Economic calendar for the week 25.01.2021 - 31.01.2021

2021-01-24

Economic calendar for the week 25.01.2021 – 31.01.2021Jana Kane

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

next trading week (25.01.2021 – 31.01.2021)**

Trading on key Forex news: next week we are expecting the publication of important macro statistics from the UK, Australia, US, Germany, as well as the results of the Fed meeting on monetary policy issues.

The dollar dropped last week and the major American stock indexes finished it with a decent gain despite the decline at the end of the week. The NASDAQ100 index rose by 4.5% last week, and S&P 500 - by 2%.

Investors are generally optimistic and stocks are looking for further gains, given the position of the world’s largest central banks, including the Fed and the US government, to further support the economy amid the ongoing coronavirus pandemic. Expectations of a successful vaccination and an early victory over the virus also help maintain investor optimism and put pressure on a safe dollar.

Market participants also suggest that in the near future, the White House may announce new additional measures after the adoption of the $1.9 trillion bailout program.

Next week, financial market participants will pay attention to the publication of important macro statistics from the UK, Australia, US, Germany, however, their focus will be on the Fed meeting and the publication of its decision on rates.

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, January 25

23:50 JPY Bank of Japan Monetary Policy Committee Meeting

As a result of the meeting last week, the Bank of Japan decided to keep the key interest rate at -0.1%. The target level of yield on 10-year government bonds was also left unchanged at zero. The Central Bank also decided to extend the financing program for one year. “It is still too early to discuss winding down the massive monetary stimulus program,” said the Bank of Japan Governor Haruhiko Kuroda during a press conference that followed, adding traditionally that the bank’s management “would not hesitate to soften policy again if necessary.” At this meeting, the Monetary Policy Committee of the Bank of Japan will once again summarize the results of the last week’s meeting of the Bank, analyze the economic situation in Japan and give indications on possible further prospects for the Bank of Japan’s financial policy. If the tone of the minutes of the meeting indicates the firmness of the 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, mild rhetoric about the bank’s monetary policy prospects will help weaken the yen and boost the Japanese stock market.

Tuesday, January 26

**07:00 GBP Report on the average wages of British citizens for the

last 3 months. Unemployment rate**

On a monthly basis, the UK Office for National Statistics (ONS) publishes a report on the average wages covering the last 3 months, with 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. Earnings growth is positive for the GBP, while a low value is negative. Forecast: January report suggests that average wages with bonuses increased over the last calculated 3 months (September-November) by +2.8% (against +2.7%, +1.3%, +0.1% , -1.0%, -1.2%, -0.3%, +1.0%, +2.4%, +2.8%, +3.1%, +2.9%, +3.2%, +3.2% in previous periods); without bonuses - increased by +2.6% (against +2.8%, +1.9%, +0.9%, +0.2%, -0.2%, +0.7%, +1.7%, +2.7%, +2.9%, +3.1%, +3.2%, +3.4%, +3.5% in previous periods). The expected data is still below average. 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. The data worse than the forecast 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 September to November, unemployment was at 5.1% (against 4.9%, 4.8%, 4.5%, 4.3%, 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 declined steadily (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, 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, January 27

**00:30 AUD RBA core inflation index using the trimmed mean method

(for the 4th quarter). Consumer Price Index (Q4)**

This indicator is published by the RBA and the Australian Bureau of Statistics. It reflects the dynamics of retail prices of goods and services included in the consumer basket. The trimmed mean method takes into account the weighted average kernel, the central 70% of the index components. Previous index values: +0.4% (+0.7% in annual terms), -0.1% (+1.2% in annual terms) in the 2nd quarter, +0.5% (+1.8% YoY) in Q1 2020. According to the forecast, the indicator for the 4th quarter of 2020 is expected to be +0.4% (+1.2% in annual terms). If the value of the indicator coincides with the forecast or turns out to be worse than it, it is likely to negatively affect the AUD. The data indicate low inflationary pressures in the country. The growth of the indicator should have a positive effect on the AUD in the short term.

