Economic calendar for the week 28.09.2020 - 04.10.2020

2020-09-27

Economic calendar for the week 28.09.2020 – 04.10.2020Jana Kane

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

next trading week (28.09.2020 – 04.10.2020)**

Trading on key Forex news: next week we expect the publication of important macro statistics from Germany, China, Great Britain, Eurozone, the US, Japan, and Australia.

The dollar strengthened last week, while the DXY dollar index, which reflects its value against a basket of 6 major currencies, rose 2.7%.

The Fed Chairman Jerome Powell, who spoke three times in Congress last week, called on Congress to provide additional financial assistance to citizens and businesses.

Powell said the recovery would be faster “if support comes from both Congress and the Fed,” urging the US government to increase government spending to accelerate the economic recovery. He noted that although “many economic indicators point to a visible improvement,” “employment and overall economic activity are still well below pre-crisis levels,” and future prospects remain highly uncertain.

“Without fiscal support, improving the labor market will be much more difficult and slower,” said Charles Evans, President of the Federal Reserve Bank of Chicago, last Wednesday.

Concerns about the economic recovery, the growing number of people infected with coronavirus in the United States (last Friday the number of cases was at 44,000), Europe and the world, which could provoke a new wave of quarantine restrictions, as well as the inability of American lawmakers to agree on another package of assistance to citizens and businesses leads to a fall in stock indices and an increase in demand for defensive assets.

While markets watch a growing number of new cases of Covid-19, and Congress finds it difficult to agree on a new stimulus package, the yield on 10-year US government bonds fell to 0.66% from 0.69% a week ago, and the dollar added 2.7% in cost. And so far, this trend towards a further decline in stock indices and the strengthening of the dollar continues.

The focus of investors next week will be on the publication of data from the US labor market. Investors will also pay attention to the publication of several important macro data from Germany, China, Great Britain, Eurozone, the US, Japan, and Australia.

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 28

No important macro statistics planned to be released.

Tuesday, September 29

**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 upon 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%, in July - by 0%, in August it decreased by -0.1%. Preliminary forecast for September: -0.2%. The euro is likely to react negatively to the publication of this indicator. If the data turn out to be better than the forecast, 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 worse than the forecast and the previous value will negatively affect the euro.

Wednesday, September 30

**01:00 CNY China’s Manufacturing PMI from the China Federation of

Logistics and 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: 51.2 in September (against 51.0 in August, 51.1 in July and 50.9 in June).

The relative growth of the index and the value of 50 should have a positive effect on the CNY. Data above the value of 50 indicates an increase in activity, which has a positive effect on the quotes of the national currency.

In the opposite case, and if the indicator is below 50, the yuan will be under pressure and probably will decrease.

**01:00 CNY China’s Services PMI from the China Federation of

Logistics and Purchasing (CFLP)**

This indicator assesses the state of the services sector in the Chinese economy. A result above 50 is considered positive and strengthens the yuan. Forecast: 52.1 in September (against 55.2 in August, 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.

06:00 GBP UK Q2 GDP (Final Release)

GDP is considered 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 -20.4% in Q2 2020 (after 0 in Q4 2019 and a -2.2% drop in Q1 2020). The fall in GDP 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 nevertheless coincide with the preliminary negative estimate of -20.4%, it will put downward pressure on the pound. Strong GDP report will strengthen the pound. But it can hardly be expected in the current situation.

06:00 EUR Retail sales in Germany

Retail sales are the main consumer spending indicator in Germany showing changes in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. Forecast: +0.7% (+3.4% in annual terms) in August against -0.9% (+4.2% in annual terms) in July, -1.6% (+5.9% in annualized) in June, +13.9% and +3.8% (annualized) in May.

The data suggests a slight improvement in sales in August, but this is unlikely to have a strong positive effect on the euro, and if it does, it will only be in the short term.

