Overview of the main events of the Forex economic calendar for the next trading week from 15.10.2018 to 21.10.2018
Trading on key Forex news: expecting the outcome of the EU summit, which will discuss Brexit issues, publication of the minutes from the September Fed meeting, data on China's GDP, as well as inflation indicators in the UK, Canada, and the Eurozone
The past week was marked by a fall in world stock indices and oil prices, as well as an increase in the yield of US government bonds. The yield on 10-year US Treasury bonds rose to 3.261% at the beginning of last week, which is another 7-year high. Quotations of gold also went up, returning to July marks above 1225.00 dollars per troy ounce.
Donald Trump criticized the Central Bank, saying that the "Fed lost its mind" while continuing to tighten monetary policy. Trump made this statement amid the collapsing American stock market. According to Trump, the fall in the stock market is “a correction that we have been waiting for for a long time”. “Nevertheless, I really disagree with the actions of the Fed,” he said.
The past Wednesday was particularly notable for the fall in stock indices. In one day, the S&P500 fell by 3.3%, the Dow Jones Industrial Average - by 3.15%. Technological sector stocks suffered the most, the Nasdaq index fell by more than 4%. Nasdaq suffered the most serious losses since June 2016, when the vote was held on the UK leaving the EU. Chinese stock indices lost almost 6%, while South Korea and Japan indices lost about 4% each. Investors have focused on slowing global economic growth, increasing bond yields and increasing trade tensions.
In two days (Wednesday and Thursday), WTI oil prices fell by $ 3.99 per barrel, which was the strongest two-day drop since July 7, 2015.
Last Thursday, oil prices recorded the strongest decline in two months due to a strong increase in reserves, growth in oil production in OPEC countries and sales of risky assets.
However, last Friday, the fall in the indices and oil prices stopped.
Major US stock indexes reached key support levels. It is possible that now is a good moment to enter the market in a long position.
This new week, the investors' attention will be focused on the publication of the minutes from the last Fed meeting held in September and at the summit where European leaders will meet to discuss a future Brexit agreement.
The preliminary text of the agreement can be agreed on by Monday, so that on Tuesday the ministers of the EU countries could endorse it, and on October 17 - the heads of state and government.
Negotiations can be considered successful in general if the Brexit agreement is complemented by trade and security agreements between the UK and the EU.
As always, a number of important macroeconomic data and several important news are expected to be published on the new trading week.
Monday, October 15
12:30 (GMT) 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 retail sales is a major indicator of consumer spending. The report is leading, and in the future the data can be revised significantly. A good result strengthens the US dollar, a low one weakens it. Forecast: + 0.3% (against + 0.3% in August).
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. Outlook: US retail sales rose 0.4% in September (against + 0.1% in August).
11:45 NZD CPI for the 3rd quarter
The Consumer Price Index (CPI) is a key indicator for estimating inflation that reflects the dynamics of retail prices for a group of goods and services that make up the consumer basket. A positive result strengthens the NZD, a negative one weakens it. Forecast: + 0.7% (against + 0.4% in the 2nd quarter).
Tuesday, October 16
01:30 AUD Minutes from the last meeting of the RB of Australia
This document is published two weeks after the meeting and the decision on the interest rate. If the RBA positively assesses the state of the labor market in the country and GDP growth rates, and also shows a hawkish attitude towards an inflation forecast in the economy, the markets regard this as a higher likelihood of a rate hike at the next meeting, which is a positive factor for AUD. A soft rhetoric of the bank in relation to, above all, inflation, puts pressure on the AUD.
Market participants believe that the RBA will not raise interest rates until 2020. Wages continue to grow slowly, and household debt has grown to a record high, which also postpones the increase in interest rates to a more distant future.
According to the head of the RBA, Philip Lowe, "there are no serious arguments in favor of tightening monetary policy in the short term". According to him, “it will be some time before the interest rates rise”.
