Overview of the main events of the Forex economic calendar for the next trading week from 24.09.2018 to 30.09.2018

Trading on key Forex news: we expect the Reserve Bank of Australia's decision on the interest rate, as well as publication of data from the US and Canadian labor markets

This week showed the same volatility as last week, when the US Administration announced that it intends to introduce new duties on goods from China worth $ 200 billion, and China announced new counter duties on the import of American goods worth $ 60 billion. The duties have been in force since last Monday, September 24.

It was especially high during the last two days of last week, which also became the last trading days of September.

On Wednesday, the Fed raised its benchmark interest rate by 0.25% to 2.25%. At a subsequent press conference, the Federal Reserve Chairman Powell confirmed the Fed's plans to further tighten the monetary policy. Another increase in interest rates is planned for 2018 and 3 rate increases are planned in 2019.

This decision of the Fed was expected, and the markets barely reacted to it. All the major movement of the dollar after the decision of the Fed was observed on Thursday. Investors finally realized that the Fed plans to continue to tighten monetary policy, while remaining the world's single largest central bank implementing this tightening.

On Thursday, the dollar index DXY, which tracks the rate of the US currency against the basket of 6 other major currencies, increased by 72 points to 94.61. On Friday, the growth of DXY continued, and the index rose to around 94.80, almost completely negating the decline of the previous week.

According to the data published on Thursday, consumer spending, which accounts for more than two thirds of the US GDP, in the second quarter showed an annual growth of 3.8%, as previously reported. The growth of US GDP in the second quarter of 2018 was 4.2%. The report presented last Thursday strengthened market participants in the opinion that the US economy remained forceful in the second quarter, which was facilitated by an increase in consumer spending, net exports, and corporate investment.

The dollar strengthened against its major counterparts in general, but fell last Friday against the Canadian dollar. This Friday's decline in the pair USD/CAD blocked all growth in the previous 4 days of the week. The Canadian dollar has strengthened throughout the currency market after on Friday the data was published, according to which Canada's GDP in July rose by 0.2% compared with the previous month and amounted to 1.79 trillion Canadian dollars (1.37 trillion US dollars) . Economists had expected that GDP growth would be at 0.1%. Compared with the same period last year, GDP in July grew by 2.4%.

This is likely to be an important argument for the Bank of Canada to raise the interest rate in October.

Also, the growth of the Canadian dollar contributed to the growth of oil prices, which on Friday reached new multi-year highs. Brent crude oil futures added another 0.8% to 82.82 dollars per barrel. Quotes of Brent are growing for the fifth consecutive quarter, which is the longest period of growth in more than ten years.

Support for oil quotations is mainly due to a reduction in oil exports from Iran on the eve of the introduction of US sanctions on November 4.

The coming week is expected to be more quiet. On Tuesday at 04:30 (GMT) the decision of the Republic of Belarus on interest rate will be published, and Friday, at 12:30 (GMT) the US Labor Department will publish data on the labor market for September. Strong data are expected, and unemployment, according to economists' forecasts, fell by 0.1% in September to 3.8%, the next multi-year low. Also on Friday, in conjunction with the US Department of Labor, Statistics Canada will publish monthly data from the Canadian labor market and data on Canada's foreign trade balance. We should recall that on Friday, during the publication of this data (12:30 GMT), a surge in volatility is expected, especially in pairs with the American and Canadian dollars.

As always, a number of important macroeconomic data and several important news are expected to be published on the new trading week.

Monday, October 1

There are no important macro data releases planned, and in Australia, China and Hong Kong banks will be closed due to national holidays. Volatility during the Asian trading session will be reduced.

Tuesday, October 2

04:30 (GMT) AUD Decision on the interest rate. Accompanying statement of the RBA.

Forecast: the rate will remain at the same level of 1.5%. As stated in the previous accompanying statements of the RBA, "strengthening the Australian dollar will complicate the adjustment of the economy", and "maintaining rates unchanged corresponds to the goals in relation to GDP and inflation". If, in the subsequent accompanying statement, the RBA shows tough rhetoric about the economic forecast and the probability of an early rate hike, this will be a bullish signal for the AUD.

