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Economic calendar for the week 17.05.2021 – 23.05.2021

Review of the main events of the Forex economic calendar for the next trading week (17.05.2021 – 23.05.2021)

Trading on key Forex news: next week we expect the publication of important macro statistics from Australia, China, Japan, Great Britain, Germany, Eurozone, US, Canada, as well as speeches by the head of the ECB Christine Lagarde.

The dollar rose sharply last Wednesday after the publication of inflationary indicators: the consumer price index in the US in April rose by 0.8%, which was the strongest monthly growth since 2009. In annual terms, inflation rose by 4.2% against 2.6% between March 2020 and March 2021. This is the strongest acceleration in inflation since 2008.

Core CPI, which excludes volatile food and energy prices, climbed 0.9% in April and posted a 3.0% year-on-year rise, the most significant gain since 1995.

The S&P 500 and DJIA suffered their strongest three-day losses last Wednesday since late October after data on soaring consumer prices exacerbated fears about inflation.

Nevertheless, by the end of last week, the situation on the financial markets regained its usual character. American stock indices ended last week with a decline, but the DXY dollar index practically returned to the levels of the end of last week, failing to develop an upward trend on strong inflationary indicators. Market participants remain convinced that strong data from the US this week is still not enough to force the US Federal Reserve to move to tighten monetary policy.

Next week, financial market participants will pay attention to the publication of important macro statistics from Australia, China, Japan, Great Britain, Germany, Eurozone, US, Canada, as well as to the speeches of the head of the ECB Christine Lagarde.

Traders should pay attention to the publication of the following macro indicators:

*during the coming week, new events may be added to the calendar and / or some scheduled events may be canceled

**GMT time

Monday, May 17

02:00 CNY Retail Sales Index

This index is published monthly by the National Bureau of Statistics of China and measures total retail sales and cash receipts. The index is often considered to be an indicator of consumer confidence and the level of economic well-being and reflects the state of the retail sector in the near term. A rise in the index is usually positive for the CNY; a decrease in the indicator will negatively affect the CNY. The previous value of the index (in annual terms) was +34.2% (after an increase of +8% in the last months of 2019 and a fall of -20.5% in February 2020). Outlook: In April 2021, retail sales in China increased by +24.9% (YoY), which indicates a continued active recovery in the indicator after a sharp drop in February-March 2020. If the data turns out to be even better, the CNY will strengthen even more.

23:50 JPY Japan’s GDP for the 1st quarter of 2021 (preliminary estimate)

GDP is considered an indicator of the general state of a country’s economy that estimates the rate of its growth or decline. The report on gross domestic product published by the Cabinet of Ministers of Japan expresses in monetary terms the aggregate value of all final goods and services produced by Japan over a certain period of time. An upward trend in GDP is considered a positive factor for the national currency (yen), while a low result is considered negative (or bearish).

In the previous 4th quarter of 2020, the country’s GDP grew by +2.8% (+11.7% on an annualized basis) after falling in the first half of 2020. The preliminary estimate implied GDP growth in the 4th quarter of 2020 by +3.0% or +12.7% in annual terms.

The data points to continued recovery in the Japanese economy after falling due to the coronavirus pandemic. However, the forecast implies that in the 1st quarter of 2021, Japan’s GDP contracted by -4.6% (-1.2% in annual terms), which is a negative factor primarily for the Japanese stock market.

If the data turns out to be weaker, the yen may strengthen against the background of the fall in the Japanese stock market in the short term. Better-than-expected data is likely to help the Japanese stock market rally. However, it should also be noted that in recent weeks, financial market participants have paid little attention to news and weak macro statistics, abandoning defensive assets, including the yen, in favor of more risky and profitable stock market assets.

Tuesday, May 18

01:30 AUD Minutes of the May meeting of the Reserve Bank of Australia

This document is published two weeks after the meeting and the decision on the interest rate. If the RBA positively assesses the state of the labor market in the country, the rate of GDP growth, and also shows a hawkish attitude towards the inflation forecast in the economy, the markets regard this as a higher probability of a rate hike at the next meeting, which is a positive factor for the AUD. The bank’s soft rhetoric regarding, above all, inflation puts pressure on the AUD.

Market participants believe that the RBA will not raise interest rates until 2024, as promised by central bank officials. Wages continue to rise slowly and household debt has risen to an all-time high, which also puts interest rate hikes in the longer term.

