Economic calendar for the week 14.09.2020 - 20.09.2020

September 13, 2020

Economic calendar for the week 14.09.2020 – 20.09.2020Jana Kane

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

next trading week (14.09.2020 – 20.09.2020)**

Trading on key Forex news: next week we are expecting the publication of important macro statistics from China, Great Britain, US, New Zealand, Australia, Canada, as well as the result of the voting in the British Parliament on Brexit and meetings of the central banks of Great Britain, Japan, and the US.

The dollar has strengthened, and the American stock indices have declined by the end of last week, and, this is the second week of the strengthening of the dollar and the fall of stock indices. Their inverse correlation is still observed.

One of the most important events of the past week was the ECB meeting. The central bankers decided to leave interest rates unchanged at 0.00% (for major refinancing operations) and -0.50% (deposit rate). The ECB also left the volume of asset purchases under the PEPP program at 1.350 billion euros and confirmed its intention to continue buying assets under this program until the end of June 2021. Euro quotes skyrocketed, but only after it became known that ECB leaders believe that there is no need to overreact to the euro’s rise.

The EUR/USD pair rose to an intra-week high near 1.1917, but then declined almost returning to last week’s opening price near 1.1840.

Still, the dollar remains vulnerable amid the Fed’s stimulus policy, the steady progress of the US coronavirus pandemic and political uncertainty ahead of the November presidential election, and its current gain can be a correction after a sharp decline over the previous 4 months.

Next week, three of the world’s largest central banks (Bank of England, Bank of Japan and the Fed) will hold their regular meetings and decide on the interest rates. Economists do not expect the leaders of these banks to make any changes to the current monetary policy, although unexpected decisions are also possible. Any movements or signals in the direction of further easing of the policies of these banks will cause increased volatility in the financial markets and weakening of GBP, JPY, or USD, respectively.

Investors will also pay attention to the publication of important macro statistics on China, UK, US, New Zealand, Australia, Canada, as well as the results of the vote in the British parliament on Brexit scheduled for Monday.

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, September 14

GBP Inflation report (exact time unknown)

Head 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 reference points for the Bank of England regarding the prospects for monetary policy in the UK is the inflation rate. If the tone of the report is soft, the British stock market will gain support and the pound will decline. Conversely, 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.

GBP Brexit vote in the British parliament (exact time unknown)

British Prime Minister Johnson’s press secretary said last week that the country is still ready to make a deal with the EU. “We need to make progress on the domestic market bill so that it can be included in the law early next year,” he said. When asked if he thought parliament would support the bill, he said he hoped parliament understood the importance of preserving the domestic market.

Meanwhile, in relation to this law, the European Commission has already addressed the British government with a warning that if the UK passes the bill on the domestic market, it would be a serious violation of the provisions of the Brexit treaty and the Northern Ireland Protocol and urged the British government to abandon the provisions of the bill.

On Monday, the British parliament is likely to consider all options regarding the prospects for a Brexit deal with the EU. If parliament approves this plan, the likelihood of a hard Brexit will increase sharply, which will negatively affect the pound quotes.

Tuesday, September 15

**01:30 AUD Minutes of the September meeting of the RB of

Australia**

This document is published two weeks after the meeting and the decision on the interest rate. If the RBA positively assesses the state of the labor market in the country, the rate of GDP growth, and also shows a hawkish attitude towards the inflation forecast in the economy, the markets regard this as a higher probability of a rate hike at the next meeting, which is a positive factor for the AUD. The bank’s soft rhetoric regarding, above all, inflation puts pressure on the AUD.

At its September meeting, the central bank kept its current monetary policy unchanged. The key interest rate of the RBA was kept at a record low level of 0.25%, and the target yield on 3-year government bonds was also left at the level of 0.25%. The decision to lower the rate and determine the current target level of government bond yields was made at the previous unscheduled RBA meeting on March 19 in order to support businesses and Australian citizens amid the rapid spread of the coronavirus pandemic. The country’s government was also forced to introduce a social distancing regime, suspend businesses and close borders to international traffic.

“Substantial uncertainty remains about the short-term outlook for the Australian economy,” Head of the RBA Philip Lowe said after the bank meeting, adding that “the board will not raise rates until there is progress towards full employment and confidence that inflation will stabilize in the target range of 2-3%“. In his opinion, “there are no serious arguments in favor of tightening monetary policy in the short term,” and “some time will pass before interest rates rise.”

