Overview of the main events of the Forex economic calendar for the next trading week from 24.09.2018 to 30.09.2018

Trading on key Forex news: we are expecting the decisions of the Reserve Bank of New Zealand and the Fed on the interest rate, as well as the publication of inflation indicators for Germany, the Eurozone, the US and a number of important macro data for the UK, Japan, and the USA

The past week was characterized by increased volatility. But it was especially high on Thursday, when the dollar fell against its major counterparts, while the US stock indices S&P500 and DJIA updated historical highs. On Thursday, the dollar index DXY, which tracks the rate of the US currency against the basket of 6 other major currencies, collapsed by 68 points to 93.47, returning to the June 2018 level.

Investors focused on positive macro data and began to pay less attention to trade conflicts.

As you know, last week the administration of the US president announced that it intends to introduce new duties on goods from China worth $ 200 billion, which will come into force on September 24 and will amount to 10%. From January 1, 2019, duties will be raised to 25%.

China announced new duties on the import of American goods worth $ 60 billion in response to US duties. The new duties from China will come into force on September 24 and amount to 5% -10%.

The hope that the US and China will be able to avoid a full-scale trade war has increased the propensity of investors to risk and buy risky assets on the stock market.

Nevertheless, any signs of escalating trade tensions between the US and China, tight Fed statements next week, or further weak data from emerging economies could lead to the end of the corrective weakening of the dollar.

The meetings of the central banks of Japan and Switzerland that passed in the week remained practically unnoticed. The market reaction to their decisions on interest rates was negligible, as expected. The NBS and the Bank of Japan refrained from changes in monetary policy, while maintaining the main interest rate at current negative levels.

Oil prices hold near the multi-year highs ahead of the meeting of the leading suppliers, which will take place on the weekend.

Next week will see another portion of important macro statistics and a meeting of the Fed will take place. Most market participants believe that the Central Bank will raise interest rates. However, the current weakening of the dollar suggests that the rate increase in September has already been priced in the quotes. Investors will focus their attention on the accompanying statement of the Fed. Tough rhetoric of the Fed leaders regarding the future of monetary policy can once again raise the attractiveness of the dollar.

 
 
 

As always, a number of important macroeconomic data and several important news are expected to be published on the new trading week.

Monday, September 24

There are no important macro data releases planned, and in South Korea, China and Japan, banks will be closed due to national holidays.

Volatility during the Asian trading session will be minimal.

Tuesday, September 25

02:50 (GMT+3) JPY Meeting of the Committee on Monetary Policy of the Bank of Japan.

The Committee will conduct an analysis of the economic situation in Japan and provide guidance on possible prospects for the financial policy of the Bank of Japan. If the tone of the protocol indicates the firmness of the Bank of Japan's intentions with respect to monetary policy in the country, it will negatively affect the stock market in Japan and strengthen the yen. Conversely, soft rhetoric about the prospects for the monetary policy of the bank will help to weaken the yen.

08:30 JPY Speech by head of the Bank of Japan Haruhiko Kuroda.

During the press conference, head of the Bank of Japan Haruhiko Kuroda will comment on the monetary policy of the bank. Following the results of the last meeting, the Bank of Japan's board of directors voted seven against two to leave the key rate at the level of -0.1%, and the target level of 10-year government bonds yield at zero. The bank did not change the guidelines for further monetary policy adopted in July, and reiterated that it would leave interest rates at an extremely low level "for an extended period." "We will keep extremely low rates for a long period of time," said Head of the Bank of Japan Kuroda, adding that "it is necessary to continue patiently easing monetary and credit policy." Markets usually react to Kuroda's speeches actively. If he touches on the topic of monetary policy during his speech, volatility will grow not only in the yen trade, but throughout the Asian and global financial markets.

Wednesday, September 26

17:30 USD Weekly report of the Energy Information Administration of the US Energy Ministry on oil and petroleum products in the US.

