Overview of the main events of the Forex economic calendar for the next trading week from August 27, 2018 to September 2, 2018

Trading on key Forex news: expecting the report of the Bank of England on the level of inflation, the publication of data on US GDP for the second quarter, and inflation consumer price indices in the euro zone

Major US stock indices finished the week in a positive territory after the Fed's chairman Jerome Powell made a speech at the Jackson Hole symposium on Friday to defend the central bank's plans to gradually raise interest rates.

The head of the Federal Reserve confirmed that, although the US economy appears to remain strong, the Central Bank intends to adhere to the previous plan, within which it gradually raises interest rates.

At the same time, the dollar index DXY, which tracks the rate of the US currency against the basket of 6 other major currencies, fell by 0.54% on Friday under teh pressure from Powell's comments, thus ending the trading week in the negative territory at 95.06.

Therefore, Powell did not give the bulls the opportunity to finalize the downward correction of the dollar on Friday.

In the minutes published last Wednesday from the July 31-August 1 meeting of the Fed, its leaders also confirmed their determination to continue gradually tightening monetary policy. According to the minutes of the meeting, FOMC members discussed the possibility of further raising interest rates. The likelihood of the rate increase in September is estimated by investors at 95%.

And, nevertheless, following the results of the last two weeks, the dollar index DXY fell by 1.26%.

On Thursday, China and the United States introduced new trade duties against each other amounting to $ 16 billion on each side. The administration of President of the United States Donald Trump is discussing the next duties on Chinese goods worth $ 200 billion. These duties can be introduced as early as next month.

On Monday, participants of the financial markets will discuss the results of the annual Federal Council symposium on economic policy held in America's Jackson Hole on August 23-25.  

As always, a number of important macroeconomic data and several important news are expected to be published on the new trading week, among which is the report of the Bank of England on the inflation level, data on US GDP for the second quarter, and inflation consumer price indices in the euro zone

Monday, August 27

There are no important macroeconomic news planned.

Tuesday, August 28

13:00 (GMT+3) GBP Report on inflation

The Governor of the Bank of England and the members of the Bank of England's Monetary Policy Committee speak in Parliament with comments on the current economic situation and economic prospects. At this time, volatility in pound trades could rise sharply. One of the main benchmarks for the Bank of England regarding the prospects for monetary policy in the UK, in addition to GDP, is the level of inflation. If the tone of the report is soft, the British stock market will receive support, and the pound will decrease. Conversely, tough rhetoric of the Bank of England's representatives in terms of containing inflation, implying an increase in the interest rate in the UK, will lead to a strengthening of the pound.

Wednesday, August 29

15:30 USD Annual GDP of the United States (second estimate). Core PCE for the 2nd quarter

Data on GDP is one of the key factors (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 + 2.2%. The forecast for the 2nd quarter of this year is + 4.0% (preliminary estimate was + 4.1%). If the data proves to be worse than the forecast, the dollar will react with a decrease.

Core Personal Consumption Expenditure 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, and data below the forecast adversely affect the USD rate. Forecast: for the 2nd quarter the value of the index was 2.0% (against 2.3% in the previous quarter and the previous value of 2.0%).

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

The publication of this data is usually accompanied by a surge in volatility in oil prices, which are denominated in US dollars. Reduction of reserves, as a rule, affects the oil prices favorably. The previous value of the indicator was -5.836 million barrels of oil and oil products.

OPEC, as well as Russia, the largest partner of the cartel, agreed to gradually increase oil production at the end of June. 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 prices. Strengthening 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 price of Brent oil rose by $ 4 last week to $ 75.90 per barrel. 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.

Thursday, August 30

15:00 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 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.

Forecast: in August the HICP index (in annual terms) increased by + 2.0% (against + 2.1% in the previous release). If the data proves to be better than the forecast, then the euro will strengthen for a short time.

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). This is 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 July, personal consumption expenditure of Americans increased by 2.0% (in annual terms) against + 1.9% in June. 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.

Friday, August 31

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 ex fresh food, an important barometer of changes in consumer trends, in July was at 0.8% (in annual terms). Inflation in Japan is still low. The growth of the indices may provoke the strengthening of the yen. The forecast for August: + 0.7%. 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

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, the CPI index (in annual terms) increased by 2.1%, the Core CPI increased (in annual terms) by 1.1% (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.

Price chart of EURUSD in real time mode

Economic calendar for the week 27.08 – 02.09.2018

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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