Overview of the main events of the Forex economic calendar for the next trading week from 26.11.2018 to 02.12.2018.
Trading on key Forex news: we are waiting for the outcome of the EU Brexit summit, speeches by heads of the ECB, the Bank of England, the Fed, including Mario Draghi, Mark Carney, and Jerome Powell; the publication of data on US GDP for the 3rd quarter, the minutes of the November Fed meeting, and consumer price inflation index in the Eurozone.
Last Thursday, the United Kingdom and the European Union drew up a preliminary agreement on the Brexit conditions. It is expected that next Sunday the leaders of the EU countries will sign the declaration and agreement at a special summit in Brussels.
If this happens, Prime Minister Theresa May will have to gain support in parliament. "The British want this to be settled. They want a good agreement that will put us on a course towards a brighter future. We can conclude this agreement, and I intend to do that," said May.
Many experts are skeptical about Theresa May's plans for Brexit. The official date of the UK's exit from the EU is March 29, 2019. After Brexit, during the transition period, new detailed negotiations will begin, and British-European economic relations at this time will remain essentially unchanged. In this case, the UK will pay billions of euros in its obligations to the budget unit.
Former Brexit minister Dominic Raab believes parliamentarians will vote against the deal. This will require a repeat vote, which is likely to be scheduled for February next year. It is likely that the pound will remain under pressure until this date.
In addition to Brexit, Europe has its own problems. In particular, this relates to the disagreements of the European Commission and the Italian government on the draft budget of the country providing for a deficit of 2.4%. The growing profitability of Italian bonds is worrying the authorities, as it can lead to the bankruptcy of banks holding Italian government bonds. Some experts believe that Italy may withdraw from the Eurozone in the next 12 months. The probability index of the collapse of the Eurozone rose to a maximum since April 2017 amid controversy over the draft budget of Italy.
Investors preferred dollar again last week. The escalation of the US trade conflict with China (the White House threatened to double the import duties on Chinese goods) also forces investors to choose the dollar as a defensive asset.
The DXY dollar index, which tracks the US currency against a basket of 6 other major currencies, ended the last week with a gain of 0.53% (+52 points) at 96.84.
This new week, investors will pay attention to the outcome of the EU Brexit summit, speeches by the ECB, Bank of England, the Fed, including Mario Draghi, Mark Carney, and Jerome Powell, the publication of data on US GDP for the 3rd quarter, the minutes from the November Fed meeting, and also consumer price inflation index in the Eurozone.
As always, a number of important macroeconomic data and several important news are expected to be published on the new trading week.
Sunday, November 25
22:45 (GMT) AUD Speech by head of the RBA Philip Lowe
In his speech, Philip Lowe will assess the current situation in the Australian economy and point out further plans for the monetary policy of his department. Any signals from him regarding changes in the plans of the monetary policy of the RBA will cause a sharp increase in volatility in the AUD trading and the Australian stock market.
Monday, November 26
The EU Brexit summit
EU leaders will discuss future Brexit agreement in Brussels.
14:00 EUR Speech by ECB head Mario Draghi
The market reacts strongly to Mario Draghi's speeches, which follow immediately after the ECB’s monetary policy meetings. Other appearances by Mario Draghi cause a less active market reaction. Most likely, Mario Draghi's speech will be devoted to the topic of the future EU agreement with the UK on Brexit. However, if Mario Draghi makes unexpected statements regarding the recent meeting of the ECB and the monetary policy of the bank, this will again cause a surge in volatility in the euro trading.
18:30 GBP Speech by head of the Bank of England Mark Carney
In one of his recent speeches, Mark Carney said that the management of the Bank of England does not doubt the ability of UK banks to cope if the Brexit talks do not bring results. In his opinion, the exit ofthe Great Britain from the EU without an agreement would be a “real economic shock.” In this situation, raising or lowering interest rates by the Bank of England is not so important for the economy.
Probably, during his speech, Mark Carney will again talk about the prospects for the UK economy and the actions of the Bank of England in the conditions before the official exit date on March 29, 2019 and after.
