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Economic calendar for the week 30.11.2020 - 06.12.2020

2020-11-29

2020-11-29

Economic calendar for the week 30.11.2020 – 06.12.2020Jana Kane

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

next trading week (30.11.2020 – 06.12.2020)**

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

American stock indices rose last week, returning to the zone of absolute highs after a correction. At the same time, the US dollar declined last week, confirming the inverse correlation with American stock indices that has been established in recent months. This is understandable: the Fed is pouring almost unlimited amounts of liquidity into the financial system, increasing the volume of purchases of stock market assets along the way.

Last week, the DXY dollar index dropped another 0.47%, coming close to the level of lows of more than 2 years ago, near 91.80.

Meanwhile, the growth of stock indices is also taking place against the backdrop of optimism by market participants, which is supported by hopes for the imminent appearance of an effective vaccine against coronavirus and the commitment of the world’s largest central banks to extra-soft monetary policy.

Despite the alarming rate of increase in the number of coronavirus cases in the world, investors still hope for a rapid V-shaped recovery of the global economy and continued growth in stock markets.

Next week, investors will pay attention to the publication of important macro statistics from China, Germany, Eurozone, Switzerland, US, Canada, Australia and on the results of the meeting of the RB of Australia. But their focus will probably be on the publication on Friday of monthly data from the US labor market.

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, November 30

**01:00 CNY China Federation of Logistics and Purchasing (CFLP)

Manufacturing PMI**

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, below 50 as negative for the yuan. Forecast: 51.5 in October (against 51.4 in September, 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. The data above 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 will probably decrease.

**01:00 CNY China Federation of Logistics and Purchasing (CFLP)

Services PMI**

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 56.2 in September, 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.

**13:00 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 October it decreased by -0.5%. Preliminary forecast for November: -0.5%. 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 suggests that inflationary pressures are still low in Germany. The data worse than the forecast and the previous value will negatively affect the euro.

Tuesday, December 1

**03:30 AUD RBA’s decision on interest rate. RBA’s accompanying

statement**

In March, the RBA made 2 rate cuts bringing it to the 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 of lending to the banking system in the amount of at least A$ 90 billion and intends to buy bonds for A$ 5 billion.

In early November, the RB of Australia lowered its key rate again, bringing it and the target level of 3-year bonds to 0.10% from 0.25% and announced a quantitative easing program in the amount of A$ 100 billion to support the country’s emerging economic recovery.

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 7.0-7.5%.

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 bank governor Philip Lowe. In his opinion, “further stimulation is needed.” He announced this during a press conference on March 19, when the RBA cut the interest rate during its unscheduled meeting.

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 RBA’s target range of 2-3% for nearly four years.

Unemployment in the country has remained above the 5% level for many years, unwilling to decline. Now the coronavirus pandemic has been added to the above negative factors, which has damaged the tourism and transport sectors.

It is expected that at this meeting the Central Bank of Australia will leave the rate at the current level of 0.1%, although unexpected decisions are possible.

In an 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 further fall in the Australian dollar will increase.

06:45 CHF Switzerland GDP for Q3

GDP is considered to be an indicator of the general state of a country’s economy and estimates the rate of its growth or decline. The Gross Domestic Product Statement expresses in monetary terms the aggregate value of all final goods and services produced by Switzerland over a given period of time. An upward trend in the GDP indicator is considered a positive factor for the national currency (franc), while a low result is considered negative (or bearish).

In the previous 2nd quarter of 2020, GDP declined by -8.2% (-9.3% yoy) after declining -2.6% (-1.3% yoy) in the 1st quarter of 2020. However, even such a strong decline cannot be compared with the fall in GDP in Germany, the Eurozone and the United States. In the 3rd quarter of 2020, Swiss GDP is projected to grow +5.9% (but declined by -10.8% on an annualized basis). The data indicate a strong slowdown in the Swiss economy, which is a negative factor for the franc.

If the data turns out to be even weaker, the franc may decline significantly in the short term. However, one should not expect a strong fall in the franc, as it is in active demand as a defensive asset. Better-than-forecast data may strengthen the franc in the short term.

**10:00 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 October it fell by -0.3%, which indicates low inflationary pressure and even a slowdown in inflation. Forecast for November: -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 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 October - by +0.2%. If the data for November turn out to be worse than the previous value or forecast, it 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 November: +0.2%.

15:00 USD Speech by the Fed Chairman Jerome Powell 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 hints by Powell toward 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 from him regarding the further actions of the Fed.