08:30 GBP Report on the average wages in Britain for the last 3 months
The Office for National Statistics of the United Kingdom (ONS) publishes a monthly report on average earnings for a period for 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. Its growth is a positive factor for GBP, and a low value of the indicator is negative. Forecast: The August report suggests that the average wages, including bonuses, has increased over the past 3 months by 2.4% (against + 2.6% in the previous period); without bonuses - by 2.8% (against + 2.9% in the previous period). If the data coincide with the forecast or turn out to be better than it, the pound will probably strengthen on the foreign exchange market.
Wednesday 17 Октября
Brexit Summit, where European leaders will meet to discuss a future Brexit agreement.
08:30 GBP Consumer price index. Core CPI
The 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. The CPI is a key indicator of inflation. Its publication causes major movements of the pound on the foreign exchange market and the the FTSE100 index of the London Stock Exchange.
As expected, annual consumer inflation in September rose by + 0.5% and + 2.8% in annual terms. In the previous month: + 0.7% and + 2.7%, respectively.
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 interest rates in the UK. And this is a positive factor for the pound. Values below the forecast can trigger a weakening of the pound.
The Core CPI is published by the Office of National Statistics and determines the price change of the selected basket of goods and services (except for food and energy) for the period. It is a key indicator for assessing inflation and changing consumer preferences. A positive result strengthens the GBP, a negative one - weakens it.
Forecast: in September, the baseline CPI (in annual terms) increased by + 1.8% (against + 2.1% in the previous month). The relative decline in the index may adversely affect the pound.
09:00 EUR Consumer Price Index (CPI). Core Index (Core CPI) of consumer prices (preliminary values)
The consumer price index (CPI) is published by Eurostat and determines the change in prices of the selected basket of goods and services for the period. It is a key indicator for assessing inflation and changing consumer preferences. A positive result strengthens the EUR, a negative one weakens it.
Forecast: In September, the CPI index (in annual terms) rose by 2.1%, the Core CPI rose (in annual terms) by 1.0% (against + 0.9% in the previous month). In general, the data can be described as positive. If the data turns out to be worse than the forecast, then the euro will weaken.
14:30 USD Weekly report of the Energy Information Administration of the US Department of Energy on the reserves of oil and petroleum products in the US
As the Energy Information Administration (EIA) of the US Department of Energy reported last Thursday, oil reserves in the country rose by 5.987 million barrels during the week September 29 - October 5. The increase in reserves exceeded growth expectations by 4 times (+1.5 million barrels). Total oil reserves in the United States now amount to 410 million barrels, almost a two-month high.
The growth of oil reserves had a negative impact on oil prices, which sharply declined last week.
OPEC, as well as Russia's largest cartel partner, agreed to gradually increase oil production at the end of June, and compensate for the decline in Iranian oil exports. The risks of increased oil production by Saudi Arabia and Russia, as well as in the United States, may increase pressure on prices. The strengthening of the dollar is also one of the reasons for the fall in oil prices in the last two months.
Now we expect a decline in oil reserves in the United States by -0.281 million barrels, which should support oil prices. The publication of data is usually accompanied by a surge in volatility in oil prices, which are denominated in US dollars.
18:00 USD Minutes of the last meeting of the Federal Open Market Committee
The publication of the minutes is extremely important for determining the current Fed policy and the prospects for raising the interest rate in the United States. According to interest rate futures, the probability of another 1 Fed rate increase this year is over 80%.
The volatility of trading on financial markets at the time of publication of the minutes usually increases, because the text of the minutes often contains either changes or clarifying details regarding the outcome of the last FOMC Fed meeting.
A soft tone of the protocol will have a positive effect on stock indices and a negative effect on the US dollar. A harsh rhetoric of Fed officials regarding the prospects for monetary policy will push the dollar to further growth.
Thursday, October 18
Brexit Summit, where European leaders will meet to discuss a future Brexit agreement.