The publication of these data is usually accompanied by a surge in volatility in oil prices, which are denominated in US dollars. Reduction of reserves, as a rule, favorably affects oil prices. The previous value of the indicator was -2.057 million barrels of oil and oil products. Forecast: oil and petroleum products in the US declined by -3.677 million barrels last week, which should support oil prices.

The OPEC, as well as the largest partner of the cartel, Russia, agreed at the end of June to gradually increase oil production. Thanks to this decision, oil prices fell by about 10% from the highs reached in the spring. The risks of increased oil production by Saudi Arabia and Russia, as well as in the US, can increase pressure on the prices. Strengthening of the dollar is also one of the reasons for the drop in oil quotations in the last two months.

However, in the previous week, oil prices increased significantly from earlier lows. The growth of oil quotations contributed to both a correctional decline in the dollar, and a significant drop in oil reserves in the US storage.

21:00 USD The Fed's decision on the interest rate. Summary of economic forecasts from the US Federal Open Market Committee. Commentary of the Federal Reserve on Monetary Policy. Speech by Fed Chairman Jerome Powell.

It is widely expected that the rate will be increased by 0.25% to 2.25%.

After the decision on the interest rate, the Fed publishes a comment on the monetary policy (FOMC Statement). The report increases volatility in the USD. A tough tone of comments on the Fed's further plans strengthens the US dollar, and the soft tone weakens it.

A summary of economic forecasts from the FOMC Economic Projections includes a Fed report with a FOMC forecast for inflation and economic growth over the next 2 years and, no less importantly, shows the individual views of FOMC members on interest rates.

During the publication of the decision on the rate and the FOMC report, a surge in volatility is expected throughout the financial market, primarily in the US stock market and in dollar quotes.

Powell's comments may affect both short-term and long-term trade in the USD. A more hawkish position on the monetary policy of the Fed is seen as positive and strengthens the US dollar, while a more cautious one is estimated as negative for the USD. Any hints Powell may give on the possibility of a faster increase in the interest rate will cause the strengthening of the dollar and the fall of American stock markets.

Investors want to hear his opinion on the possibility of 4 rate increases this year.

21:30 USD Press conference of the FOMC (Open Market Committee of the US Federal Reserve).

The press conference of the US Federal Open Market Committee lasts about an hour. In the first part, the decree is read out, followed by a series of questions and answers that can increase market volatility.

Thursday, September 27

00:00 NZD The RB of New Zealand's decision on the interest rate. The accompanying statement of the RBNZ. Commentary on monetary policy.

The RB of New Zealand decides on the interest rate. The current interest rate in New Zealand is at 1.75%, remaining one of the highest in the world among advanced economies. This attracts investors into almost safe purchases of the New Zealand currency that generates revenue, as well as traders using carry-trade strategies, when a more expensive currency is bought at the expense of a cheaper one. It is widely expected that at this meeting the interest rate will remain at the same level of 1.75%.

In the accompanying statement and comments, the RBNZ will provide an explanation of the decision taken on the interest rate and comments on the economic conditions that contributed to the adoption of this decision.

At this time, volatility in the New Zealand dollar trades is increased.

01:00 NZD Press Conference of the RBNZ.

Earlier the RBNZ stated that against the backdrop of "a multitude of uncertainties", the monetary policy "will remain soft for the foreseeable future" but "can be adjusted accordingly". For a stable recovery of the New Zealand economy and rising inflation, "a lower New Zealand dollar rate is needed".

The leaders of the RBNZ previously stated that if economic growth does not accelerate in accordance with their expectations, the bank may consider the possibility of lowering interest rates. Now, probably, the RBNZ will note that there is no need to reduce interest rates.

The country's GDP growth in the second quarter was + 1.0% (compared to the same period last year, the economy grew by 2.8%). The forecast was + 0.8% and + 2.5%, respectively. This was reported last week by the Bureau of Statistics of New Zealand.

A strong report on GDP growth does not guarantee further acceleration of the economy, however, in the short term it is an argument in favor of refusing to cut rates.

Nevertheless, further prospects for the economy are still unclear.

