Review of the main events of the Forex economic calendar for the next trading week (11.07.2022 – 17.07.2022)
The DXY dollar index ended the first full trading week of July with an increase of almost 2.5% and broke through the mark of 107.00 last Wednesday (after the publication of the minutes of the June Fed meeting).
According to these minutes, the Fed will raise rates by 50 or 75 basis points in July: high inflation justifies “restrictive” interest rates, with the possibility of a “more restrictive stance” if inflation remains at high levels.
The dollar continues to dominate the market. Risk aversion and the Fed’s monetary policy, which remains by far the tightest among the policies of the world’s major central banks, are the main drivers of the dollar’s growth.
Next week, market participants will pay attention to the publication of important macro statistics from Germany, the US, Australia, China, as well as the results of meetings of the central banks of New Zealand and Canada, where decisions on interest rates will be made. However, no significant macro statistics are expected until Wednesday.
*during the coming week, new events may be added to the calendar and / or some scheduled events may be canceled
Monday, July 11
No important macro statistics scheduled to be released.
Tuesday, July 12
17:00 GBP Speech by head of the Bank of England Andrew Bailey
Financial market participants expect Andrew Bailey to talk on the future policy of the UK central bank. Volatility during the speech by the head of the Bank of England usually rises sharply in the quotes of the pound and the FTSE London Stock Exchange index if he gives any hints of tightening or easing monetary policy of the Bank of England. Probably, Andrew Bailey will also give explanations regarding the decision taken by the Bank of England on the interest rate and touch upon the state and prospects of the British economy after Brexit against the backdrop of a sharp rise in energy prices and inflation. If Bailey does not touch on monetary policy issues, the reaction to his speech will be weak.
Wednesday, July 13
02:00 NZD The decision of the Reserve Bank of New Zealand on the interest rate. Accompanying statement
Subdued economic growth (New Zealand’s GDP growth has slowed since the second half of 2018) and a weakening labor market, as well as an escalation of international trade wars and a worsening global economic outlook, have forced the Reserve Bank of New Zealand to keep interest rates low for a long time. Another additional and unforeseen risk to the global and New Zealand economies was the coronavirus epidemic.
However, following the results of the meetings held in October and November, the Reserve Bank of New Zealand (for the first time in 7 years) raised the key interest rate to 0.50%, and then to 0.75%. In February and April 2022, the interest rate was raised again to 1.5% to dampen inflation and contain rapidly rising home prices. The current RBNZ interest rate is 2.0%.
Earlier, the RBNZ said that the economy no longer needs the current level of monetary stimulus.
It is expected that at this meeting the RBNZ will raise the interest rate again, and may also speak in favor of a further increase in the interest rate at the next meetings. Market participants following the NZD quotes need to be prepared for a sharp increase in volatility during this period of time.
In the accompanying statement and comments, the RBNZ leaders will provide an explanation of the interest rate decision and comments on the economic conditions that contributed to the decision.
At this time, the volatility in the quotes of the New Zealand dollar may rise sharply.
Earlier, the RBNZ said that against the backdrop of “multiple uncertainties”, monetary policy “will remain loose for the foreseeable future but may be adjusted accordingly.”
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: +8.7% in May, +7.8% in April, +7.6% 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 data for June is 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: +8.7% in June, which is better than the preliminary estimate of +8.2%.
12:30 USD Consumer Price Index (ex food and energy)
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), in April +0.6% (+6.2% in annual terms), in May +0.6% (+ 6.0% 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. Data better than the forecast will strengthen the dollar. Forecast for June: +0.5% and +5.9% (in annual terms), which indicates some improvement in the situation and a slowdown in inflation in the US economy.
14:00 CAD Bank of Canada interest rate decision. Accompanying statement from the Bank of Canada. Report of the Monetary Policy Committee of the Bank of Canada
The Bank of Canada will decide on the interest rate. In March 2020, the bank cut the rate 3 times, bringing it to the level of 0.25%, to mitigate the economic damage from the novel coronavirus pandemic.
In the accompanying statement, Canada’s central bank said the “decision is aimed at supporting the financial system, which plays a central role in lending to the economy, as well as laying the foundation that will allow the economy to return to normal.” The central bank’s press release also said that the spread of the coronavirus and the sharp drop in global oil prices are collectively putting severe pressure on Canadians and the Canadian economy.
In fact, quantitative easing and a significant reduction in the interest rate should contribute to the weakening of the national currency.
The negative effects of the coronavirus on the Canadian economy and the country’s labor market, as well as the weakness of the housing market, still put pressure on the Bank of Canada to maintain an easy monetary policy. Nevertheless, following the results of the meetings held in March, April, June, the Bank of Canada decided to raise the interest rate (up to 1.5%) and spoke in favor of its further increase. The Bank of Canada now expects GDP and consumer price index (CPI) growth to be stronger this year than previously expected. Bank officials also acknowledged that the uncertainty caused by Russia’s special military operation in Ukraine could dampen economic growth and fuel inflation.
It is possible that at the meeting on Wednesday the Bank of Canada will again raise the interest rate, by 0.25% or 0.50%, and possibly even higher, for example, up to 2.25%.
Tough tone of the Bank of Canada’s accompanying statement regarding rising inflation and prospects for further tightening of monetary policy will cause the strengthening of the Canadian dollar. If the Bank of Canada signals the need for loose monetary policy, the Canadian currency will decline.
