Economic calendar for the week 01.02.2021 - 07.02.2021

2021-01-31

Economic calendar for the week 01.02.2021 – 07.02.2021Jana Kane

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

next trading week (01.02.2021 – 07.02.2021)**

Trading on key Forex news: next week we are expecting the publication of important macro statistics from the US, Germany, Eurozone, New Zealand, Australia, Canada and the results of the meetings of the central banks of Australia, Great Britain, as well as the publication on Friday of monthly data from the American labor market , which has a decisive importance (along with inflationary indicators and GDP data) for the Fed when making decisions on monetary policy.

The world stock markets declined last week. Last Wednesday, US stock indices suffered massive one-day losses comparable to the fall in October amid heightened concerns about problems with the distribution of coronavirus vaccines. The S&P 500 index fell 3% on Wednesday, reaching a local intraday low near 3715.0.

Negative dynamics and investor fears also had a negative impact on commodity markets, in particular on oil prices, which were unable to develop an upward trend, despite a significant drop in commercial oil reserves in the United States last week.

Investors remain worried about the rise in the number of coronavirus infections in Europe and Asia, new quarantine restrictions, as well as protracted negotiations in the US Congress over a $1.9 trillion economic stimulus program.

European plans to contain the coronavirus are under threat from supply disruptions and vaccine shortages. Market participants are concerned that European countries may not be able to vaccinate the most vulnerable populations and fully resume economic activity in the near future.

The dollar, on the contrary, strengthened last week. Despite the fact that last Wednesday the Fed leaders confirmed their intention to keep the interest rate in the range of 0.0% -0.25% and the program of asset repurchase in the amount of $120 billion monthly, market participants continue to discuss the likelihood of curtailing of the stimulus program by the Fed, which also supports the dollar.

Investors are still optimistic, and stocks are aimed at further growth, given the position of the world’s largest central banks, including the Fed, and the US government, aimed at further supporting the economy in the context of the ongoing coronavirus pandemic.

Next week, financial market participants will pay attention to the publication of important macro statistics from the US, Germany, Eurozone, New Zealand, Australia, and Canada. However, their focus will be on the meetings of the central banks of Australia, Great Britain, and their decisions on rates, as well as the publication on Friday of the monthly data from the American labor market, which are crucial (along with inflation and GDP data) for the Fed in adopting decisions on monetary policy.

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, February 1

07:00 EUR Retail sales in Germany

Retail sales is 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: -2.3% in December against +1.9% (+5.6% in annual terms) in November, +2.6% (+ 8.6% in annual terms) in October, -1.5 % (+7.6% in annual terms) in September.

The data indicate a new decline in the indicator due to new lockdowns in the context of the coronavirus pandemic. The data release is unlikely to have a positive impact on the euro. Better-than-expected data is likely to have a positive effect on the euro, but only in the short term.

15:00 USD Manufacturing PMI from ISM

The Institute for 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: 59.5 in January (against 60.7 in December, 57.5 in November, 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 the level of 50 and above the previous values, which may support the dollar in the short term. The data above 50 indicates an acceleration of activity, which has a positive effect on the quotes of the national currency. If the indicator falls below the forecast, and especially below the value of 50, the dollar may fall sharply.

Tuesday, February 2

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

statement**

In March 2020, 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 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 Reserve Bank 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.

Negative forecasts from economists suggest that the Australian economy contracted 6% in 2020, the sharpest annual GDP contraction since the Great Depression of the 1920s. The unemployment rate appears to have risen 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 the 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 four years.

Unemployment in the country has remained above the 5% level for many years, unwilling to decline. Now the Australian economy is experiencing difficulties due to the coronavirus pandemic, which has hit the tourism and transport sectors hard.

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 the 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.

**10:00 EUR Eurozone GDP for the 4th quarter (preliminary

estimate)**

GDP is considered an indicator of the overall health of the economy. A growing trend in GDP is considered positive for the EUR; a low result weakens the EUR.

Recently, macro data from the Eurozone have been indicating a gradual recovery in the growth rate of the European economy after a sharp drop in early 2020. However, the decision made by the EU leaders in July to provide additional support to the economy (a package of spending on the economic recovery of the bloc of 1.8 trillion euros was approved) will help stabilize the economy of the Eurozone, which is on the cusp of the deepest economic downturn since World War II as a result of quarantine restrictions, restraint in spending by companies and consumers, as well as a the collapse of exports.

