Overview of the main events of the Forex economic calendar for the next trading week from 11.02.2019 to 17.02.2019
Trading on key Forex news: we are awaiting the results of the New Zealand RB meeting, the publication of macro data reflecting consumer sentiment in the US, and the publication of inflation indicators in the UK, US, China, as well as GDP in Germany and the Eurozone
The dollar ended last week with a decent increase. Investors are once again concerned about the state of the global economy, which causes sales in the stock market and the purchase of safe haven assets and the dollar. At the end of the trading day on Friday, the DXY dollar index futures traded at 96.44, which is 110 points higher than the opening price at the beginning of last week. At the same time, the major US stock indexes ended the past week with a slight increase.
Last Thursday, economic adviser to the White House Larry Kudlow said that China and the United States are still far from concluding a trade deal. Hopes for a new trade agreement between the countries weakened after Kudlow's statements, which heightened investor concerns and had a negative impact on stock markets. In this case, on March 2, the United States will raise duties on imports of goods from China by another $200 billion to 25% from 10%, and the trade confrontation between the US and China will reach a new level of escalation.
This can have a very negative impact on stock markets and commodity prices, as well as cause investors to withdraw into safe haven assets and the dollar.
Oil prices also fell last week due to renewed concerns about a slowdown in the global economy, which could adversely affect demand. WTI crude oil traded near the mark of 52.00 US dollars per barrel at the end of last week, which is a January 28 low.
The attention of traders this new week will be focused on the publication of important macro statistics from the UK, USA, Eurozone, China, as well as the meeting of the RB of New Zealand devoted to the issues of monetary policy.
As always, a number of important macroeconomic data and several important news are expected to be published on the new trading week.
Monday, February 11
09:30 (GMT) GBP GDP for the 4th quarter (preliminary release)
GDP is considered an indicator of the general state of the British economy. The growing trend in GDP is considered positive for the GBP. Britain's GDP remains one of the highest in the world in annual terms, although its growth slowed down after the Brexit referendum held at the end of June 2016. In the second quarter, GDP growth was +0.4% and +1.2% in annual terms, and +0.6% and +1.5% in Q3. If the data for the 4 quarter is better than the previous values, the pound will strengthen. Forecast: UK GDP growth rate in Q4 declined to +0.2% (+1.4% in annual terms), which could have a negative impact on the pound, which is already under pressure due to ongoing negotiations between London and Brussels and the remaining probability of the hard Brexit, i.e. without any trade agreement with the EU. The UK exit from the block is scheduled for March 29.
Last Thursday, the Bank of England kept its current monetary policy unchanged, but lowered its forecast for UK GDP growth in 2019 to 1.2% versus 1.7% earlier, referencing a slowdown in the global economy and increased uncertainty around Brexit.
Tuesday, February 12
17:45 USD Speech by Fed Chairman Jerome Powell
Recently, Fed officials have increasingly given statements implying the Fed’s inclination to wait and see as to further raising interest rates in order to be able to assess the economic situation in the United States calmly against the background of insufficiently strong inflation pressure and worsening global economic outlook. So, last Thursday, President of the Federal Reserve Bank of St. Louis, James Bullard, who is a member of the FOMC with the right to vote, reiterated that the US central bank does not need to continue raising interest rates to achieve target levels of employment and inflation.
Most likely, the reaction to Powell's speech will be minimal. However, Powell’s comments may affect both short-term and long-term USD trading if he again touches on the topic of the Fed’s monetary policy. A more hawkish position on the Fed’s monetary policy is seen as positive and strengthens the US dollar, while a more cautious one is evaluated as negative for the USD.
If he makes unexpected statements, then volatility in trading in financial markets may increase. In December, Powell said that "(the Fed's) policy is not predetermined. We will pay close attention to incoming economic and financial data".
Any hints by Powell to the need for a cautious approach to raising interest rates will cause the dollar to fall and American stock markets to rise.