15:00 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: 57.5 in November (against 59.3 in October, 55.4 in September, 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 values, 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, the dollar may drop sharply.

Wednesday, December 2

00:00 AUD Speech by the head of the RBA Philip Lowe

In his speech, Philip Lowe will assess the current situation in the Australian economy and point out further plans for the monetary policy of the department. Any signals from him regarding a change in the plans of the RBA’s monetary policy will cause a sharp increase in volatility in the AUD trading and on the Australian stock market. If he does not touch upon the topic of monetary policy, the market reaction to his speech will be weak.

Market participants would also like to hear Lowe’s views on central bank policy in the face of the ongoing coronavirus pandemic and the first recession in Australia in 30 years.

In early November, the RBA’s key interest rate was cut to a record level of 0.1%, and the target level of yield on 3-year government bonds was also lowered to 0.1%. The decision to lower the rate and set the current target for government bond yields was made to support businesses and Australian citizens amid the rapid spread of the coronavirus pandemic.

According to Lowe, “there are no serious arguments in favor of tightening monetary policy in the short term,” and “it will be some time before interest rates rise.”

00:30 AUD Australia GDP (Q3)

The Australian Bureau of Statistics report on the country’s GDP, which is the main indicator of the state of the Australian economy, for the 3rd quarter. Strong report will strengthen the AUD. Weak GDP report will negatively affect the AUD. Forecast: + 2.5% (against -7.0% in Q2, -0.3% in Q1 2020, +0.5% in Q4, +0.4% in Q3 2019). The growth of the indicator is a positive factor for the AUD. If the data turns out to be worse than the forecast, the AUD will decline.

07:00 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: +1.0% (+6.6% in annual terms) in October against -2.2% (+6.5% in annual terms in September).

The data suggests some improvement in sales indicators, but this is unlikely to have a strong positive effect on the euro, or, most likely, only in the short term. Better-than-expected data will also have a positive effect on the euro in the short term.

13:15 USD ADP   National   Employment Reportе

Typically, the ADP’s private sector employment report has a strong impact on the market and dollar quotes. 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 November was 420,000 (against +365,000 in October, +749,000 in September). 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 out on Friday, it may fall short of forecasts, pointing to a decline in non-farm jobs instead of an expected 0.520 million new job growth.

If the forecast (+0.520 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 lost the previously increased unemployment benefits.

Thursday, December 3

00:30 AUD Balance of trade

This indicator measures the ratio of 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. Previous value (October) AU$ 4.840 billion. A decrease in the trade surplus may negatively affect the Australian dollar. Vice versa, the growing trade surplus is a positive factor for the AUD. Forecast for October: A$ 5.800 billion.

10:00 EUR Retail sales in the Eurozone

Retail sales is a major consumer spending indicator that shows the change in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. October forecast: +0.5% and +2.9% (YoY) against -2.0% (+2.2% in annual terms) in September. The data suggests that retail sales have yet to hit pre-coronavirus levels after a sharp drop in March-April when Europe was under strict quarantine measures.

15:00 USD ISM Services PMI

This indicator assesses the state of the services sector in the US economy. These services sectors (as opposed to the manufacturing sector) have practically no impact on the country’s GDP.

In September this indicator came out with a value of 57.8, and in October 56.6. 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. Forecast for November: 56.0, which is likely to positively affect the USD in general.

Friday, December 4

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 October) was +1.6% after falling by -17.7% in April. If the data for November turns out to be weaker than the previous value, the AUD may sharply decline in the short term.

**13:30 USD Average hourly wages. Non-Farm Payrolls. Unemployment

rate**

These are important indicators of the state of the labor market in the US for November. Forecast: +0.1% (against +0.1% in October, -1.2% in June, -1.0% in May, +4.7% in April) / +0.520 million (against +0.638 million in October, +1.763 million in July and -20.687 million in April) / 6.8% (against 6.9% in October, 13.3% in May and 14.7% in April), respectively.

In general, the figures are not yet encouraging, but they are quite understandable due to mass layoffs in American companies and the closure of offices and shops due to the coronavirus pandemic. At the same time, the data show a gradual improvement in the American 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, because 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 frame.

13:30 CAD Unemployment rate in Canada

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

Unemployment has risen in Canada in recent months amid massive business closures and layoffs due to coronavirus pandemic. 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 at 8.8% in November (after 8.9%, 9.0%, 10.2%, 10.9%, 12.3%, 13.7%, 13.0% in previous months).

Price chart of AUDUSD 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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