Overview of the main events of the Forex economic calendar for the next trading week from 29.10.2018 to 04.11.2018
Trading on key Forex news: we expect the publication of the decisions of the central banks of Japan, China, and the UK on interest rates, inflation indicators for the USA, Eurozone, and Australia, GDP for the third quarter in the Eurozone, as well as labor market data for the USA and Canada for October
Increasing concerns about geopolitical contradictions and a slowdown in global economic growth are increasingly affecting the markets. The S&P500 index, for example, has lost 9.5% since the beginning of the month, the Nasdaq Composite has rolled back more than 10% from its recent high, and the DJIA - 7.2%. Last week, data showed that Chinese growth slowed to a low of almost 10 years.
Against the background of expectations of the next rise in the interest rates by the Fed and the aggravation of foreign trade conflicts, which could weaken the economic growth of China and other countries, the nervousness of investors is growing, forcing them to avoid risks. The yield on US Treasury bonds with a 10-year maturity fell by 3.6% over the week to 3.079%. Quotes of gold rose for the fourth week in a row, closely approaching the mark of 1238.00 dollars per ounce.
The dollar index DXY, which tracks the rate of the US currency against a basket of 6 other major currencies, despite a decline on Friday, rose by 0.7% over the week to 96.10.
The week was full of important events, including meetings of the central banks of Canada and the Eurozone. The Bank of Canada expectedly raised the rate by 0.25% to 1.75%. The ECB also gave no surprises, keeping its current monetary policy unchanged.
During the press conference, the ECB head Mario Draghi said that the ECB will not intervene in resolving the confrontation between the European Commission and the Italian government on the country's budget.
The growing profitability of Italian bonds is worrying the authorities, as it can lead to the bankruptcy of banks holding Italian government bonds. The debt crisis in Italy remains the biggest risk for the Eurozone in the coming years, as it can spread to other countries of the monetary union.
The unresolved Brexit issue also puts pressure on both the pound and the euro. A hard Brexit is very probable.
The dollar is still the leader on the foreign exchange market.
As always, a number of important macroeconomic data and several important news are expected to be published on the new trading week.
Monday, October 29
12:30 (GMT) 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 Americans spend per month on durable goods, consumer goods, and services (excluding food and energy). 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. The figure below the forecast weakens the dollar. Forecast: In September, personal consumption expenditure of Americans increased by 2.0% (in annual terms) versus + 2.0% in August. If the data is weaker, the dollar may decline significantly in the short run. Deterioration is a negative factor for the USD.
Tuesday, October 30
09:00 EUREurozone GDP for the 3rd quarter (preliminary estimate)
GDP is considered an indicator of the overall state of the Eurozone economy. The growing trend of the GDP is considered positive for the EUR, a low result weakens the EUR.
Recently, macro data from the Eurozone has indicated a slowdown in the European economy. Against the background of steadily low inflation, the risks of a slowdown in the growth of the European economy may force the ECB leadership to extend the QE program instead of its completion in December. ECB President Mario Draghi reiterated during a press conference after the meeting of the central bank that ended last week that economic risks remain balanced. In his opinion, low growth rates in the first half of 2018 are temporary. Mario Draghi also previously stated that the QE program can be extended if necessary.
Forecast: in the third quarter, Eurozone GDP grew by 0.4% (+ 1.9% in annual terms). If the data is weaker, the euro will decline. Data better than the forecast will strengthen the euro.
Wednesday. October 31
00:30 AUD Consumer price index. Trimmed mean core inflation index (3 quarter)
The inflationary consumer price index (CPI) for the third quarter of this year, published by the RBA and the Australian Bureau of Statistics, assesses the dynamics of retail prices for goods and services in Australia. CPI is the most significant indicator of inflation and changes in customer preferences. A high value is a positive factor for the AUD, and a low one is negative. The previous value of the indicator was + 0.5% (+ 2.1% in annual terms). According to the forecast, the indicator is expected to decline to + 0.4% (+ 1.9% in annual terms), which may adversely affect the AUD. If the value of the indicator is better than the forecast, this will have a positive effect on the AUD.
The trimmed mean core inflation index of the RBA for the third quarter is published by the RBA and the Australian Bureau of Statistics. It reflects the dynamics of retail prices of goods and services that make up the consumer basket. The trimmed mean method takes into account the weighted average core, the central 70% of the index components. The previous value of the index was + 0.5% (+ 1.9% in annual terms). According to the forecast, it is expected that the value of the indicator decreased to + 0.4% (+ 0.5% in annual terms), which may adversely affect the AUD.
