monetary Policy Committee of the Bank of England will speak in parliament with comments on the current economic situation and economic outlook. At this time, the volatility in trading on the pound may rise sharply. Apart from GDP, one of the main benchmarks for the Bank of England regarding the prospects for monetary policy in the UK is inflation. If the tone of the report is soft, the British stock market will gain support and the pound will decline. Tough rhetoric of the Bank of England representatives regarding inflation control implying an increase in the interest rate in the UK will lead to the strengthening of the pound.

Thursday, September 3

01:30 AUD Trade balance

This indicator measures the relationship between Australia’s export and import volumes. Growth in exports from Australia leads to an increase in the trade surplus, which has a positive impact on the AUD. Forecast for July: A$ 8.80 billion (previous A$ 8.202 billion). The growing trade surplus is likely to have a positive impact on the Australian dollar.

09:00 EUR Retail sales in the Eurozone

Retail sales is the main consumer spending indicator that shows the change in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. Forecast for July: +5.9% and -0.5% (YoY) against +5.7% (+1.3% in annual terms) in June and -3.1% (in annual terms) in May. It is difficult to predict the euro’s reaction to the publication of these values, since the data suggests that although retail sales declined in July on an annualized basis, they rose compared to the previous months (March-April), when strict quarantine measures were in force in Europe.

14:00 USD ISM Services PMI

This indicator assesses the state of the service sector in the US economy. The services sector (in contrast to the manufacturing sector) has practically no impact on the country’s GDP.

In July, this indicator came out with a value of 58.1. A result above 50 is seen as positive for the USD. However, a relative decline in the index could negatively affect the dollar in the short term. Outlook for August: 57.1, which is likely to positively affect the USD overall.

14:00 GBP Speech by the Bank of England Governor Andrew Bailey

Participants in financial markets are expecting that Andrew Bailey, who became the head of the Bank of England on March 16, 2020, replacing Mark Carney, will clarify the situation regarding the future policy of the UK central bank. Volatility during his speech usually rises sharply in the pound trading and in the London Stock Exchange FTSE if Andrew Bailey gives any hints of tightening or easing of the Bank of England’s monetary policy. He will probably also touch on the state and prospects of the British economy, which has been badly affected by the coronavirus pandemic and is on the verge of Brexit, which can still happen without a deal.

If he does not touch upon the issues of monetary policy, the reaction to his speech will be weak.

Friday, September 4

00:30 AUD Retail Sales Index

The Retail Sales Index is published monthly by the Australian Bureau of Statistics and measures total retail sales. The index is often considered an indicator of consumer confidence and reflects the health of the retail sector in the near term. A rise in the index is usually positive for the AUD; a decrease in the indicator will negatively affect the AUD. The previous value of the index (in June) was +3.3% after falling by -17.7% in April. If the data for July turns out to be weaker than the previous value, the AUD may sharply decline in the short term. Forecast: +3.3%.

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

rate**

The most important indicators of the state of the labor market in the United States in August. Forecast: 0% (against +0.2% in July, -1.2% in June, -1.0% in May, +4.7% in April) / +1.55 million (against +1.763 in July , +4.8 million in June, +2.509 million in May and -20.687 million in April) / 9.9% (against 10.2% in July, 11.1% in June, 13.3% in May and 14 , 7% in April), respectively.

In general, the indicators cannot be described as positive, but they are understandable due to mass layoffs in American companies and the closure of offices and shops due to the coronavirus. At the same time, the data show a gradual improvement in the US labor market after its collapse in previous months at the beginning of the year. Prior to the coronavirus, the US labor market remained strong, signaling the stability of the American economy and supporting the dollar.

It is often difficult to predict the market reaction to the publication of indicators. Many indicators for previous periods are subject to revision. Now it will be even more difficult to do this, because the economic situation in many other large economies is no better. In any case, when data from the US labor market is published, a surge in volatility is expected in trading not only in USD, but throughout the financial market. The most cautious investors might choose to stay out of the market during this time.

12:30 CAD Unemployment rate in Canada

Statistics Canada is to publish data on the country’s labor market for August.

Unemployment has risen in Canada in recent months amid massive business closings due to coronavirus and layoffs. Unemployment rose from the usual 5.6% - 5.7% to 7.8% in March and to 13.7% in May. If unemployment continues to rise, the Canadian dollar will decline. If the data is better than the previous value, the Canadian dollar will strengthen. A decrease in the unemployment rate is a positive factor for the CAD, an increase in unemployment is a negative factor. Unemployment is expected to be 11% in August (after 10.9%, 12.3%, 13.7%, 13.0% in previous months).

Price chart of EURUSD in real time mode

![Economic calendar for the week 31.08.2020 – 06.09.2020][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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