Review of the main events of the Forex economic calendar for the next trading week (09.05.2022 – 15.05.2022)
The first week of May was very volatile and rich in economic events. Despite the volatility during it, the DXY dollar index remained almost at the same levels as a week ago, having managed, nevertheless, to update a 2-year high above 104.00.
As a result of the Fed meeting, which ended last Wednesday, its leaders decided to raise interest rates by 0.50% and announced the beginning of the reduction of the Fed’s balance of assets in the amount of $9 trillion next month. “Inflation is too high, and we understand the difficulties it causes. We are taking swift action to bring it down,” the Fed Chairman Jerome Powell said at a press conference following the meeting, adding that “the Federal Open Market Committee is generally leaning towards considering further interest rate hikes of 50 basis points over the next few meetings.”
Thus, the dollar has every chance to accelerate its growth, primarily due to the toughest policy of the Fed among all the world’s largest central banks.
Nevertheless, the monthly report of the US Department of Labor published on Friday slightly disappointed the market participants, who are betting on the further strengthening of the dollar. The number of US non-farm payrolls rose by 428,000 in April, while unemployment was 3.6% (the forecast was +391,000 new jobs and unemployment falling to 3.5%), the same as last month.
These data practically did not affect the dollar quotes, although market participants were waiting for its strengthening after the publication of the report of the US Department of Labor.
Next week will not be full of economic events, unlike the last one. Nevertheless, market participants will pay attention to the publication of important macro statistics from China, Germany, the US, and the UK.
*during the coming week, new events may be added to the calendar and / or some scheduled events may be canceled
Monday, May 9
No important macro statistics scheduled to be released
Tuesday, May 10
No important macro statistics scheduled to be released
Wednesday, May 11
01:30 CNY Consumer Price Index (CPI)
The National Bureau of Statistics of China will present regular monthly data reflecting the dynamics of consumer prices in China. Rising consumer prices could trigger an acceleration in inflation, which could force the People’s Bank of China to take measures aimed at tightening fiscal policy. Strengthening growth in consumer inflation may cause appreciation of the yuan, a low result will put pressure on the yuan.
The Chinese economy, according to various estimates, is already the largest in the world, pushing the US economy to second place. Therefore, the publication of important macroeconomic indicators of this country has a significant impact on global financial markets, primarily on the positions of the yuan, other Asian currencies, the dollar, commodity currencies, as well as Chinese and Asian stock indices. China is the largest buyer of raw materials and a supplier of a wide range of finished products to the world commodity market.
In March 2022, the growth of the consumer inflation index amounted to 0% (+1.5% in annual terms).
The deterioration of macroeconomic indicators, including the decline in consumer inflation, may adversely affect the positions of the yuan, as well as commodity currencies such as the Canadian, Australian, and New Zealand dollars. To a greater extent, this applies to the Australian dollar, since China is Australia’s largest trade and economic partner.
According to the forecast, the consumer price index is expected to decrease in April by -0.6% and increase by +1.5% in annual terms.
The growth of the consumer inflation index will positively affect the quotes of the yuan, as well as commodity currencies. However, the data worse than expected and the relative decline in the CPI may negatively affect them.
06:00 EUR Germany Harmonized Index of Consumer Prices (HICP) (final release)
This index is published by the EU Statistics Office and is calculated on the basis of a statistical method agreed between all EU countries. It is an indicator for assessing inflation and is used by the Governing Council of the ECB to assess the level of price stability. A positive result strengthens the EUR, a negative result weakens it.
Previous indicator values: +7.8% in March, +5.5% in February, +5.1% in January, +5.7% in December, +6.0% in November, +4.6% in October, +4.1% in September, +3.4% in August, +3.1% in July, +2.1% in June, +2.4% in May, +2.1% in April, +2.0% in March, +1.6% in January and February, -0.7% in December and negative values in the second half of 2020 (in annual terms). If the April data turns out to be better than the previous values, the euro may strengthen in the short term. The growth of the indicator is a positive factor for the euro. The data points to mounting inflationary pressures in Germany. Data worse than the previous value will have a negative impact on the euro. Forecast: +7.8% in April (according to the first estimate).
12:30 USD Consumer Price Index (ex food and energy products)
Consumer Price Index (CPI) determines the change in prices of a selected basket of goods and services over a given period and is a key indicator for assessing inflation and changing consumer preferences. Food and energy are excluded from this indicator for a more accurate estimate. A high result strengthens the US dollar, while a low result weakens it. In March 2022, the value of the indicator was +0.3% (+6.5% in annual terms), which indicates a strong increase in consumer inflation after the index fell in March and April 2020 against the backdrop of the coronavirus pandemic. If the data turns out to be weaker than the forecast, the dollar is likely to react with a short-term decline. Better-than-expected data will strengthen the dollar. Forecast for April: +0.4% and +6.0% (in annual terms).
Thursday, May 12
06:00 GBP UK GDP for the 1st quarter (first estimate)
GDP is considered an indicator of the overall health of the British economy. The growing trend of the GDP indicator is considered positive for the GBP. The UK GDP was one of the highest in the world until 2016, when the Brexit referendum was held. Then its growth slowed down, and with the onset of the global coronavirus pandemic, the growth rate of British GDP completely moved into negative territory.
Previous GDP values: +1.3% in Q4, +1.0% in Q3, +5.5% in Q2 after falling -1.6% in Q1 2021 of the year. The main factors that could force the Bank of England to keep the rate low are weak GDP and labor market growth, as well as low consumer spending. If GDP data turns out to be significantly worse than previous values, this will put downward pressure on the pound. A strong GDP report will strengthen the pound.
Forecast for Q1 2022: +0.7%.
Friday, May 13
14:00 USD University of Michigan Consumer Sentiment Index (pre-release)
This indicator reflects the confidence of American consumers in the economic development of the country. A high level indicates growth in the economy, while a low level indicates stagnation. Previous indicator values: 65.2 in April, 59.4 in March, 62.8 in February, 67.2 in January 2022. An increase in the indicator will strengthen the USD, and a decrease in the value will weaken the dollar. The data point to the uneven recovery of this indicator, which is negative for the USD. Data worse than previous values may have a negative impact on the dollar in the short term. Forecast for May: 66.5.
Price chart of EURUSD in real time mode
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