The euro reacted positively to this decision.

However, economists forecast a -1.8% drop in Eurozone GDP in Q4 2020 (-6.0% YoY) after a 12.5% rise (-4.3% in annual terms) in the 3rd quarter, falling by -11.8% (-14.7% in annual terms) in the second quarter and falling by -3.6% (-3.1% in annual terms) in the 1st quarter of 2020.

If the data turn out to be weaker than the preliminary estimate (-1.8% and a decline of -6.0% in annual terms), the euro may decline. Data better than the first estimate may strengthen the euro in the short term, although there is still a long way to a full recovery of the European economy even to pre-crisis levels (quarterly growth within 0.2% - 0.4%).

**21:45 NZD Change in the employment rate. Unemployment rate (data

for the 4th quarter)**

The employment rate reflects the quarterly change in the number of employed New Zealand citizens. The growth of the indicator has a positive impact on consumer spending, which stimulates economic growth. A high value is positive for the NZD, while a low value is negative. Forecast: In the 4th quarter, the number of employed citizens of New Zealand decreased, and the employment rate fell by -0.1% (against a fall of -0.8% in the 3rd quarter, an increase of +0.7% in the 1st quarter of 2020 and a decline of -0.4% in the second quarter).

Also at the same time, the Bureau of Statistics of New Zealand publishes a report on the unemployment rate - an indicator that estimates the proportion of the unemployed population to the total number of able- bodied citizens. The growth of the indicator indicates the weakness of the labor market, which leads to a weakening of the national economy. The decline in the indicator is positive for the NZD. Forecast: Unemployment in New Zealand in the 4th quarter increased to 5.6% from 4.2% in the 1st quarter of 2020, 4.0% in the 2nd quarter, 5.3% in the 3rd quarter.

Other indicators of the Bureau of Statistics NZ report are also expected to come out with deterioration, which is likely to negatively affect the NZD. Data worse than the forecast will have an even stronger negative impact on the NZD.

Wednesday, February 3

01:30 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 on 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 amid 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.”

**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 2020, 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, November and December - decreased by -0.3%, which indicates low inflationary pressure and even a slowdown in inflation. Forecast for January: +0.4% (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 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 2020, 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, November and December - by +0.2%. If the data for January turns out to be worse than the previous value or forecast, this may negatively affect the euro. If the data turn 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 January: +0.2%.

13:15 USD ADP National Employment Report

Typically, the ADP’s national 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 employees in the private sector in the United States in January was 40,000 (against a fall of -123,000 in December, an increase of +307,000 in November, +365,000 in October, +749,000 in September). The relative growth of the indicator may have a positive effect on the dollar quotes, while the relative decline in the indicator can hava a negative effect. Therefore, the market reaction may be negative, and the dollar may decline if the data turns out to be worse than 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 directly correlate with the official US Labor Department data due Friday, it may fall short of forecasts, pointing to a decline in nonfarm jobs instead of an expected 85,000 new job growth (after falling by -140,000 in December).

If the forecast (+85,000 new jobs) from the US Department of Labor does not come true, it will indicate a reversal of the current trend in hiring rates.

15:00 USD Services PMI from ISM in the US economy ****

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, for October 56.6, November 55.9, and December 57.2. 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 January: 56.5, which is likely to have a positive overall effect on the USD, despite the relative decline.

Thursday, February 4

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 (November) AU$ 5.022 billion. A decrease in the trade surplus may negatively affect the Australian dollar. Conversely, a growing trade surplus is a positive factor for the AUD.

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. Forecast for December: -3.4% and +0.8% (in annual terms) against

-6.1% (-2.9% in annual terms) in November, +1.5% (+4.3% in annual terms) in October. The data suggests that retail sales have yet to reach pre-coronavirus levels after a sharp drop in March-April, when tough quarantine measures were in place in Europe.