It is likely that the head of the RBNZ Adrian Orr will once again confirm the bank's tendency to pursue a soft monetary policy, despite the country's GDP growth in the 2nd quarter, which will keep the pressure on the New Zealand currency.

In any case, the volatility in the New Zealand dollar trade is expected to grow during the RBNZ press conference.

09:35 JPY Speech by head of the Bank of Japan Haruhiko Kuroda.

During the press conference, head of the Bank of Japan Kuroda will comment on the monetary policy of the bank. Kuroda said after the meeting of the Bank of Japan last week that "it is necessary to continue patiently easing the monetary policy". Markets usually  react to Kuroda's speeches actively if he touches on the subject of monetary policy. Volatility in this case will grow not only in the yen trade, but also throughout the Asian and global financial markets.

10:00 EUR Harmonized index of consumer prices (HICP) in Germany.

This index is published by the EU Statistics Office and is calculated on the basis of the statistical methodology agreed upon by all EU countries. It is an indicator for assessing inflation and it is used by the ECB Governing Council to assess the level of price stability. A positive result strengthens the EUR, a negative result weakens it.

In August, the HICP index (in annual terms) increased by + 1,9%. If the data for September is better than the previous value, then the euro will strengthen for a short time.

15:30 USD Annual GDP of the United States (final estimate). Personal consumption expenditureprice index for the 2 nd quarter.

Data on GDP is one of the key indicators (along with data on the labor market and inflation) for the Fed in terms of its monetary policy. A strong result strengthens the US dollar; a weak GDP report has a negative effect on the US dollar. In the previous quarter, GDP growth was + 2.0%. The forecast for the 2nd quarter of this year is + 4.2% (preliminary estimate was + 4.2%). If the data prove to be worse than the forecast, the dollar will react with a decrease.

Personal consumption expenditure price index is an important indicator of inflation, reflecting the average amount of money that 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 deciding on the rate.

A high indicator is considered as a positive factor for USD, but data below the forecast adversely affect the rate of USD. Forecast: for the 2nd quarter the value of the index was 2.2% (against 2.3% in the previous quarter and the previous value of 2.0%).

Friday, September 28

00:45 CAD Speech of the head of the Bank of Canada Stephen Poloz.

In his speech, the head of the Bank of Canada Stephen Poloz will explain the bank's position and assess the current economic situation in the country. If the tone of his speech is tough concerning the monetary policy of the Bank of Canada, then the Canadian dollar will strengthen on the foreign exchange market. If he calls for the preservation of soft monetary policy, the Canadian currency will decline. In any case, during Stephen Poloz's speech, the volatility in the Canadian dollar is expected to grow.

02:30 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 evaluation of price dynamics obtained as a result of comparison of retail prices of the corresponding basket of goods and services. The CPI Tokyo index excluding the price of fresh food, an important barometer of changes in consumer trends, in August was at 0.9% (in annual terms). Inflation in Japan is still low. The growth of the indices may provoke the strengthening of the yen. Forecast for September: + 0.8%. During the publication of the CPI indices, the volatility of trade in the yen and the Japanese stock market is expected to increase.

12:00 EUR Consumer Price Index (CPI). Core CPI (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 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: CPI index (in annual terms) increased by 2.0% in September, the Core CPI index grew by 1.0% (in annual terms) (against + 1.0% 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.

15:30 USD Core price index - Personal consumption expenditure.

The data are published by the Bureau of Economic Analysis of the US Department of Commerce and reflect the average amount of money Americans spend per month on durable goods, consumer goods and services (excluding food and energy). One of the most important indicators of inflation, which is taken into account by the Federal Reserve when deciding on the interest rate.

A strong result strengthens the US dollar. The indicator below the forecast weakens the dollar. Forecast: in August, spending on personal consumption of Americans increased by 2.0% (in annual terms) against + 2.0% in July. The data is strong, and the dollar should respond positively to their publication. If the data turn out to be weaker, the dollar may drop significantly in the short term. Deteriorating indicators is a negative factor for USD.

Price chart of EURUSD in real time mode

Economic calendar for the week 24.09 – 30.09.2018

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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