The Monetary Policy Committee of the Bank of Canada will make a regular quarterly report on current monetary policy, containing information on changes in monetary policy. In this report, representatives of the Bank of Canada will explain the position of the bank and assess the current economic situation in the country. Tough tone of the report will cause the strengthening of the Canadian dollar. If the Bank of Canada signals the need for loose monetary policy, the Canadian currency will fall.
15:00 CAD Press conference of the Bank of Canada
During the press conference, the head of the Bank of Canada Tiff Macklem will explain the bank’s position and assess the current economic situation in the country. If the tone of his speech is tough on the monetary policy of the Bank of Canada, the Canadian dollar will strengthen in the foreign exchange market. If Macklem speaks in favor of loose monetary policy, the Canadian currency will fall. In any case, high volatility in the CAD quotes is expected during his speech.
Thursday, July 14
01:30 AUD Employment rate. Unemployment rate
The employment rate reflects the monthly change in the number of employed Australians. The growth of the indicator has a positive impact on consumer spending, which stimulates economic growth. A high value is positive for the AUD, while a low value is negative. Previous values of the indicator: +60,600 in May, +4,000 in April, +17,900 in March, +77,400 in February, +12,900 in January 2022.
Also at the same time, the Australian Bureau of Statistics will publish a report on the unemployment rate – an indicator that assesses the ratio of the unemployed population to the total number of able-bodied citizens. The growth of the indicator shows the weakness of the labor market, which leads to a weakening of the national economy. The decrease in the indicator is a positive factor for the AUD.
Outlook: Unemployment in Australia remained at its lowest levels in June (against 3.9% in May and April, 4.0% in March and February, 4.2% in January), approaching pre-coronavirus levels, and employment rose by another +25,000 working Australians.
The RBA officials have repeatedly stated that in addition to the situation in international trade, the Australian economy and the central bank’s monetary policy plans are affected by indicators of the level of debts and household spending, growth in wages of workers, as well as the state of the country’s labor market. If the values of the indicators turn out to be worse than the forecast, then the Australian dollar may decline significantly in the short term. Better-than-expected data will strengthen the AUD in the short term.
Friday, July 15
02:00 CNY China’s GDP for the 2nd quarter. Retail Sales Index
The National Bureau of Statistics of China will present data on GDP growth in the 2nd quarter of 2022.
China’s GDP is expected to have grown +0.6% (+4.4% y/y) in Q2 2022 after growing +1.3% (+4.8% y/y) in 1- Q4 2022, +1.6% (+4.0% YoY) in Q4, +0.2% (+4.9% YoY) in Q3, +1 .3% (+7.9% YoY) in Q2 and +0.6% (+18.3% YoY) in Q1 2021.
China is the largest buyer of raw materials and a supplier of a wide range of finished products to the world commodity market. China’s economy is already the largest in the world, according to many sources, pushing the US economy to second place. Therefore, the publication of important macroeconomic indicators from China can have a strong impact on the entire financial market.
The relative decline in GDP may have a negative impact on the yuan quotes, as well as on the quotes of commodity currencies and currencies of the Asia-Pacific region, as it may indicate a slowdown in the growth of the Chinese economy.
The growth of the indicator will have a positive impact on the Chinese yuan, as well as on world stock indices, primarily Asian, as well as on quotations of commodity currencies such as the New Zealand and Australian dollars. China is the largest trade and economic partner of Australia and New Zealand and the buyer of raw materials from these countries.
Therefore, positive macro statistics from China may also have a positive impact on the quotes of these commodity currencies, although the expected data indicate a slowdown in the world’s largest economy, and this is a negative factor for stock markets and quotes of commodity currencies.
Retail Sales Index is published monthly by China’s National Bureau of Statistics and evaluates the total volume of retail sales and cash generated. The index is often considered an indicator of consumer confidence and economic well-being and reflects the state of the retail sector in the near term. The growth of the index is usually a positive factor for the CNY; a decrease in the indicator will negatively affect the CNY. The previous value of the index (in annual terms) -6.7% (after an increase of +8% in the last months of 2019 and a fall of -20.5% in February 2020).
Outlook: June 2022 retail sales in China fell by -7.1% (y-o-y). This is weak data after a contraction in previous months, which indicates a slowing pace of recovery after a strong drop in February-March 2020. If the data turns out to be even weaker, the CNY could weaken sharply.
12:30 USD Retail sales. Retail control group
This report (Retail Sales) reflects the total sales of retailers of all sizes and types. The change in retail sales is the main indicator of consumer spending. The report is a leading indicator and data may be heavily revised in the future. A high result strengthens the US dollar, a low result weakens it. A relative decrease in the indicator may have a short-term negative impact on the dollar, and an increase in the indicator will have a positive effect on the USD. In the previous month (May), the value of the indicator was -0.3% (after +0.7%, +1.4%, +0.8%, +4.9% in the previous months of 2022). June forecast: +0.8%.
Retail sales is the main indicator of consumer spending in the US showing the change in retail sales. The Retail Control Group measures volume across the entire retail industry and is used to calculate price indices for most products. A high result strengthens the US dollar, and vice versa, a weak report weakens the dollar. A slight increase in indicators is unlikely to accelerate the growth of the dollar. Data worse than the previous period (0%, +0.5%, +1.1%, -0.9%, +6.7% in January 2022) may negatively affect the dollar in the short term.
14:00 USD University of Michigan Consumer Confidence Index (preliminary 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: 50.0 in June, 58.4 in May, 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 shows 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 July: 58.0.
Price chart of USDCAD in real time mode
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