“The economic recovery will be uneven and unstable,” and “unemployment may remain high for a long time,” said the leaders of the RBA after one of the last meetings of the bank, promising that “the rate will not rise until the Central Bank sees progress in moving towards full employment and stable inflation rates in the 2-3% range”.

According to the head of the RBA Philip Lowe, “there are no serious arguments in favor of tightening monetary policy in the short term.” In his opinion, “some time will pass before interest rates rise.”

Nevertheless, if the published minutes contain unexpected information regarding the issues of the RBA’s monetary policy, the volatility in the AUD quotes will increase.

06:00 GBP Report on the average wages of the British citizens for the last 3 months. Unemployment rate

On a monthly basis, the UK Office for National Statistics (ONS) publishes a report on average earnings covering the last 3 months, with and without bonuses.

This report is a key short-term indicator of the dynamics of changes in the level of wages of employees in the UK. Wages growth is positive for the GBP, while a low value is negative. Forecast: May report suggests that average wages with bonuses increased over the last calculated 3 months (January-March) by +4.6% (against +4.5%, +4.8%, +4.7% , +3.7%, +2.8%, +1.3%, +0.1% in previous periods); without bonuses – increased by +4.6% (against +4.4%, +4.2%, +4.1%, +3.6%, +2.8%, +1.9%, +0.9%, +0.2% in previous periods). Thus, the expected data is close to the average values ​​of the indicators. They also point to the growing dynamics of the level of wages, which is a positive factor for the pound, as it contributes to the growth of inflationary pressures. If the data turns out to be better than forecast, the pound is likely to strengthen in the foreign exchange market. Data worse than forecast will negatively affect the pound in the short term.

Also at this time, data on unemployment in the UK are published. It is expected that in the 3 months from January to March, unemployment was at the level of 4.9% (against 4.9%, 5.0%, 5.1%, 5.0%, 4.9%, 4.8%, 4.5%, 4.3%, 3.9%, 3.9% in previous periods). Since 2012, the UK unemployment rate has declined steadily (from 8.0% in September 2012). This is a positive factor for the pound, the rise in unemployment is a negative factor.

If the data from the UK labor market turn out to be worse than the forecast and / or the previous value, the pound will be under pressure.

In any case, at the time of the publication of data from the British labor market, an increase in volatility in the pound quotes and on the London Stock Exchange is expected.

09:00 EUR Eurozone GDP for the 1st quarter (second estimate)

GDP is considered to be an indicator of the overall health of the economy. The upward trend in GDP is considered positive for the EUR; a poor result weakens the EUR.

Recently, macro data from the Eurozone have been indicating a gradual recovery in the growth rate of the European economy after a sharp drop in early 2020. However, the decision made by the EU leaders in July to provide additional support to the economy (a package of spending on the economic recovery of the bloc in the amount of 1.8 trillion euros was approved) will help stabilize the economy of the Eurozone, which, as a result of quarantine restrictions, restraint in spending by companies and consumers, as well as a collapse of exports, is on the cusp of the deepest economic downturn since World War II.

The euro reacted positively to this decision.

Nevertheless, according to the forecast of economists, the GDP of the Eurozone is expected to fall in the 1st quarter of 2021 by -0.6% (by -1.8% in annual terms) after falling by -0.7% (-4.9% in annualized) in the 4th quarter of 2020, an increase of +12.5% ​​(a fall of -4.3% in annual terms) in the 3rd quarter, a fall of -11.8% (-14.7% in YoY) in the 2nd quarter and a decline of -3.6% (-3.1% YoY) in the 1st quarter of 2020.

If the data turn out to be weaker than the forecast, the euro may decline. Better-than-forecast data may strengthen the euro in the short term, although the European economy is still far from the full recovery even to pre-crisis levels (quarterly growth within 0.2% – 0.4%).

14:00 EUR Speech by head of the ECB Christine Lagarde

During the speech by the head of the ECB Christine Lagarde, the volatility of trading increases not only in the euro and European stock indices, but throughout the financial market, especially if she touches on the topic of the ECB’s monetary policy. Any hints at curtailing the QE program in the Eurozone will cause the euro to rise. The soft tone of Christine Lagarde’s speech and the propensity to continue the extra soft monetary policy of the ECB will negatively affect the euro. If Christine Lagarde does not touch upon the topic of the ECB’s monetary policy, then the reaction to her speech will be weak.