21:00 NZD Press conference of the RBNZ
During the press conference, the head of the RBNZ Adrian Orr will explain the bank’s position regarding the monetary policy and the economic situation of the country. His speeches often serve as an unofficial source of information on the future direction of the monetary policy of the RBNZ. In his opinion, the country's monetary policy should correlate with the dynamics of employment and financial stability of the state.
Earlier, the RBNZ stated that against the background of “a multitude of uncertainties”, monetary policy “will remain soft in the foreseeable future”, but “may be adjusted accordingly”. For a stable recovery of the New Zealand economy and rising inflation, "a lower New Zealand dollar rate is necessary".
It is likely that the head of the RBNZ Adrian Orr will once again confirm the bank’s propensity to pursue a soft monetary policy, which will cause continued pressure on the New Zealand currency.
In any case, an increase in volatility in the New Zealand dollar trade is expected during the press conference of the RBNZ.
Wednesday, February 13
01:00 NZD Decision of the RB of New Zealand on the interest rate. Accompanying statement of the RBNZ
The current interest rate in New Zealand is at 1.75%, remaining one of the highest in the world among advanced economies. And it attracts investors to almost safe purchases of the New Zealand currency, which generate income, as well as traders using the carry-trade strategy, when a more expensive currency is bought at the expense of cheaper ones. It is widely expected that at this meeting, the interest rate will remain at the same level of 1.75%.
However, the RBNZ may leave open the possibility of lowering the key interest rate.
In early November, the RB of New Zealand kept its current monetary policy unchanged, leaving the key rate at 1.75%. “Annual core inflation remains below 2% in the middle of the target range of the RBNZ, which indicates the need to continue the stimulating monetary policy,” said the head of the RBNZ Adrian Orr.
The RBNZ expects rates to remain at this level throughout 2019 and a part of 2020.
Nevertheless, weaker-than-expected data from the labor market (in the 4th quarter of 2018, unemployment in the country rose to 4.3% versus 4.0% in the 3rd quarter) may increase the inclination of the RB of New Zealand to decrease the percentage rates.
Economists continue to point out signs of slowing economic growth and stick to a more negative outlook, suggesting that the RBNZ will lower its key interest rate in 2019.
According to economists, the New Zealand economy will find it difficult to accelerate growth and maintain stronger inflation in the medium term without taking some steps to mitigate the bank’s current monetary policy.
In the accompanying statement and comments, the RBNZ will provide an explanation of the decision on the interest rate and comments on the economic conditions that contributed to the adoption of this decision.
At this time, the volatility in the New Zealand dollar trade could rise sharply.
09:30 GBP Consumer price index. Core CPI
Consumer Price Index (CPI) reflects the dynamics of retail prices for a group of goods and services that are part of the British consumer basket. CPI is a key indicator of inflation. Its publication causes major fluctuations of the pound on the foreign exchange market, as well as the index of the London Stock Exchange FTSE100.
In the previous month (in January), inflation rose by +0.2% and +2.1% (in annual terms).
The sharp fall of the British pound after the Brexit referendum contributed to the growth of inflation to current levels. The sharply increased inflation in the country suggests that the Bank of England may again return to the question of raising the interest rate in the UK. And this is a positive factor for the pound. The value of indicator below the forecast and the previous values may trigger a weakening of the pound.
Core Consumer Price Index (Core CPI) is published by the Office of National Statistics and determines the price change of a selected basket of goods and services (except for food and energy) over a given period. It is a key indicator for assessing inflation and changing consumer preferences. A positive result strengthens the GBP, a negative one weakens it.
In January, Core CPI (in annual terms) increased by +1.9% (against +1.8% in the previous month). The publication of the index is likely to positively affect the pound if its value is as high.
13:30 USD Core Consumer Price Index (ex food and energy)
Core Consumer Price Index (Core CPI) calculates 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 changing consumer preferences. Food and energy are excluded from this indicator for a more accurate assessment. A high result strengthens the US dollar, and a low one weakens it. In the previous month (in December), the value of the indicator was +0.2% (+2.2% in annual terms) versus +0.2% in November (+2.2% in annual terms). A decline is a negative factor for the dollar. If the data for January is weaker, then the dollar is likely to respond by lowering. The growth rate is a positive factor for the USD.
