Economic calendar for the week 19.10.2020 - 25.10.2020

2020-10-17

2020-10-18

Economic calendar for the week 19.10.2020 – 25.10.2020Jana Kane

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

next trading week (19.10.2020 – 25.10.2020)**

Trading on key Forex news: next week we are expecting the publication of important macro statistics data from China, Australia, Great Britain, Germany, Eurozone, Canada, New Zealand, as well as the results of the US presidential debates.

The dollar strengthened last week. As a result, the DXY dollar index rose 0.6%, mainly due to the strengthening of the dollar against the euro and pound, whose share in the DXY index is about 57% and 12%, respectively.

The euro and pound remain under pressure from a sharp increase in the number of coronavirus cases in Europe and the UK, which could provoke new strict quarantine measures that restrict economic activity.

The pound is also affected by the Brexit situation after the EU leaders’ summit failed to make progress on a trade deal with the UK. At the beginning of next week, negotiations on a trade deal between the EU and the UK will continue, but only by telephone.

The outlook for the UK and European economies is deteriorating, which could push their central banks to adopt new stimulus measures. As ECB Governing Council member Olli Rehn said last week in an interview with Reuters, “the latest data are disappointing, especially in the services sector, and they increase the risk of the situation worsening.” In his opinion, the recovery of the European economy turned out to be weaker than expected, and “inflationary risks are decreasing.”

Investors’ attention next week will be on the publication of important macro data from China, Australia, Great Britain, Germany, Eurozone, Canada, New Zealand, as well as the debate of the US presidential candidates.

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, October 19

02:00 CNY China’s GDP for the 3rd quarter

National Bureau of Statistics of China will present data on GDP growth in the 3rd quarter.

In the second quarter, China’s GDP grew by +11.5% (+3.2% YoY) after contracting -6.8% (-9.8% YoY) in the 1st quarter and growing in the 3rd and 4th quarters of 2019 by +1.5% and +6.0%, respectively.

China’s GDP is expected to grow by +11.3 %% (+5.1% yoy) in the third quarter of 2020.

China is the largest buyer of raw materials and a supplier of a wide range of finished products to the world commodity market. China’s economy is the second largest in the world after America’s. Therefore, the publication of important macroeconomic indicators from China can have a strong impact on the entire financial market.

The relative decline in GDP may negatively affect the yuan quotes, as well as the quotes of commodity currencies and currencies of the Asia- Pacific region, since may indicate a slowdown in the growth rate of the Chinese economy.

The growth of the indicator will have a positive effect on the Chinese yuan, as well as on the world, primarily Asian stock indices, as well as on the quotes of commodity currencies such as the New Zealand and Australian dollars. China is the largest trade and economic partner of Australia and New Zealand and a buyer of commodities from these countries.

Therefore, positive macro statistics from China may also have a positive effect on the quotes of these commodity currencies.

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 CNY. The previous value of the index (in annual terms) was +0.5% (after an increase of +8% in the last months of 2019 and a fall of -20.5% in January 2020). Outlook: In September, retail sales in China increased by +1.7% (in annual terms), which indicates a still weak recovery after a strong fall in February-March this year. If the data turns out to be even weaker, the CNY will decline.

Tuesday, October 20

00:30 AUD Minutes of the October 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 inflationary 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 mild rhetoric regarding, above all, inflation puts pressure on the AUD.

At its October 6 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 level of yield on 3-year government bonds was also left at 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 business 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.

“The economic recovery will be uneven and unstable,” and “unemployment may remain high for a long time,” the RBA leaders said, promising that “the rate will not be increased until the Central Bank sees progress in moving towards full employment and stable inflation in the range of 2-3%”.

At the same time, the RBA admitted that “the economic drawdown was not as strong as expected.”

According to RBA Governor Philip Lowe, “there are no serious arguments in favor of tightening monetary policy in the short term,” and “some time will pass before interest rates are increased.”