The Consumer Price Inflation Index (CPI) published by the RBA and the Australian Bureau of Statistics measures the dynamics of retail prices for goods and services in Australia. CPI is the most significant indicator of inflation and changes in consumer preferences. A high reading is positive for the AUD, while a low reading is negative. Previous values of the indicator: +1.6% (0.7% in annual terms), -1.9% (-0.3% in annual terms) in the 2nd quarter, +0.3% (+2.2 % in annual terms) in the 1st quarter of 2020. According to the forecast, it is expected that the value of the indicator for the 4th quarter of 2020 will be +0.7% (+0.7% in annual terms). The expected positive reading is likely to also have a positive effect on the AUD. If the value of the indicator turns out to be worse than the forecast, it is likely to put pressure on the AUD.

**13:30 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) involving 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”: +1.0% in November, +1.9% in September, +0.5% in August, +11.7% 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 excluding defense and aviation”: +0.5% in November, +1.0% in September, +1.9% in August, +2.5% 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 December: +1.0% (orders for durable goods), +0.4% (orders for capital goods excluding defense and aviation).

It looks like the growth of indicators has stalled again after their recovery in previous months from a strong drop in March and April, which may negatively affect the dollar quotes. The slightly better-than- expected data is also unlikely to have a long-term positive impact on the dollar.

**19:00 USD The Fed’s decision on interest rate. The Fed’s comments

on monetary policy. FOMC Press Conference**

Following two meetings in March, the Fed sharply cut its interest rate (to 0.25% from 1.75% in February), and also 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 US 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 withdrew funds from defensive assets, buying more risky and profitable assets of the stock market, which continued to grow despite the threat of a second wave of the coronavirus epidemic and the associated economic slowdown. The role of the dollar as a defensive asset was also declining.

The rate is widely expected to remain at 0.25% at this meeting. Nevertheless, during the period of publication of the decision on the rate, volatility may sharply grow throughout the financial market, primarily in the American stock market and in the dollar quotes, especially if the decision on the rate differs from the forecast or the Fed leaders make unexpected statements.

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 strengthening the US dollar, while a more cautious position is seen as negative for the USD. Investors are eager to hear Powell’s views on the Fed’s future plans for this year.

The press conference of the US Federal Open Market Committee lasts about an hour. The first part includes the reading of the the ruling, followed by a series of questions and answers that can increase market volatility. Any hints by Powell about the possibility of a change in the current monetary policy will cause an increase in volatility in the dollar quotes and in the American stock market.

Thursday, January 28

**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 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 December it decreased by -0.7%. Preliminary forecast for January: +0.5%. 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 is worse than the forecast and the previous value will negatively affect the euro.

**13:30 USD Annual GDP of the US for the 4th quarter (preliminary

estimate)**

GDP data is one of the key indicators (along with data on the labor market and inflation) 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 3rd quarter, GDP grew by +33.4% after falling by -31.4% in the 2nd quarter and by -5.0% in the 1st quarter of 2020.

If the data point to another decline in GDP in the 4th quarter, the dollar will be under pressure. The positive data on GDP will support the dollar and the American stock indices, although they are already mostly priced in. Preliminary forecast for Q4 2020: +3.9%.

Friday, January 29

**09:00 EUR Germany’s GDP for the 4th quarter (preliminary

release)**

GDP is considered the most important indicator of the overall health of the economy. The growing trend in the GDP indicator is considered positive for the national currency. The German economy is the locomotive of the entire European economy. A high value of GDP is considered a positive factor for the EUR, while a low one is considered negative.

The growth of the European and German economies slowed sharply in 2019, and in 2020 the European economy has already entered a recession according to many indicators. Although the Brexit problem is finally resolved, the risk of negative impact on the economy of the consequences of the coronavirus pandemic has been added to the internal political risks in Europe.

If the GDP data turn out to be weaker than the forecast, it will put downward pressure on the euro. Better-than-expected data may strengthen the euro.

Forecast: German GDP grew by +8.5% in the 4th quarter of 2020.

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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