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Economic calendar for the week 21.09.2020 - 27.09.2020

2020-09-20

2020-09-20

Economic calendar for the week 21.09.2020 – 27.09.2020Jana Kane

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

next trading week (21.09.2020 – 27.09.2020)**

Trading on key Forex news: next week we are expecting the publication of important macro statistics from Australia, Germany, Eurozone, Great Britain, US, as well as the results of the meetings of the central banks of New Zealand, Switzerland and speeches of the heads of the Bank of England and the Fed.

The Fed did not disappoint financial market participants and kept its key rate at 0.25% confirming its intention to achieve an average inflation level of 2% with long-term inflationary expectations also on average at 2%.

According to the updated forecasts of the Fed, we should expect to hear about rate hikes no earlier than 2023. Fed officials noted improved financial conditions, as well as increased economic activity and an improvement in the labor market. Investors reacted with enthusiasm to the Fed’s more positive outlook for the economy.

At the same time, Powell’s statement that he considers the current policy sufficient, and that now, in order to continue the economic recovery, new measures of fiscal support from the government are needed, alerted buyers in the US stock market. American stock indices declined after the Fed meeting, and the dollar strengthened, gaining some breathing room after falling sharply in the previous 4 months. However, at the end of last week, the DXY dollar index, which reflects its value against a basket of 6 major currencies, still declined. The immediate target for the DXY dollar index in case of renewed decline will be 91.72, which is around the September and almost 3-year lows.

The central banks of Japan and Great Britain also did not change their monetary policies at their meetings last Thursday.

The Bank of England, in particular, acknowledged the risks of a longer period of increased unemployment and the uncertain economic outlook. The Bank of England promised to continue considering the possibility of negative interest rates, to which the pound reacted with a sharp short- term fall. However, by the end of the trading day last Thursday the GBP/USD pair returned to the opening price of the trading day. Yet the dynamics of the dollar, which is vulnerable against the backdrop of the Fed’s aggressively stimulating monetary policy, the progress of the coronavirus pandemic in the country, as well as political unrest and uncertainty ahead of the presidential elections in November, remain more important to the dynamics of the entire foreign exchange market.

Next week, investors will pay attention to the publication of important macro statistics from Australia, Germany, the Eurozone, Great Britain, the United States, as well as the results of the meetings of the central banks of New Zealand, Switzerland and the statements of the heads of the Bank of England and the Fed.

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 21

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. In addition to 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. 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.

14:00 USD Speech by the Chairman of the Fed Jerome Powell

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

If he makes unexpected statements, the volatility in trading in the financial markets may increase.

“I think the ‘new norm’ now is lower interest rates, lower inflation, and possibly weaker economic growth,” Powell said last year.

Based on the results of the September 2020 meeting, when the Fed kept its key rate at 0.25% and confirmed its intention to achieve an average inflation level of 2% with long-term inflation expectations also at an average of 2%, Powell said that the overall activity indicators remain below pre-coronavirus pandemic levels, and the future economic outlook remains “unprecedentedly uncertain” and additional fiscal support from the government may be required. According to Powell, the current policy of the Fed is sufficient and appropriate for the situation, but the central bank is ready to adjust it in the event of risks that may become an obstacle to achieving its goals.

Nevertheless, financial market participants will carefully study his speech in order to catch signals regarding the further actions of the Fed.

Tuesday, September 22

**07:30 GBP Speech by the Head of the Bank of England Andrew

Bailey**

Participants in the financial markets are expecting Andrew Bailey, who replaced Mark Carney as head of the Bank of England on March 16, 2020, to clarify the situation regarding the future policy of the UK central bank. Volatility during his speech usually rises sharply in the quotes of the pound and 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.

Wednesday, September 23

01:30 AUD Retail Sales Index

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. Index growth is usually positive for the AUD; a decrease in the indicator will negatively affect the AUD. The previous value of the index (for July) was +3.2% after falling by -17.7% in April. If the data for August turns out to be weaker than the previous value, the AUD may sharply decline in the short term.

**02:00 NZD Decision of the RB of New Zealand on the interest rate.

Accompanying statement**

After the bank’s management decided to cut the rate by 0.75% at an unscheduled meeting on March 15, the current interest rate of the Reserve Bank of New Zealand is at 0.25%. The bank’s management explained this 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 of 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 cut or increase the rate yet, but may speak in favor of lowering it in the coming months in case the economic situation in the country and in the world worsens.

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 contributed to this decision.

At this time, the volatility in the quotations of 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 “can 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 needed.”

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

**07:30 EUR Markit Economics Manufacturing PMI (preliminary

release). Markit Economics Composite PMI (preliminary release)**

Germany’s Manufacturing PMI is an important indicator of the business environment and the overall health of the German economy. This sector of the economy forms a significant part of Germany’s GDP. A result above 50 is seen as positive and strengthens the EUR, one below 50 as negative for the euro. September forecast (preliminary release): 52.5.

Previous values: 52.2 in August, 51.0 in July, 45.2 in June, 36.6 in May, 34.5 in April, 45.4 in March, 48 in February, 45.3 in January, which indicates a continuing recovery in business activity in this sector of the German economy, although the average value of the indicator for several months is still below 50. The growth of the indicator above the previous value and the value of 50 may support the euro (in the short term). The data worse than the forecast will have a negative impact on the euro.

Composite PMI of the German economy is an important indicator of the business environment and the overall health of the German economy. A result above 50 is seen as positive and strengthens the EUR, one below 50 as negative for the euro. Forecast for September (preliminary release): 54.2 against 54.4 in August, 55.3 in July, 47.0 in June, 32.3 in May, 17.4 in April, 35 in March, 50.7 in February, 51.2 in January. The publication of this indicator with the specified expected value is likely to support the euro in the short term. The data worse than the forecast and below the value of 50.0, as a rule, have a negative impact on the euro.