**12:00 GBP Bank of England’s decision on interest rate. Bank of

England’s meeting minutes. Planned volume of asset purchases by the Bank of England. Monetary Policy Report**

In March (11 March and 19 March) 2020, during its extraordinary meetings, the Bank of England cut its interest rate twice, bringing it to the level of 0.1%, and announced its intention to purchase UK government bonds in the amount of 200 billion British pounds, trying to compensate for the economic damage from the coronavirus pandemic. The central bank announced that it would increase its bond portfolio to £645bn, then £745bn and £895bn from £445bn at the time. “The current situation is completely unprecedented,” the new Governor of the Bank of England Andrew Bailey said at a press conference after the March 19 emergency meeting. Bailey said he expects a sharp economic contraction due to the coronavirus, and the Bank of England stands ready to take further stimulus measures if necessary. “No, we’re not done yet,” he said. Based on these statements by Andrew Bailey, it is fair to expect from the Bank of England further actions towards easing its monetary policy. It is possible that at this meeting on February 4, the Bank of England will again undertake them, increasing the volume of purchases of bonds or lowering the interest rate. Although, most economists believe that the Bank of England will refrain from lowering the interest rate for now.

Also at this time, the minutes of the Monetary Policy Committee (MPC) of the Bank of England are published with the distribution of votes “for” and “against” raising / lowering the interest rate. The main risks for the UK after Brexit are associated with expectations of a slowdown in the country’s economic growth, as well as with a large current account deficit in the UK balance of payments.

The intrigue about further actions of the Bank of England remains. And in trading of the pound and the FTSE100 index, a lot of trading opportunities will be there during the publication of the bank’s decision on rates.

Also at the same time, the Bank of England’s monetary policy report will be published containing an assessment of the economic outlook. At this time, the volatility in the pound quotes may rise sharply. Apart from GDP, one of the main reference points for the Bank of England regarding the prospects for monetary policy in the UK is the inflation rate. If the tone of the report is soft, the British stock market will gain support and the pound will decline. Conversely, the tough rhetoric of the report on containing inflation, which implies an increase in interest rates in the UK, will lead to a strengthening of the pound.

12:30 GBP Speech by the Bank of England Governor Andrew Bailey

In his speech, Andrew Bailey, who took over as Governor of the Bank of England on March 16, 2020, replacing Mark Carney, will clarify the bank’s decision on monetary policy. He will probably also touch on the state and prospects of the British economy after Brexit, which has been badly hit by the coronavirus pandemic.

Participants of financial markets will also expect him to clarify the situation regarding the further policy of the UK central bank. If Andrew Bailey gives any hints of tightening or easing of the Bank of England’s monetary policy in the near future, volatility during his speech will sharply increase in the quotes of the pound and the London Stock Exchange FTSE Index. If he does not touch upon the issues of monetary policy, the reaction to his speech will be weak.

Friday, February 5

**00:30 AUD RBA’s statement on monetary policy. Retail Sales

Index**

The Statement on Monetary Policy provides an overview of economic and financial conditions and an assessment of risks to financial stability and sustainable economic growth. The statement is a kind of guideline for defining the RBA’s monetary policy plans. A tougher stance on the RBA’s monetary policy is seen as positive and strengthens the Australian dollar, while a more cautious stance is seen as negative for the AUD.

The 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 November) was +7.1% after falling by -17.7% in April. If the data for December turns out to be weaker than the previous value, the AUD may sharply decline in the short term. If the data turns out to be higher than the previous values, the AUD is likely to strengthen.

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

rate**

The most important indicators of the state of the labor market in the United States in January. Forecast: +0.3% (against +0.8% in December, +0.3% in November, +0.1% in October, -1.2% in June, -1.0% in May, +4.7% in April) / +0.085 million (against -0.140 million in December, +0.245 million in November, +0.638 million in October, +1.763 million in July and -20.687 million in April) / 6.7% (against 6.7% in December and November, 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. 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, 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. Probably the most cautious investors will choose to stay out of the market during this time frame.

13:30 GBP Speech by the Bank of England Governor Andrew Bailey

13:30 CAD Unemployment rate in Canada

Statistics Canada is to publish data on the country’s labor market for January. Unemployment has risen in Canada in recent months amid massive business closures due to coronavirus and layoffs. Unemployment rose from the usual 5.6% - 5.7% to 7.8% in March and already to 13.7% in May. If unemployment continues to rise, the Canadian dollar will decline. If the data is better than the previous value, then 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 8.6% in January (after 8.6% in December, 8.5% in November, 8.9%, 9.0%, 10.2%, 10.9%, 12 , 3%, 13.7%, 13.0%, respectively, in the previous months).

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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