Overview of the main events of the Forex economic calendar for the next trading week from 22.10.2018 to 28.10.2018
Trading on key Forex news: we expect the publication of the decisions of the Bank of Canada and the ECB on interest rates, as well as data on US GDP for the third quarter
Strong volatility on financial markets persisted last week, while the price of oil continued to fall. Last Wednesday, oil prices fell sharply after the publication of data on US oil reserves, which rose last week by 6.5 million barrels to 416.4 million barrels, the highest mark since the end of June. Falling stock markets also raised fears that global oil demand will start to decline and cause an increase in oversupply.
At the end of the week, oil prices reached important support levels, $ 68.60 per barrel of WTI crude oil and $ 79.30 per barrel of Brent crude oil.
Meanwhile, the US dollar strengthened last week, both against the background of uncertainties over Brexit and after the publication of the minutes from the September Fed meeting, according to which the US central bank is going to continue to raise interest rates.
Representatives of the UK and the EU, judging by reports in the press, have not been able to make progress in the negotiations on Brexit, and the parties argue that they are stepping up preparations for the case of the UK leaving the EU without an agreement.
In the minutes of the September meeting published last Wednesday, the Fed signaled the possibility of another rate increase in 2018 and three increases in 2019. Higher interest rates usually increase the demand for national currency.
The dollar is supported due to faster economic growth than in other countries. US economic growth is now higher than a couple of years ago.
The DXY dollar index, which tracks the US currency against a basket of 6 other major currencies, rose by 35 points to 95.38 last week. The yield on 10-year US Treasury bonds held around the maximum levels (3.196% at the end of the week) after last week it reached 3.261%, the highest level for 7.5 years, also supporting the dollar.
In general, the dollar remains the leader on the foreign exchange market, despite all the fluctuations in the rates and the flow of conflicting political news.
As always, a number of important macroeconomic data and several important news are expected to be published on the new trading week.
Monday, October 22
No important macro data is expected to be released.
Volatility and trading volumes on Monday will be reduced.
Tuesday, October 23
No important macro data is expected to be released.
Volatility and trading volumes on Tuesday will be reduced.
Participants in the oil market will pay attention to the publication at 20:30 (GMT) of the report of the American Petroleum Institute (API) on commercial reserves of oil and petroleum products in the US last week .
Wednesday, October 24
14:00 (GMT) CAD The decision of the Bank of Canada on the interest rate. Accompanying statement of the Bank of Canada. Report of the Bank of Canada Monetary Policy Committee
Bank of Canada decides on the interest rate. The Bank of Canada is expected to raise interest rate by 0.25% to 1.75%. Probably, on the eve of this meeting of the bank, the Canadian dollar will maintain a positive trend, despite the publication of weaker than expected inflation data last Friday. Consumer inflation rose in September by 2.2% in annual terms (the forecast was + 2.7%), retail sales volumes decreased in August by 0.1% (the forecast was + 0.3%).
In their accompanying statement and report on changes in monetary policy, representatives of the Bank of Canada will explain the position of the bank and assess the current economic situation in the country. A harsh tone of the accompanying statement of the Bank of Canada regarding rising inflation and the prospects for further monetary tightening will cause a strengthening of the Canadian dollar. If the Bank of Canada is followed by signals to extend the period for maintaining a soft monetary policy, the Canadian currency will decline.
The Monetary Policy Committee of the Bank of Canada will make a report on current monetary policy containing information on changes in monetary policy. A harsh tone of the report may the CAD to grow.
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
The fall in oil prices also contributed to the strengthening of the dollar and falling stock markets, which caused investors to fear a slowdown in the global economy.
The publication of data is usually accompanied by a surge in volatility in oil prices, which are denominated in US dollars.
15:15 CAD Press Conference of the Bank of Canada
During the press conference, head of the Bank of Canada Stephen Poloz will comment on the decision on rates and on the monetary policy of the bank. In the second part of the press conference, representatives of the Bank of Canada will answer questions. During the press conference, the CAD volatility will increase.
Thursday, October 25
11:45 EUR ECB's decision on the interest rates
The ECB publishes its decision on the key rate and on the deposit rate. The ECB’s tough position on inflation and the level of key interest rates strengthens the euro, a soft position and lower rates weaken the euro. The forecast - the rate will remain at the same level of 0%. The ECB's deposit rate for commercial banks is also likely to remain unchanged at -0.4%.
Earlier, the central bank promised that it would not consider raising the rates for a long time after the end of the quantitative easing program (QE). The rate hike in the Eurozone is unlikely until mid-2019. It is widely expected that the ECB will confirm its plans to complete QE in December. However, earlier the ECB President Mario Draghi stated that the QE program could be extended if necessary. If the QE program is extended at this meeting, the euro will decline. However, even such a decision will have a limited impact on the markets, economists believe.
12:30 EUR The ECB Press Conference
At the press conference, head of the ECB Mario Draghi will speak. A surge in volatility is expected, not only in trading in the euro, but also on the entire financial market. Mario Draghi is famous for his ability to move financial markets with his comments. Similar previous decisions of the ECB on the interest rate and subsequent press conferences moved the euro by 3-5% in a short time. Draghi will assess the current economic situation in the Eurozone and comment on the ECB’s decision on interest rates.
23:30 JPY Consumer price index (CPI) in the Tokyo region (ex fresh food)
This consumer price index, published by the Bureau of Statistics of Japan, reflects the assessment of price dynamics obtained by comparing the retail prices of the corresponding basket of goods and services. Tokyo's CPI index ex fresh food, an important barometer of changes in consumer trends, was released in September with a value of + 1.0% (annualized). Inflation in Japan is still low. The growth of the indices may trigger the strengthening of the yen. October forecast: + 0.9%. During the publication of CPI indices, the volatility of trading in the yen and the Japanese stock market is expected to increase.
Friday, October 26
12:30 USD Annual US GDP for the 3rd quarter (preliminary estimate). Core personal consumption expenditure index for the 3rd quarter
GDP data is one of the key indicators (along with labor market and inflation data) for the Fed in terms of its monetary policy. A strong result strengthens the US dollar; weak GDP report adversely affects the US dollar. In the previous quarter, GDP growth was + 4.2%. The forecast for the 3rd quarter of the current year is 3.3%. Despite the relative decline, this is a strong value. If the data turns out to be worse than the forecast, the dollar will respond with a decrease.
The core personal consumption expenditure index is an important indicator of inflation, reflecting the average amount of money Americans spend per month on durable goods, consumer goods and services (excluding food and energy). This indicator is one of the most important indicators that the Fed takes into account when making a decision on the rate.
The high rate is considered as a positive factor for the USD, data below the forecast negatively affect the USD rate. Forecast: for the 3rd quarter the index value was 2.0% (against 2.1% in the previous quarter).
14:00 EUR Speech by ECB President Mario Draghi
His speeches after the ECB meetings usually have a particularly strong influence on the market. In previous periods, his speech in similar situations could cause a change in the rate of the euro by more than 3%. His unexpected statements can also cause a surge in volatility today.
If Mario Draghi does not touch upon the ECB’s monetary policy, the reaction to his speech will be weak.
Price chart of EURUSD in real time mode
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