00:30 AUD Employment rate. Unemployment rate. The proportion of working citizens in the total population
The employment rate reflects the monthly change in the number of employed Australian citizens. The growth of the indicator has a positive impact on consumer spending, which stimulates economic growth. A high value is a positive factor for the AUD, and a low value is negative. Forecast: in September, the number of employed Australian citizens increased by 15,000 people (against +44,000 people in August). Also at the same time, the Australian Bureau of Statistics publishes a report on unemployment - an indicator that measures the ratio of the unemployed population to the total number of able-bodied citizens. The growth rate indicates a weak labor market, which leads to a weakening of the national economy. The decline is a positive factor for the AUD. Forecast: Unemployment in Australia in September was 5.3%, as well as in August.
Also among the data provided by the Australian Bureau of Statistics is the indicator that measures the proportion of the labor force in the total population. This is the percentage of the total number of working-age population considered to be labor force (either employed or in search of work). Forecast: 65.6% in September (against 65.7% in August).
In general, the indicators can be described as positive. If the values of the indicators are worse than the forecast, the Australian dollar will decline. Data better than forecast will strengthen the AUD.
Friday, October 19
02:00 CNY GDP for the 3rd quarter
The National Bureau of Statistics of China will present data on GDP growth in the 3rd quarter. In the previous quarter, GDP growth was + 1.8%. China's GDP is expected to increase by + 1.6% in the 3rd quarter (+ 6.6% in annual terms against + 6.7% in the 2nd quarter). China is the largest buyer of commodities and supplier to the global commodity market for finished products of the widest range. China's economy is the second largest in the world after the US. Therefore, the publication of important macroeconomic indicators from China can have a strong impact on the entire financial market. The tense situation in the trade relations between the United States and China reinforces the fear that the fall of the yuan and the slowdown of economic growth in China may have an impact on the world markets.
The growth rate will have a positive impact on the Chinese yuan, as well as on the world, first of all, Asian stock indexes, as well as on the quotations of commodity currencies, such as the New Zealand and Australian dollars.
China is the largest trade and economic partner of Australia and New Zealand and the buyer of commodities from these countries.
Therefore, positive macro statistics from China have a positive effect on the quotations of these commodity currencies.
06:35 JPY Speech by the head of the Bank of Japan Haruhiko Kuroda
During the press conference, the head of the Bank of Japan Haruhiko Kuroda will comment on the monetary policy of the bank. According to the results of the last meeting, the Board of the Bank of Japan by a majority of votes decided to leave the key rate at the level of -0.1%, and the target level of yield of 10-year government bonds at zero. "We will maintain extremely low rates for a long period of time," said the Head of the Bank of Japan, adding that "it is necessary to patiently continue easing monetary policy". Markets usually respond noticeably to Kuroda's speeches. If he touches on the topic of monetary policy during his speech, volatility will increase not only in yen trading, but throughout the Asian and global financial markets.
12:30 CAD Retail Sales Index. Core Consumer Price Index in Canada
This index is published monthly by Statistics Canada and estimates total retail sales. The index is often considered an indicator of consumer confidence and reflects the state of the retail sector in the near term. Index growth is usually a positive factor for the CAD; a decrease in the rate of a negative impact on the CAD. The previous value of the index is 0.3%. Forecast: In August, retail sales rose 0.4% in Canada. If the data is weaker, then CAD will decrease.
The Core Consumer Price Index (Core CPI) from the Bank of Canada reflects the dynamics of the retail prices of the relevant basket of goods and services (excluding fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, inter-city transport, and tobacco products). The target inflation rate for the Bank of Canada is in the range of 1% -3%. The growth rate of CPI is a precursor to a rate increase and a positive factor for the CAD. Consumer prices in Canada increased by 1.7 in August in annual terms. If the data for September is worse than the previous value, this will negatively affect the CAD.
Price chart of EURUSD in real time mode
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