**09:00 EUR Consumer Price Index. Core Consumer Price Index

(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 August - decreased by -0.2%, which indicates low inflationary pressure and even a slowdown in inflation. Forecast for September: +0.2% (annualized). If the data turns out to be worse than forecast, 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 consumer inflation by the ECB is slightly 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 August - by +0.4%. If the data for September turn out to be worse than the previous value or forecast, this may negatively affect the euro. If the data turns out to be better than the forecast or the previous value, the euro is likely to respond 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. Forecast for September: +0.7%.

12:15 USD ADP National Employment Report ****

Typically, the ADP private sector employment report has a strong impact on the market and the dollar. An increase in the value of this indicator has a positive effect on the dollar. It is expected that the growth in the number of workers in the private sector in the United States in September was 650,000 (against +428,000 in August). The growth of the indicator should have a positive effect on the dollar quotes.

Therefore, the market reaction may be positive, and the dollar will strengthen if the data is confirmed or turns out to be better than the forecast.

Millions of Americans have previously been laid off due to the coronavirus pandemic and related quarantine measures. The bulk of the layoffs were concentrated in tourism and retail. Other important sectors of the economy were also affected. ADP previously reported that the most significant drop in employment was recently noted in the construction and financial services sectors.

While the ADP report does not correlate directly with official US Labor Department data due Friday, it may fall short of forecasts, pointing to a decline in nonfarm payrolls instead of an expected 0.875 million new job growth.

If the forecast (+0.875 million new jobs) from the US Department of Labor does not come true, it will indicate a reversal of the current trend in the rate of hiring, while millions of Americans have lost the previously increased unemployment benefits.

12:30 USD US Annual GDP for Q2 (Final Release)

GDP data is one of the key indicators (along with labor market and inflation data) for the Fed in terms of its monetary policy. Strong result strengthens US dollar; weak GDP report negatively affects the US dollar. In the previous 1st quarter, GDP declined by -5.0% after growing by 2.1% in the 3rd and 4th quarters of 2019. The preliminary forecast for the 2nd quarter of 2020 was -32.9%. The data already takes into account the impact of the coronavirus on the American economy. The final estimate assumes a fall in GDP in the 2nd quarter by -31.7%. Since the strong drop in GDP has already been priced in, the publication of data with a slight deviation from the forecast and the first estimate will not cause strong volatility in dollar quotes. The data weaker than the forecast and the previous value will have a negative impact on the dollar.

23:50 JPY Tankan Large Manufacturing Index

This index reflects general business conditions for large Japanese manufacturing companies and is an indicator of the current state of Japan’s export-oriented economy, which is highly dependent on the industrial sector.

An indicator value above 0 (0 is the middle line) is a positive factor for the JPY, while an indicator value below 0 is negative.

According to the forecast, the index value is expected to be -23 (for the 3rd quarter) after falling to -8 in the 1st quarter and to -34 in the 2nd quarter of 2020. This is still very low, which is unlikely to support the yen’s position.

Thursday, October 1

14:00 USD ISM Manufacturing PMI

The Institute of 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: 56.0 in September (against 56.0 in August, 54.2 in July, 43.1 in May, 41.5 in April, 49.1 in March, 50.1 in February). The index value is above 50 and not below the previous value, which can 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 drops below the forecast and the value of 50, the dollar may drop sharply.

Friday, October 2

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, then the AUD may sharply decline in the short term. The preliminary forecast was -4.2%.

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

rate**

These are most important indicators of the state of the labor market in the United States in September. Forecast: +0.4% (against +0.4% in August, +0.2% in July, -1.2% in June, -1.0% in May, +4.7% in April) / +0.875 million (against +1.371 million in August, +1.763 million in July, +4.8 million in June, +2.509 million in May and -20.687 million in April) / 8.3% (against 8.4% in August , 10.2% in July, 11.1% in June, 13.3% in May and 14.7% in April), respectively.

In general, the indicators can not yet be described as positive, but they are quite 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 indicate 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 may be revised. 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 entire financial market. The most cautious investors might choose to stay out of the market during this time.

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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