**08:00 EUR Markit Economics Composite Manufacturing PMI

(preliminary release)**

Eurozone’s Manufacturing PMI is an important indicator of the health of the entire European economy. A result above 50 is considered positive and strengthens the EUR, one below 50 - as negative for the euro. Forecast for September (preliminary release): 51.7 (against 51.9 in August, 54.9 in July, 48.5 in June, 31.9 in May, 13.6 in April, 29.7 in March, 51 , 6 in February, 51.3 in January), which is likely to have a positive effect on the euro. If the data turns out to be worse than the forecast and the value of 50, then the euro may drop sharply in the short term.

08:30 GBP Markit Economics Services PMI (preliminary release)

UK’s Services PMI is an important indicator of the health of the UK economy. The services sector employs most of the UK’s working-age population and accounts for approximately 78% of GDP. Financial services are still the most important part of the services industry. If the data turns out to be worse than the forecast and the previous value, the pound is likely to drop sharply in the short term. The data better than the forecast and the previous value will have a positive impact on the pound. At the same time, a result above 50 is considered positive and strengthens the GBP, one below 50 - as negative for the GBP.

Previous values ​​of the indicator: 58.8 in August, 56.5 in July, 47.1 in June, 29.0 in May, 13.4 in April, 34.5 in March, 53.2 in February, 53.9 in January. Preliminary forecast for September: 56.0.

14:00 USD The Fed Chairman Jerome Powell’s speech in Congress

The Fed Chairman Jerome Powell will speak to Congress on economics and monetary policy. His comments could affect both short-term and long-term USD trading if he again touches on the Fed monetary policy. A more hawkish stance on the Fed’s monetary policy is seen as positive and strengthening the US dollar, while a more cautious position is seen as negative for the USD.

If he makes unexpected statements, the volatility in trading in the financial markets may increase. Any hint by Powell about the need for an even softer central bank policy will cause the dollar to fall and American stock markets to rise.

Financial market participants will carefully study his speech in order to catch signals regarding the further actions of the Fed.

23:50 JPY Bank of Japan Monetary Policy Committee Meeting

At this meeting, the Monetary Policy Committee of the Bank of Japan will once again summarize the results of the last week’s regular meeting of the Bank, analyze the economic situation in Japan and give indications on possible future prospects for the Bank of Japan’s financial policy.

If the tone of the minutes of the meeting indicates the firmness of intentions of the Bank of Japan regarding monetary policy in the country, it will negatively affect the Japanese stock market and strengthen the yen. Conversely, soft rhetoric about the bank’s monetary policy prospects will help weaken the yen and boost the Japanese stock market.

Thursday, September 24

**07:30 CHF SNB’s decision on interest rate. SNB’s statement on

monetary policy**

The current deposit rate is in negative territory and amounts to -0.75%. At the previous meeting in June, rates remained at the same level. The central bank of Switzerland has consistently advocated a soft monetary policy in the country, and traditionally considers the rate of the national currency “overvalued”. Recently, the franc has largely lost its status as a safe-haven currency, and the threat of intervention is certainly holding back the franc from excessive growth. According to the SNB executives, the franc is “still very overvalued” and intervention in the foreign exchange market remains “an important means of maintaining the low attractiveness of investments in francs and easing upward pressure on the currency”.

Traders will also scrutinize the SNB’s statement in order to pick up signals regarding further monetary policy plans. The tough rhetoric of the statement will strengthen the franc. The soft tone and intention to continue the extra soft monetary policy of the SNB will negatively affect the franc. High volatility is expected in the foreign exchange market and, above all, in the franc trading, if the management of the SNB makes unexpected statements.

14:00 USD The Fed Chairman Jerome Powell’s speech in Congress

The Fed Chairman Jerome Powell will speak to Congress on economics and monetary policy. His comments could affect both short-term and long-term USD trading if he again touches on the Fed monetary policy. A more hawkish stance on the Fed’s monetary policy is seen as positive and strengthening the US dollar, while a more cautious position is seen as negative for the USD.

If he makes unexpected statements, the volatility in trading in the financial markets may increase. Any hint by Powell about the need for an even softer central bank policy will cause the dollar to fall and American stock markets to rise.

Financial market participants will carefully study his speech in order to catch signals regarding the further actions of the Fed.

Friday, September 25

**12:30 USD Durable goods orders. Capital goods orders (ex defense

and aviation)**

This indicator reflects the value of orders received by manufacturers of durable goods and capital goods (capital goods are durable commodities used to produce durable goods and services), implying large investments. Commodities produced in the defense and aviation sectors of the US economy are not included in this indicator. A strong result strengthens the USD. Previous values ​​of the indicator “orders for durable goods”: +11.4% in July, +7.7% in June, +15.0% in May, -18.3% in April, -16.7% in March , +2.0% in February, -0.2% in January.

Previous values ​​of the indicator “orders for capital goods ex defense and aviation”: +1.9% in July, +4.3% in June, +1.5% in May, -6.6% in April, -1.3% in March, -0.6% in February, +0.9% in January.

In theory, the relative growth of the indicator has a positive effect on the dollar; the market reaction to its negative value may be negative for the dollar in the short term. Data worse than the previous value will also negatively affect the dollar quotes. Forecast for August: +1.5% (orders for durable goods), +1.9% (orders for capital goods excluding defense and aviation).

Despite the growth in indicators, this is probably still not enough to cover their strong drop in March and April. Nevertheless, better-than- expected data will have a short-term positive impact on the dollar.

Price chart of NZDUSD 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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