Wednesday, May 19

06:00 GBP Consumer Price Index. Core Consumer Price Index

Consumer Price Index (CPI) reflects the dynamics of retail prices for a group of goods and services that make up the British consumer basket. The CPI is a key indicator of inflation. Its publication causes active movement of the pound in the foreign exchange market, as well as the London Stock Exchange FTSE100 index.

In the previous reporting month (March), the growth in consumer inflation (in annual terms) amounted to +0.7%.

Forecast for April: +1.4% (annualized). This reading indicates that inflationary pressures are still weak and are unlikely to provide significant support to the pound. Indicator reading below the forecast could provoke a weakening of the pound, as low inflation will force the Bank of England to adhere to a soft monetary policy.

Core CPI is published by the Office for National Statistics and determines the price change of a selected basket of goods and services (excluding food and energy) for a given period. It is a key indicator for assessing inflation and changes in purchasing preferences. A positive result strengthens the GBP, a negative one weakens it.

In March, Core CPI (in annual terms) increased by +1.1%. Probably, the publication of the indicator will have a positive short-term effect on the pound if its value is higher than the forecast and previous values. Forecast for April: +1.2% (annualized). The indicator reading below the forecast and previous values ​​may provoke a weakening of the pound.

12:30 CAD Consumer price indices in Canada

Core CPI from the Bank of Canada reflects the dynamics of the retail prices of the corresponding basket of goods and services (excluding fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation, and tobacco products). The inflation target for the Bank of Canada is in the range of 1-3%. The rise in CPI is a harbinger of a rate hike and a positive factor for the CAD. Core CPI increased by +1.6% in January 2021, +0.7% in December 2020, +1.5% in November, +1.0% in October and September (in annual terms). If the data for April turns out to be worse than the previous values, it will negatively affect the CAD. The data will strengthen the Canadian dollar better than the previous values. Forecast: Core CPI rose by +1.3% (in annual terms), which is likely to have a positive impact on the CAD.

18:00 USD Minutes of the April meeting of the Federal Open Market Committee

FOMC minutes from the Fed are usually released two or three weeks after the day the interest rate decision is made.

The publication of the minutes is extremely important for determining the course of the current Fed policy and the prospects for raising interest rates in the United States. The volatility of trading in financial markets during the publication of the minutes usually increases, since the text often contains either changes or clarifying details regarding the results of the last FOMC Fed meeting.

During the April meeting, the Fed leaders did not change the parameters of monetary policy, signaling that the interest rate will remain at minimum levels until the end of 2023.

At a subsequent press conference, the Fed Chairman Jerome Powell made it clear that no adjustments are planned in the near future either. Purchases of Treasury securities in the volume of $80 billion a month and mortgage-backed securities in the amount of $40 billion a month will continue in the same volumes.

The Fed’s forecasts for inflation and economic growth have been revised upwards, despite the fact that the key rate will not increase until the end of 2023. The Fed intends to adhere to a flexible approach to the target inflation rate and is not very concerned about the growth of government bond yields.

Loose financing conditions, combined with accelerating vaccinations, the adoption of the next package of fiscal aid and the prospect of lifting quarantine restrictions and opening the economy, increases the Fed’s tolerance for higher yields on government bonds, economists say.

The soft tone of the minutes will have a positive effect on stock indices and a negative effect on the US dollar. Tough rhetoric of the Fed leaders regarding the prospects for monetary policy will push the dollar to further growth.

Thursday, May 20

01:30 CNY The People’s Bank of China Interest Rate Decision

Since May 2012, the People’s Bank of China has been steadily cutting interest rates in support of Chinese manufacturers. The bank last lowered the rate in April 2020 (by 0.20% to 3.85% at the moment).

In 2020, in the context of international trade conflicts and a slowdown in the global economy, the world’s largest central banks took the path of easing their monetary policies in order to support national economies and increase the competitiveness of goods exported from these countries.

The People’s Bank of China is also in line with this process. The depreciation of the yuan has become especially relevant in the last 2 years, when the confrontation between the two most powerful economies in the world began. One of the measures to mitigate the negative consequences of increased duties on the import of Chinese goods into the United States was the depreciation of the national currency of China. This measure was intended, among other things, to maintain the same volumes of imports of Chinese products to the United States, which would cost American buyers less due to the difference in the rates of the national currencies of the United States and China.