From 01:00 to 05:00 JPY The decision of the Bank of Japan on the interest rate. Press conference of the Bank of Japan and commentary on monetary policy
The Bank of Japan decides on the interest rate. Currently, the discount rate in Japan is in negative territory amounting to -0.1%. Most likely, the rate will remain at the same level. If the rate is lowered and deepened into negative territory, such a decision will cause a sharp decline in the yen on the foreign exchange market and growth on the Japanese stock market. In any case, during this period, a jump in volatility is expected in the yen and on the Asian financial market.
Last week, there was an increase in the yen and a decrease in the USD/JPY pair. However, it is worth noting that above the key support levels of 111.25 (EMA144 on the daily chart) and 111.00 (EMA200 on the daily chart), the upward dynamics of the USD/JPY pair prevails. Probably, its growth will continue, against the background of the different orientation of the monetary policies of the Bank of Japan and the Fed.
10:00 EUR Consumer Price Index (CPI). Core CPI (preliminary release)
Forecast: in October, CPI (in annual terms) rose by 2.2%, Core CPI rose (in annual terms) by 1.0% (against + 0.9% 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.
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 US storages
As the Energy Information Administration (EIA) of the US Department of Energy reported last Thursday, oil reserves in the country increased by 6.35 million barrels last week. The increase in reserves significantly exceeded market expectations (3.69 million barrels). The total oil reserves in the US are now 422.75 million barrels, which is the highest mark since the end of June. The growth of oil reserves has a negative impact on oil prices, which have fallen sharply since the beginning of the month.
The fall in oil prices also contributed to the strengthening of the dollar and falling stock markets, which caused investors to fear the 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.
Четверг 01 Ноября
After 01:00 CNY, the decision of the People’s Bank of China on the interest rate
China's economy is the second largest in the world after the US. Therefore, the publication of important macroeconomic indicators of this country has a significant impact on world financial markets, primarily on the positions of the yuan, other Asian currencies, the dollar, and commodity currencies, as well as Chinese and Asian stock indices. If the rhetoric of the leaders of the National Bank of China regarding inflationary prospects is tough, and the rate is raised, this will be a positive (bullish) factor for CNY. A soft rhetoric of China’s NB and a lower rate will cause the yuan to fall.
12:00 GBPThe decision of the Bank of England on the interest rate. Monetary Policy Report. Minutes of the meeting of the Bank of England. Planned volume of asset purchases by the Bank of England
It is expected that the rate will remain at the same level of 0.75%. In August, the rate was increased by 0.25%, the second time in the last 10 years, despite the fact that inflation remains below the forecast, wage growth slowed down, and the uncertainties associated with Brexit increased. Economists believe that the next increase in rates will not happen until May of next year, but the balance of risks is shifted towards an even later continuation of monetary tightening.
Also at this time the following data are published: the report on monetary policy with the results of voting on the rate and other issues, as well as comments on the state of the economy; minutes of the Monetary Policy Committee (MPC) of the Bank of England with the distribution of votes for and against the increase / decrease in the interest rate. The main risks for the UK after Brexit are associated with expectations of a slowdown in the country's economic growth, as well as with a large current account deficit in the UK balance of payments.
The asset purchase program by the Bank of England, also called Quantitative Mitigation, has remained unchanged since August 2016 at 435 billion pounds per month. Probably, the volume of bond purchases by the Bank of England on the open market will remain at the same level of 435 billion pounds sterling in November.
And yet, the intrigue about the future actions of the Bank of England remains. A lot of trading opportunities are available in the pound and the FTSE100 index during the period of publication of the bank’s decision on rates.
12:30 GBP Speech by head of the Bank of England Mark Carney
During the press conference, Mark Carney will explain the decision of the Bank of England on rates and answer questions. Participants of the financial markets are waiting for him to clarify the situation regarding the future policy of the central bank of Great Britain. Volatility during his speech usually grows sharply in the pound trade and in the index of the London Stock Exchange FTSE, if Mark Carney gives any hints of tightening or easing of monetary policy.
Friday, November 2
12:30 USD Average hourly wages. Non-farm payrolls. Unemployment rate
The most important indicators of the state of the labor market in the US in October. Forecast: + 0.3% (vs. + 0.3% in September) / 190,000 (vs. 134,000 in September) / 3.7% (vs. 3.7% in September).
In general, the indicators can be described as strong. If they coincide with the forecast or are better, it will have a positive impact on the USD. However, it is often difficult to predict the market response to the publication of indicators. In any case, when these indicators are published, a surge in volatility is expected in trading not only for the USD, but also for the entire financial market. Probably the most cautious investors would prefer to stay out of the market during this period.
12:30 CAD Changes in the number of employed citizens in Canada. Unemployment Rate
Unemployment in September was 5.9%. In the case of rising unemployment, the Canadian dollar will decline. If the data is better than the forecast, the Canadian dollar will strengthen. Lower unemployment is a positive factor for the CAD. Forecast: Unemployment rate in October is at 5.9%.
Price chart of GBPUSD in real time mode
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