Nevertheless, if the published minutes contain unexpected information concerning the issues of the RBA’s monetary policy, the volatility in the AUD quotes will increase.

02:00 CNY Retail Sales Index

This index is published monthly by the National Bureau of Statistics of China and measures the total retail sales and cash proceeds. 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 CNY. The previous value of the index (in annual terms) was -1.1% (after an increase of +8% in the last months of 2019 and a fall of -20.5% in January 2020). Outlook: In August, retail sales in China fell by -1.4%, which indicates a weak recovery after a strong fall in February-March this year. If the data turns out to be even weaker, the CNY will decline.

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

3 months. Unemployment rate**

Every month, the UK Office for National Statistics (ONS) publishes a report on average wages covering the last 3 months, with and 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 positive for the GBP, while a low reading is negative. Forecast: the September report suggests that the average wages with bonuses decreased over the last calculated 3 months (May-July) by -1.1% (against -1.2%, -0.3%, +1.0 %, +2.4%, +2.8%, +3.1%, +2.9%, +3.2%, +3.2% in previous periods); without bonuses - by -0.6% (against -0.2%, +0.7%, +1.7%, +2.7%, +2.9%, +3.1%, +3.2%, +3.4%, +3.5% in previous periods). Thus, the indicator is expected to be below the average values. If the data turns out to be better than forecast, the pound is likely to strengthen in the foreign exchange market in the short term. Data worse than expected will negatively affect the pound.

Also at this time, the office publishes data on unemployment in the UK. It is expected that in the 3 months from May to July, unemployment was at the level of 3.9% (against 3.9%, 3.9%, 3.9%, 3.9%, 4.0%, 3.9% and 3.8% in previous periods). Since 2012, the UK unemployment rate has steadily declined (from 8.0% in September 2012). This is a positive factor for the pound, while unemployment growth 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 the publication of data from the British labor market, an increase in volatility in the pound quotes and on the London Stock Exchange is expected.

Wednesday, September 16

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 make up 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 FTSE100 index.

In the previous reporting month (July), the growth in consumer inflation (in annual terms) amounted to 1.0%.

Forecast for August: +1.3% (annualized). This value is unlikely to provide significant support to the pound. Indicator value below the forecast could provoke a weakening of the pound, as low inflation will force the Bank of England to adhere to a soft monetary policy.

Core CPI is published by the Office for National Statistics and determines the price change of a selected basket of goods and services (excluding food and energy) for a given period. It is a key indicator for assessing inflation and changes in purchasing preferences. A positive result strengthens the GBP, a negative result weakens it.

In July, Core CPI (in annual terms) increased by +1.8%. The publication of the indicator is likely to have a positive effect on the pound if its value is higher than the forecast and the previous value. Outlook for August: +1.4% (annualized). The indicator reading below the forecast and previous values may provoke a weakening of the pound.

12:30 USD 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 leading, 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 (July), the indicator increased by +1.9% (against a decline of -17.2% in April, -4.5% in March, -0.4% in February).

Retail sales is the main 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 (+1.4% in July, +5.6% in June, +11% in May, -15.3% in April, +1.7% in March, 0.0% in January and in February) will negatively affect the dollar in the short term.

12:30 CAD Consumer Price Indices in Canada

Core Consumer Price Index (Core CPI) from the Bank of Canada reflects the dynamics of the retail prices of the corresponding basket of goods and services (excluding fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transport, and tobacco products). The target inflation rate for the Bank of Canada is in the range of 1-3%. The rise in CPI is a harbinger of a rate hike and a positive factor for the CAD. Core Consumer Price Index rose in July by +0.7% (in annual terms), in May - by +0.7%, and in April - by +1.2%. If the August data turns out to be worse than the previous values, it will negatively affect the CAD. Better-than-forecast data and above previous values will strengthen the Canadian dollar.

Outlook for August: CPI will come out with a value of +0.9% (in annual terms).

**18:00 USD The Fed’s decision on the interest rate. Summary of

Economic Projections from the US Federal Open Market Committee. The Fed’s Comments on Monetary Policy**

Following two meetings in March, the Fed cut its interest rate to 0.25% from 1.75% in February and 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 American economy and inject cheap liquidity into the financial system. Usually, with the easing of monetary policy, the national currency becomes cheaper and its quotations go down.