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

**01:30 CNY Decision of the People’s Bank of China on the interest

rate**

Since May 2012, the People’s Bank of China has been steadily cutting interest rates to support Chinese manufacturers. The last time in 2020 the bank cut the rate in April (by 0.20% to 3.85% at the moment).

In recent months, amid international trade conflicts and a slowdown in the global economy, the world’s largest central banks have been moving towards softening their monetary policies in order to support national economies and increase the competitiveness of goods exported from these countries.

The People’s Bank of China is also in line with this process. The depreciation of the yuan has become especially relevant in the last 2 years, when the confrontation between the two most powerful economies in the world began. One of the measures to mitigate the negative consequences of increased duties on the import of Chinese goods into the United States was the depreciation of the national currency of China. This measure was intended, among other things, to maintain the same volumes of imports of Chinese products to the United States, which would cost American buyers less due to the difference in the rates of the national currencies of the United States and China.

Now, another strong negative factor has been added to this - the coronavirus.

Probably, at this meeting, the People’s Bank of China will keep the interest rate at the same level of 3.85%, although a rate cut is also possible.

However, if the People’s Bank of China makes unexpected statements or decisions, volatility may increase throughout the financial market. Investors will also be interested in the bank’s assessment of the consequences of the coronavirus for the Chinese economy and its policy in the near future in this regard.

Wednesday, October 21

00:30 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 (in August) was -4.0% after falling by -17.7% in April. If September data turns out to be weaker than the previous value, the AUD may sharply decline in the short term.

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 (August), the growth in consumer inflation (in annual terms) amounted to +0.2%.

Forecast for September: +0.3% (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 one weakens it.

In August, Core CPI (in annual terms) increased by +0.9%. 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. Forecast for September: +1.3% (annualized). The indicator value below the forecast and previous values may provoke a weakening of the pound.

12:30 CAD Consumer price indices in Canada. Retail Sales Index

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 inflation target for the Bank of Canada is in the range of 1-3%. A rise in CPI is a harbinger of a rate hike and a positive factor for the CAD. Core CPI rose in August by +0.8% (in annual terms). If the September data turns out to be worse than the previous values, it will negatively affect the CAD. Better-than-expected data and data above previous values will strengthen the Canadian dollar.

September forecast: CPI will come out with a value of +0.4% (in annual terms).

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 July) was +0.6% after falling by -9.9% in March, by -25% in April and by +18.7% in May. If the data for August turns out to be weaker than the previous value, the CAD may decline in the short term. The preliminary forecast for August was +1.1%.

Thursday, October 22

21:45 NZD CPI (Consumer Price Index) for Q3

Consumer Price Index (CPI) is a key indicator for assessing inflation and reflects the dynamics of retail prices for a group of goods and services that make up the consumer basket. A positive result strengthens the NZD, a negative one weakens it. Previous CPI values (YoY): +1.5% in Q2, +2.5% in Q1 2020, +1.9% in Q4 2019. A relative decrease in the indicator may negatively affect the NZD quotes.

Friday, October 23

01:00 USD Presidential debates in the US

Financial market participants will follow this debate. Economists believe that under Biden, stronger fiscal stimulus measures can be expected that will be highly appropriate for economic recovery in the near term, while under Trump, the prospect of a long period of extremely low interest rates is more likely to support business activity over a longer period of time, and this is extremely important for buyers of high-yield and risky stock assets betting on the further growth of the American stock market.

At the same time, many economists agree that any outcome of the presidential election will be positive for the American stock market. The growth of stock indices, at the same time, will most likely be accompanied by a fall in the dollar.

**07:30 EUR Markit Economics Manufacturing PMI in Germany

(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. October forecast (pre-release): 52.5.

Previous values: 56.4 in September, 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 for several months is still below 50. A rise in 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 considered positive and strengthens the EUR, one below 50 - as negative for the euro. October forecast (preliminary release): 54.1 vs 54.7 in September, 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 October (preliminary release): 53.0 (against 50.4 in September, 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, 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 continue to be 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: 56.1 in September, 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 October: 55.6.

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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