Tuesday, November 27
There are no important macro data scheduled to be published.
However, traders should pay attention to the publication at 15:00 of the Conference Board indicator on the level of consumer confidence in the US in November. This indicator reflects the confidence of American consumers in the economic development of the country. High value indicates growth, while low value indicates stagnation. The previous value of the indicator was 137.9. The growth rate will strengthen the USD, and a decrease in value will weaken the dollar. It is expected that this indicator will have value of 136.2, which may adversely affect the dollar, despite the relatively high value of the indicator.
Wednesday, November 28
13:30 USD Annual US GDP for the 3rd quarter (second estimate). Core personal consumption expenditure index for the 3rd quarter (second estimate)
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 this year + 3.5%. Despite the relative decline, this is a strong indicator. If the data turns out to be worse than the forecast, the dollar will respond with a decrease.
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.
A high value is considered a positive factor for the USD, data below the forecast negatively affect the USD rate. Forecast: for the 3rd quarter the index value was 1.6% (versus 2.1% in the previous quarter).
15:30 USD Weekly report of the Energy Information Administration of the US Department of Energy on the reserves of oil and petroleum products in US storages
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 was +4.851 million barrels of oil and petroleum products. If the reserves of oil and petroleum 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 7-week lows below $ 59.00 per barrel of Brent crude. In September, Brent crude was quoted at $ 86.60 a barrel, which is a multi-year high.
The fall in global stock indices and signs of a slowdown in global economic growth also adversely affect oil prices. There are no signs for a reversal of the bearish trend in oil prices.
17:00 USD Speech by Fed Chairman Jerome Powell
After the last Fed meeting in September, Powell said everything that financial market participants wanted to hear from him. Powell confirmed the Fed’s plans for another interest rate increase in 2018 and 3 rate increases in 2019.
In one of his recent speeches, Jerome Powell expressed confidence in the "good state" of the American economy. 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. Most likely, the reaction to his speech will be minimal. However, Powell’s comments may affect both short-term and long-term USD trading if he again touches on the Fed’s monetary policy topic. A more “hawkish” position on the Fed’s monetary policy is seen as positive and strengthens the US dollar, while a more cautious one is evaluated as negative for the USD.
The main issue is how Powell interprets the fall in stock market quotes. If he makes unexpected statements, then volatility in trading in financial markets may increase. Any hints of Powell on the need for a cautious approach to raising interest rates will cause the dollar to fall and American stock markets to rise.
Thursday, November 29
13:30 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). This is one of the most important indicators of inflation, which the Fed takes into account when making decisions on interest rates.
A high result strengthens the US dollar. A value below the forecast weakens the dollar. Forecast: In October, personal consumption expenditure of Americans rose by 2.0% (year-on-year) against + 2.0% in September. If the data is weaker, the dollar may decline significantly in the short run. The deterioration of indicators is a negative factor for the USD.
19:00 USD Minutes of the last meeting of the Federal Open Market Committee (FOMC Minutes)
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 likelihood of another 1 Fed rate hike in December is more than 90%.
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.
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, excluding the price of fresh food, an important barometer of changes in consumer trends, came out in October 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. November forecast: + 1.0%. During the publication of CPI indices, the volatility of trading in the yen and the Japanese stock market is expected to increase.
Friday, November 30
10:00 EUR Consumer Price Index (CPI). Core CPI (preliminary release)
The consumer price index (CPI) is published by Eurostat and determines the price change of the selected basket of goods and services for the period. The index is a key indicator for estimating inflation and changing consumer preferences. A positive result strengthens the EUR, a negative one weakens it.
Forecast: in November, CPI index (in annual terms) increased by + 2.1%, Core CPI increased (in annual terms) by + 1.1% (against values of + 2.2% and +1.1 %, respectively, in the previous month). In general, the data can be described as positive. If the data turns out to be worse than the forecast, the euro will weaken.
Price chart of EURUSD in real time mode
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