In recent months, the dollar has been declining as investors are withdrawing funds from defensive assets, buying riskier and more profitable assets of the stock market, which continues to grow despite the threat of a second wave of the coronavirus epidemic and the associated economic slowdown. The dollar’s role as a defensive asset is also declining.

The rate is widely expected to remain at 0.25% at this meeting. At the end of May, the US Federal Reserve Chairman Jerome Powell said that he was “satisfied with the current situation and the path we (at the Fed) are now heading.” “We are not close to any of our limits,” - said Powell, making it clear that the Fed intends to continue to support the economy. Other Fed leaders have also repeatedly stated in recent days that they are in favor of continuing the policy of supporting the American economy.

Nevertheless, during the period when the rate decision is published, volatility may sharply grow throughout the financial market, primarily in the American stock market and in dollar quotes, if the rate decision differs from the forecast.

The FOMC Economic Projections include the Fed’s report on inflation and economic growth over the next 2 years and, just as important, shows the individual views of the FOMC members on interest rates.

During the publication of the decision on the rate and the FOMC report, a surge in volatility is expected throughout the financial market, primarily in the American stock market and in dollar quotes.

Powell’s comments may affect both short-term and long-term USD trading. A more hawkish stance on the Fed’s monetary policy is seen as positive and strengthens the US dollar, while a more cautious position is seen as negative for the USD. Any hints by Powell about the possibility of raising the interest rate will cause the dollar to strengthen and the American stock markets to fall.

Investors want to hear him talk about the future plans of the Fed for this and next year.

**18:30 USD Press Conference of the FOMC (Federal Open Market

Committee)**

The press conference of the US Federal Reserve Committee on Open Markets lasts about an hour. In the first part, the ruling is read, followed by a series of questions and answers that can increase market volatility.

22:45 NZD New Zealand GDP for Q2

The release of this data will cause increased volatility in the NZD. Despite the recent drop in commodity and agricultural prices (especially dairy products, which is a major contributor to New Zealand’s exports) and the coronavirus pandemic hitting the global economy, it is likely that New Zealand’s Q2 GDP report will come out with negative indicators, as it will reflect the situation in the economy, mainly after the first wave of coronavirus, which affected New Zealand least of all compared to other large economies.

GDP in the 2nd quarter of 2020 is expected to decline by -1.0% (previous values of -1.6%, +0.5% and +0.7%), but increased by +0.3% y / y (previous values -0.2% and +1.8% for the 4th quarter of 2019), which is unlikely to have a favorable effect on the positions of the New Zealand currency. If the data is better than forecast, the NZD will strengthen. Data worse than forecast and previous values could negatively affect the NZD.

Thursday, Spetember 17

01:30 AUD Employment rate. Unemployment rate

Employment rate reflects the monthly change in the number of Australian citizens employed. The growth of the indicator has a positive impact on consumer spending, which stimulates economic growth. A high value is positive for the AUD, while a low value is negative. Forecast: in August, the number of employed Australian citizens increased by 40,000 (after falling in April by 594,300, in May - by 227,700 and an increase by 114,700 in July).

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 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 August was at 7.8% (against 7.5% in July, 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 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 all-time 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 declining, and a return of inflation to the middle of the target range of 2-3% is not even in 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, the Australian dollar may significantly decline in the short term. Better-than-expected data will strengthen the AUD in the short term.

**03:00 JPY Bank of Japan’s decision on interest rate. Bank of

Japan’s press conference and comments on monetary policy**

The Bank of Japan will decide on the interest rate. At the moment, the main rate in Japan is in negative territory, amounting to -0.1%. Most likely, the rate will remain the same. If it is reduced and deepens into negative territory, such a decision will cause a sharp decline in the yen in the foreign exchange market and an increase in the Japanese stock market. In any case, during this period of time, a surge in volatility is expected in trading in the yen and the Asian financial market.

