Overview of the main events of the Forex economic calendar for the next trading week from 17.09.2018 to 23.09.2018
Trading on key Forex news: we expect the decisions of the Bank of Japan and the Swiss National Bank on interest rate, as well as the publication of inflation indicators for Canada in August and a number of important macro data for the UK and the Eurozone
Last week, the European Central Bank retained the key interest rate at 0%, and loan and deposit rates - at the level of -0.25% and -0.40%, respectively. The ECB reiterated its promise to keep interest rates unchanged at least until the summer of 2019 and said that since October, the purchases of bonds will amount to € 15 billion a month before the end of the year, when the purchases are over.
The ECB also lowered its forecasts for GDP growth for 2018 and 2019, from 2.1% to 2.0% and from 1.9% to 1.8%, respectively.
Another important event of the past week was the meeting of the Bank of England, after which the Bank of England decided to keep the interest rate at 0.75%. In the Bank of England's reports, it was noted that Brexit remains the key risk to the British economy. All 9 members of the Bank of England Monetary Policy Committee voted for this decision.
Investors also drew attention to reports that the US is inviting China to resume foreign trade negotiations. US Treasury Secretary Steven Mnuchin invited the top leadership of China to hold a new round of talks. This step indicates the readiness to move to a more peaceful rhetoric.
As a result of the trading week, the dollar index DXY, which tracks the rate of the American currency against the basket of 6 other major currencies, declined by 37 points to 94.97.
The dollar was under pressure after the publication of weak inflationary indices in the US.
Nevertheless, investors who are betting on the fall of the dollar should remember that the Fed intends to adhere to its plan to raise the interest rate. And this is an important fundamental factor in favor of the dollar strengthening.
As always, a number of important macroeconomic data and several important news are expected to be published on the new trading week.
Monday, September 17
12:00 (GMT+3) EUR Consumer Price Index (CPI). Core CPI
The Consumer Price Index (CPI) is published by Eurostat and determines the change in prices of the selected basket of goods and services for a given period. It is a key indicator for assessing inflation and changing consumer preferences. A positive result strengthens the EUR, a negative result weakens it.
Forecast: in August, CPI (in annual terms) grew by 2.0%, Core CPI grew by 1.0% in annual terms (against + 1.1% in the previous month). In general, the data can be characterized as positive. If the data prove to be worse than the forecast, the euro will weaken.
Tuesday, September 18
04:30 AUD Minutes of the last meeting of the RBA
Published two weeks after the meeting and the decision on the interest rate. If the RBA assesses the state of the labor market in the country and the GDP growth rate positively, and also displays a hawkish attitude toward the inflation forecast in the economy, the markets regard this as a higher probability of a rate hike at the next meeting, which is a positive factor for the AUD. The bank's soft rhetoric regarding, above all, inflation puts pressure on the AUD.
Market participants believe that the RBA will not raise interest rates until mid-2019. Salaries continue to grow slowly, and households' debt has risen to a record high, which also postpones raising 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." In his opinion, "before the rate increases, some time will pass".
Wednesday, September 19
05:00 JPY The Bank of Japan's decision on the interest rate. Press conference of the Bank of Japan and comment on monetary policy
The Bank of Japan decides on the interest rate. At the moment, the basic discount rate in Japan is in the negative territory at -0.1%. Most likely, the rate will remain at the same level. If the rate is lowered and deepens to the negative territory of -0.2%, such a decision will cause a sharp decline in the yen on the foreign exchange market and growth on the Japanese stock market. In any case, during this period of time, a volatility jump in the yen and the Asian financial market is expected.
It should be noted that above the key support levels of 110.15 (the Fibonacci level of 38.2% of the correction to growth since August of last year and the level of 99.90), 110.35 (EMA200 on the daily chart), the upward trend of the pair USD/JPY prevails. Probably, its growth will continue, against the background of different focuses of monetary policies of the Bank of Japan and the Fed.
11:30 GBP Consumer price index. Core consumer price index
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 index is a key indicator of inflation. Its publication causes major movement of the pound on the foreign exchange market and the index of the London stock exchange FTSE100.
As expected, the annual consumer inflation in August fell by -0.2%, but increased by + 2.5% in annual terms. In the previous month: 0.0% and + 2.5%, respectively.
The sharp drop in the British pound after the referendum on Brexit contributed to the growth of inflation to current values. The sharp increase in inflation in the country gives grounds to assume that the Bank of England can again return to consideration of the issue of raising the interest rate in the UK. And this is a positive factor for the pound. Values below the forecast can trigger a weakening of the pound.
Core CPI is published by the Office of National Statistics and determines the change in prices of the selected basket of goods and services (except food and energy) for this period. It is a key indicator for assessing inflation and changing consumer preferences. A positive result strengthens the GBP, the negative - weakens it.
Forecast: in August, the base CPI (in annual terms) increased by 2.2% (against + 1.9% in the previous month), which should positively affect the pound.
16:00 EUR Speech by ECB head Mario Draghi
The market reacts strongly to Mario Draghi's speeches, which follow immediately after ECB meetings on monetary policy.
Other presentations by Mario Draghi cause a weaker market reaction. However, if Mario Draghi makes unexpected statements regarding the recent meeting of the ECB and the monetary policy of the bank, this again will cause a surge in volatility in the euro trade.
Thursday, September 20
01:45 NZD New Zealand's GDP in the second quarter
The publication of data will cause increased volatility in NZD. Against the background of rising prices for agricultural products in recent years (especially for dairy products, which is an important part of New Zealand's exports), it is likely that the report on New Zealand's GDP for the second quarter will have positive indicators, and this will positively affect the positions of the New Zealand currency.
Forecast: + 0.5% (previous value + 0.5%). If the data are better, the NZD will strengthen.
10:30 CHF Decision of the Swiss National Bank on the interest rate. The SNB's statement on monetary policy
The current deposit rate is in the negative territory at -0.75%. Forecast: the rate will remain at the same level -0.75%. The Swiss central bank has consistently advocated a soft monetary policy in the country, and the traditional currency rate has traditionally been considered overvalued. Recently, the franc has largely lost the status of a safe haven asset, and the threat of intervention certainly keeps the franc from excessive growth.
Traders will carefully study the statement of the SNB to catch signals about further plans for monetary policy. Rigid rhetoric of the statements will help the franc strengthen. A soft tone and the propensity to continue the extra soft monetary policy will have a negative impact on the franc. High volatility is expected on the foreign exchange market, and, first of all, in the franc trading.
Friday, September 21
15:30 CAD Retail sales index. Core Consumer Price Index in Canada
This index is published monthly by the Statistics Canada and estimates the total amount of retail sales. The index is often considered an indicator of consumer confidence and reflects the state of the retail sector in the short term. The growth of the index is usually a positive factor for the CAD; the decline in the figure will negatively affect the CAD. The previous value of the index is -0.2%. Forecast: in July, retail sales grew in Canada by 1.1%. If the data is even weaker, the CAD will decrease.
The Core CPI of the Bank of Canada reflects the dynamics of the retail prices of the respective basket of goods and services (excluding fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transport and tobacco products). The target inflation rate for the Bank of Canada is in the range of 1% -3%. The growth of the CPI is a precursor of the rate increase and a positive factor for the CAD. Consumer prices rose in Canada by +1.6 in July in annual terms. If the data for August is worse than the previous value, this will negatively affect the CAD.
Price chart of EURUSD in real time mode
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