Thursday, February 14
07:00 EUR Germany's GDP (preliminary release)
The publication of data has a significant impact on the euro quotes due to the paramount importance of the German economy for the euro area. A high value is a positive factor for the EUR. Germany's GDP in Q3 2018 decreased by -0.2%, but grew by 1.1% in annual terms.
The report on the gross domestic product for the third quarter indicated that the German economy, which is the locomotive of the entire European economy, slowed down in the second half of 2018. This is a negative factor for the euro. If the data for the 4th quarter is even weaker than the data for the 3rd quarter, the euro will decline.
10:00 EUR Eurozone GDP for the 4th quarter (second estimate)
GDP is considered an indicator of the overall state of the Eurozone economy. The growing trend in GDP is considered positive for the EUR, a low result weakens the EUR.
Recently, macro data from the Eurozone has been indicating a slowdown in the European economy. Against the background of steadily low inflation, the risks of a slowdown in the European economy may force the ECB leadership to refrain from raising interest rates for a long time after the end of the QE program in December. Mario Draghi also previously stated that the QE program can be extended if necessary.
Forecast: in the 4th quarter, Eurozone GDP grew by +0.2% (+1.2% in annual terms). In Q3, GDP growth was +0.2% and +1.6%, respectively. If the data turns out to be even weaker, then the euro may decline significantly in the short term. Data better than the forecast will strengthen the euro.
13:30 USD Retail sales (ex auto sales). Retail control group
This report (Core Retail Sales Ex Autos) reflects the total sales of retailers of all sizes and types, with the exception of car dealerships. The change in sales in the retail sector is the main indicator of consumer spending. The report is leading, and in the future the data can be greatly revised. High results strengthen the US dollar, low results weaken it. The forecast for December: +0.1% (against +0.2% in November and +0.7% in October).
A decline in the index may have a short-term negative impact on the dollar.
Retail sales is the main indicator of consumer spending in the United States, showing the change in sales in the retail sector. The Retail Control Group indicator measures volume across the entire retail industry and is used to calculate price indices for most products. A high result strengthens the US dollar, and vice versa, a weak report weakens the dollar. Forecast: The volume of retail trade in the US increased in December by +0.4% (against +0.9% in November and +0.3% in October).
In general, the indicators can be described as positive. However, their relative decline may adversely affect the dollar quotes. Data better than the forecast will strengthen the dollar in the short term.
Friday, February 15
01:30 CNY Consumer price index
The National Bureau of Statistics of China will present data reflecting the dynamics of consumer prices in China in January. Rising consumer prices could trigger an acceleration of inflation, which may force the Bank of China to take measures aimed at tightening fiscal policy. Increased consumer inflation may cause the yuan to rise in price, a low result will put pressure on the yuan.
China's economy is the second largest in the world after the US. Therefore, the publication of important macroeconomic indicators of this country has a significant impact on world financial markets, primarily on the positions of the yuan, other Asian currencies, the dollar, commodity currencies, as well as Chinese and Asian stock indices. China is the largest commodity buyer and supplier to the global commodity market for a wide range of finished products.
In the previous month (in December), the growth of the consumer inflation index was 0% (+1.9% in annual terms).
The deterioration of macroeconomic indicators, including a decrease in consumer inflation, may adversely affect the positions of the yuan, as well as commodity currencies, such as Canadian, Australian, New Zealand dollars. To a greater extent, this refers to the Australian dollar, since China is Australia's largest trade and economic partner.
The growth of the consumer inflation index will positively affect the quotes of the yuan, as well as commodity currencies, primarily the Australian dollar.
15:00 USD University of Michigan Consumer Confidence Index
The consumer confidence index is published by the University of Michigan and reflects the confidence of American consumers in the economic development of the country. High value indicates growth, while low one indicates stagnation.
The previous (January) value of the indicator is 91.2. The growth rate will strengthen the USD, and a decrease in value will weaken the dollar. Forecast for February (preliminary value): 94.5, which will have a short-term positive impact on the dollar.
Price chart of GBPUSD in real time mode
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