In June and July, during its regular meetings, the Bank of Japan kept the deposit rate at -0.1%, and the target level of 10-year bonds at 0%, and kept the annual target level of ETF purchases at 12 trillion yen. The Bank of Japan has expanded its business aid program to 110 trillion yen from 75 trillion yen. Under this program, companies can obtain loans without collateral and at a zero interest rate. The goal of the program is to support commercial companies whose bankruptcy rates have skyrocketed in Japan over the past month due to the coronavirus pandemic. In a related statement, the Bank of Japan said that the bank’s management will continue to “increase the monetary base until inflation is stable above 2%.” “We will not hesitate to take additional easing measures if necessary,” the bank also traditionally said in a statement.

During the press conference, head of the Bank of Japan Haruhiko Kuroda will comment on the bank’s monetary policy. The Bank of Japan continues to adhere to its super-soft monetary policy. As Kuroda has stated on several occasions, “it is appropriate for Japan to patiently continue with its current loose monetary policy.” Markets usually react noticeably to Kuroda’s speeches. He will probably touch upon the topic of monetary policy during his speech, which will cause an increase in volatility not only in the yen trade, but also throughout the Asian and global financial markets.

If the bank’s executives decide that the Japanese economy is stable and the momentum of inflation towards the 2% target is not diminishing, they will refrain from changing policy.

06:00 JPY Press Conference of the Bank of Japan

During the press conference, head of the Bank of Japan Haruhiko Kuroda will comment on the bank’s monetary policy. Despite the 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 manufacturers. Markets usually react noticeably to Kuroda’s speeches. If he touches on the topic of monetary policy during his speech, volatility will increase not only in trading in the yen, but throughout the Asian and global financial markets.

**11:00 GBP Bank of England’s decision on interest rate. Bank of

England’s meeting minutes. Planned volume of asset purchases by the Bank of England. Monetary Policy Report.**

In March (11 March and 19 March), during its extraordinary meetings, the Bank of England cut its interest rate twice, bringing it to the level of 0.1%, and announced its intention to purchase UK government bonds in the amount of 200 billion British pounds in an attempt to counteract economic damage from the coronavirus pandemic. The central bank announced that it would increase its bond portfolio to £645 billion, then to £745 billion from £445 billion at the time. “The current situation is completely unprecedented,” the new Head of the Bank of England Andrew Bailey said at a press conference following the March 19 emergency meeting. Bailey said he expects a sharp economic contraction due to the coronavirus, and the Bank of England stands ready to take further stimulus measures if necessary. “No, we are not done yet,” he said. Based on these statements by Andrew Bailey, it is fair to expect further actions from the Bank of England in the direction of easing its monetary policy. It is possible that at this meeting on September 17, the Bank of England will again undertake them, increasing the volume of purchases of bonds or lowering the interest rate. Although, most economists believe that the Bank of England will refrain from changing the current monetary policy for now.

Also at this time, the minutes of the Monetary Policy Committee (MPC) of the Bank of England are published with the distribution of votes “for” and “against” raising / lowering the interest rate. The main risks for the UK after Brexit are associated with expectations of a slowdown in the country’s economic growth, as well as with a large current account deficit in the UK balance of payments.

The intrigue about the further actions of the Bank of England remains. And in trading the pound and the FTSE100 index, a lot of trading opportunities will be there during the period of publication of the bank’s decision on rates.

Also at the same time, the Bank of England’s monetary policy report will be published, containing an assessment of the economic outlook. At this time, the volatility in the pound quotes may rise sharply. Apart from GDP, one of the main reference points for the Bank of England regarding the prospects for monetary policy in the UK is the inflation rate. If the tone of the report is soft, the British stock market will gain support and the pound will decline. Conversely, the report’s tough rhetoric on curbing inflation, implying an increase in interest rates in the UK, will strengthen the pound.

Friday, September 18

12:30 CAD Retail Sales Index

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 health of the retail sector in the near term. A rise in the index is usually positive for the CAD; a decrease in the indicator will negatively affect the CAD. The previous value of the index (in June) was +23.7% after falling in March by -9.9% and growing in May by +18.7%. If the data for July turns out to be weaker than the previous value, the CAD may decline in the short term. Forecast for July: +24.5%.

**14:00 USD University of Michigan Consumer Sentiment Index

(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, 74.1 in August. 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 September with a value of 76.0. There is still a weak trend towards a gradual recovery in the growth of the indicator. Poor data may negatively affect the dollar in the short term.

Price chart of EURUSD in real time mode

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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