Interest rates may remain unchanged for an even longer period after 2018, given the weak wage growth and the slowdown in the Australian economy. "The Board does not see any weighty arguments in favor of adjusting the key interest rate in the short term" said in one of the latest statements of the RBA.

Economists also warn that due to the weakness of the housing market and the continuing weakening of housing prices in major cities, the RBA will not change rates until 2020.

The resumption of trade tensions between the US and China will be the main risk factor for the Australian economy and the Australian dollar next year.

16:00 USD Speech by Fed Chairman Jerome Powell

At a press conference following the September meeting of the Fed, Jerome Powell said everything that the participants in the financial markets wanted to hear from him. Powell confirmed the Fed's plans for another interest rate increase in 2018 and a 3 rate increase in 2019.

Most likely, the reaction to his speech will be minimal. Nevertheless, Powell's comments may affect both the short-term and long-term trade of the USD, if he again touches on the subject of the monetary policy of the Fed. A more hawkish position on the monetary policy of the Fed is seen as positive and strengthens the US dollar, while a more cautious one is estimated as negative for the USD.

If he makes unexpected statements, then volatility in trading in financial markets may increase. Any Powell's hints to the need for a cautious approach to raising the interest rate will cause the dollar to fall and the growth of US stock markets.

Wednesday, October 3

There are no important macro data releases planned.

However, one should pay attention to the publication (at 12:30 GMT) of the report from ADP on employment in the private sector of the American economy for September. This report usually has a significant impact on the market and the dollar quotes, although, there is no direct correlation with Non-Farm Payrolls, as a rule. Strong data positively affects the dollar. The number of employees in the US private sector is expected to increase by 185,000 (against +163,000 in August), which can be assessed as a strong result. Lower result or data worse than the forecasted values could negatively affect the dollar.

14:30 USD Weekly report of the Energy Information Administration of the US Energy Ministry on oil and petroleum products in the US.

The publication of this data is usually accompanied by a surge in volatility in oil prices, which are denominated in the US dollars. Reduction of reserves, as a rule, affects the oil prices positively. The previous value is at +1.852 million barrels of oil and petroleum products. Forecast: oil and petroleum products in the US fell by -0.105 million barrels last week, which should support oil prices a little.

In recent weeks there has been an increase in oil quotations. Last Friday, oil prices reached new multi-year highs. Quotes of Brent are growing for the fifth consecutive quarter, which is the longest period of growth in more than ten years.

Support for oil prices has been mainly lent by reduced oil exports from Iran on the eve of the introduction of US sanctions on November 4.

Thursday, October 4

There are no important macro data releases planned.

However, one should pay attention to the publication (at 00:30 GMT) of data on the foreign trade balance of Australia. If they differ significantly from the forecast values, this will cause higher volatility in the AUD trade.

Friday, October 5

12:30 USD Average hourly wage. Non-Farm Payrolls. Unemployment rate

The most important indicators of the labor market in the US in September. The forecast: + 0.3% (against + 0.4% in August) / 188 000 (against 201 000 in August) / 3.8% (against 3.9% in August).

In general, the indicators can be regarded as strong. If they coincide with the forecast or are better, this will have a positive effect on the USD. However, it is often difficult to predict the market reaction to the publication of  the indicators. In any case, when these indicators are published, a surge in volatility is expected in the trade not only in the USD, but throughout the financial market. Probably the most cautious investors will prefer to stay out of the market in this period.

12:30 CAD Change in the number of employed citizens in Canada. Unemployment rate in Canada.

Statistics Canada will publish data for September. Previous value was at -51600 employed citizens (in August). Forecast: +32500 employed citizens. If the growth in the number of employed citizens in September is significantly lower than the forecast, then the Canadian dollar may react with a decline.

Unemployment in August was 6.0%. If the unemployment increases, the Canadian dollar will decrease. If the data prove to be better than the forecast, the Canadian dollar will strengthen. Forecast: the unemployment rate in September is 5.9%. Lower unemployment is a positive factor for CAD.

Price chart of EURUSD in real time mode

Economic calendar for the week 01.10 – 07.10.2018

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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