Overview of the main events of the Forex economic calendar for the next trading week from 19.11.2018 to 25.11.2018
Trading on key Forex news: we are waiting for the outcome of the European Commission meetings discussing the Italian budget situation and the political declaration on the future Brexit agreement and the UK's exit plan, the publication of minutes from the last RBA and ECB sessions, the results of the British Parliament's hearing of the inflation report by the Bank of England, as well as the publication of indicators of consumer inflation in Canada in October
At the beginning of last week, the DXY dollar index, which tracks the US currency against a basket of 6 other major currencies, reached a new 16-month high, exceeding the 97.50 mark. And yet, following the trading week that ended last Friday, the dollar gave up its leadership, and the dollar index DXY moved to negative territory, falling below the level of 96.40.
The dollar declined despite positive statements made by the Fed Chairman Jerome Powell on Wednesday and Thursday, about the "good shape" of the US economy.
“I am very pleased with the state of the US economy at the moment,” he said. “The Fed’s policy is one of the reasons why the country's economy is so strong now.” It is widely expected that the Fed will raise the key interest rate in December, and then raise the interest rate several times in 2019.
Investors preferred safe assets such as gold, yen, franc, government bonds, and global stock indices continued to decline.
The greatest volatility was observed in currency pairs with the pound, which remains under the pressure of the problems with Brexit.
On Thursday, the pound fell sharply amid the reports in the media that the British Minister for Brexit Dominic Raab is resigning. He was followed by six more ministers from the British government (now Raab’s seat will be taken by Stephen Barkley, who represents the Conservative Party in parliament. In 2016, he supported the campaign for the country's withdrawal from the EU).
The pound fell even despite the plan approved by the British Parliament for exit from the European Union presented on Wednesday by Prime Minister Theresa May. In her opinion, this plan "meets the priorities of the British people."
Next week, namely on November 25, a meeting of EU leaders on this issue is to take place. Last Thursday, the President of the European Council Tusk said that the EU wanted a political declaration on the future agreement to be represented by representatives of the UK by November 20.
British Prime Minister Theresa May has faced strong resistance in parliament due to the promotion of a draft agreement on exit from the EU. If the vote on the agreement fails, then May may be dismissed. It can also lead to a general election or a second referendum. The probability of the UK's exit from the EU without an agreement rose to 50%, against 20% the previous week.
As always, a number of important macroeconomic data and several important news are expected to be published on the new trading week.
Monday, November 19
There are no important macro data planned to be published.
Tuesday, November 20
00:30 (GMT) 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 assesses the state of the labor market in the country and the GDP growth rates positively, 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 the AUD. 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 rate is increased”.
02:00 JPY Press conference of the Bank of Japan and commentary on monetary policy
According to Kuroda and the management of the Bank of Japan, "it is appropriate to patiently continue with the current soft monetary policy." If he touches on the topic of monetary policy during his speech, volatility will increase not only in the yen trading, but throughout the Asian and global financial markets.
Soft rhetoric of Kuroda’s speech will have a positive effect on the Japanese stock market, and a negative one on the yen quotes.
Wednesday, November 21
EUR Decision of the European Commission on the Italian budget
Italy has not made any changes to the project regarding the country's budget, and the EU can take disciplinary action against Italy, whose economy is the third largest economy in the Eurozone.
15:30 USD Weekly report of the Energy Information Administration of the United States Department of Energy on the reserves of oil and petroleum products in US storage
The publication of this data is usually accompanied by a surge in volatility in oil prices, which are denominated in US dollars. A decrease in reserves, as a rule, has a positive effect on oil prices. The previous value of the indicator is +10.27 million barrels of oil and petroleum products. If the reserves of oil and oil products in the United States rose again last week, then this will negatively affect oil prices.
In recent weeks, there has been a drop in oil prices. Last week, oil prices hit new 5-week lows below $ 65.00 per barrel of Brent crude. In September, Brent crude was quoted at $ 86.60 a barrel, which is a multi-year high.
Thursday, November 22
The US celebrates the national holiday of Thanksgiving. US banks will be closed, and the US stock exchanges will operate in a reduced mode. Trading volumes will be lower, but this does not exclude the possibility of increased volatility on this day caused by speculative transactions of private investors.
The next day, Black Friday sales start in the United States.
GBP Inflation report hearing
Head of the Bank of England and members of the Monetary Policy Committee of the Bank of England come forward with comments on the current economic situation and the outlook for the economy. At this time, the volatility in the pound may rise sharply. One of the main benchmarks for the Bank of England in terms of monetary policy prospects in the UK, in addition to GDP, is the level of inflation. If the tone of the report is soft, then the British stock market will receive support, and the pound will decline. Vice versa, tough rhetoric of representatives of the Bank of England in relation to curbing inflation, implying a rise in interest rates in the UK, will strengthen the pound.
12:30 EUR Minutes of the ECB meeting on monetary policy
This document provides an overview of the current policy of the ECB with planned changes in the financial and monetary areas. The publication of this document may cause a surge in volatility in the euro and the European stock market. Investors will carefully study the text of the protocol from the October ECB meeting in order to catch additional signals regarding the completion of the QE program. The head of the ECB, Mario Draghi, has repeatedly stated earlier that the quantitative easing program can be extended if necessary. Recently, weak macro data from the Eurozone has indicated a slowdown in the growth of the European economy.
However, volatility in euro trading could increase dramatically if the minutes from the October meeting of the ECB contain unexpected statements or new information regarding the prospects of the QE program.
Friday, November 23
13:30 CAD Retail Sales Index. Consumer Price Indices in Canada
The retail 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. The 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 -0.1%. If September data is weak again, the CAD will decrease.
The Core Consumer Price Index (Core CPI) from the Bank of Canada reflects the dynamics of the retail prices of the corresponding 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. In September, consumer prices in Canada increased by + 2.2% (year-on-year) and the Core CPI rose by + 1.5%. If the data for October are worse than the previous values, then this will negatively affect the CAD.
Price chart of GBPUSD in real time mode
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