The coronavirus has become an additional strong negative factor.

Probably, at this meeting, the People’s Bank of China will keep the interest rate at the same level of 3.85%, although a rate cut is also possible.

Nevertheless, if the People’s Bank of China makes unexpected statements or decisions, then volatility may increase in the entire financial market. Investors will also be interested in the bank’s assessment of the consequences of the coronavirus for the Chinese economy and its policy in the near future in this regard.

01:30 AUD Employment rate. Unemployment rate

The employment rate reflects the monthly change in the number of Australian citizens employed. 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. Forecast: In April, the number of employed Australian citizens increased by 15,000 (after falling by 607,400 in April, by 264,100 in May 2020 and by 29,100 in January 2021).

Also at the same time, the Australian Bureau of Statistics will publish a report on the unemployment rate – an indicator that estimates the ratio of the unemployed population to the total number of able-bodied citizens. The growth of the indicator indicates the weakness of the labor market, which leads to a weakening of the national economy. The decline in the indicator is a positive factor for the AUD. Forecast: unemployment in Australia in April was at 5.6% (against 5.6% in March, 5.8% in February, 6.4% in January, 6.6% in December). In general, the indicators cannot be called positive yet. However, in other large economies, the labor market has deteriorated on an even larger scale due to the coronavirus.

The leaders of the RBA have repeatedly stated that, in addition to the situation in international trade, the Australian economy and the central bank’s monetary policy plans are influenced by the indicators of the level of household debt and spending, the growth of workers’ salaries, as well as the state of the country’s labor market.

In November 2020, the RB of Australia cut its key interest rate by another 0.15%, to a new record low of 0.1%, due to the coronavirus. In the opinion of the RBA management, an unemployment rate of 4.5% or lower is required to raise wages and accelerate inflation to the target range. Unemployment in the country is not declining, and a return of inflation to the middle of the target range of 2-3% is not even in the distant horizon.

At the same time, the AUD may react positively to the publication of data from the country’s labor market, if they turn out to be better than the previous values. If the values ​​of the indicators turn out to be worse than the forecast and / or previous values, then the Australian dollar may significantly decline in the short term.

02:00 NZD Budget release

The New Zealand Treasury will publish a preliminary budget for next year. Volatility in trading in the New Zealand dollar usually increases at the time of the budget release.

12:00 EUR Speech by head of the ECB Christine Lagarde

During the speech by the head of the ECB Christine Lagarde, the volatility of trading increases not only in the euro and European stock indices, but throughout the financial market, especially if she touches on the topic of the ECB’s monetary policy. Any hints at curtailing the QE program in the Eurozone will cause the euro to rise. The soft tone of Christine Lagarde’s speech and the propensity to continue the extra soft monetary policy of the ECB will negatively affect the euro. If Christine Lagarde does not touch upon the topic of the ECB’s monetary policy, then the reaction to her speech will be weak.

Friday, May 21

01:30 AUD Retail Sales Index

This indicator is published monthly by the Australian Bureau of Statistics and estimates total retail sales. The index is often considered an indicator of consumer confidence and reflects the health of the retail sector in the near term. A rise in the index is usually positive for the AUD; a decrease in the indicator will negatively affect the AUD. The previous value of the index (for March) was +1.3%. If the data turns out to be weaker than the previous value, the AUD may sharply decline in the short term, but if it’s above the previous values, the AUD is likely to strengthen. Forecast: +0.5% in April.

07:30 EUR Germany’s Manufacturing PMI by Markit Economics (preliminary release). Composite PMI by Markit Economics (preliminary release)

Germany’s Manufacturing PMI is an important indicator of the business environment and the overall health of the German economy. This sector of the economy forms a significant part of Germany’s GDP. A result above 50 is seen as positive and strengthens the EUR, one below 50 as negative for the euro. Forecast for May (preliminary release): 65.8.

Previous monthly values: 66.2, 66.6, 60.7, 57.1, 58.3, 57.8, indicating that business activity in this sector of the German economy is accelerating after a slowdown in 2020 due to the coronavirus pandemic. The growth of the indicator above the previous values ​​will support the euro (in the short term). The worse than expected data will have a negative impact on the euro.

Composite PMI is an important indicator of the business environment and the overall health of the German economy. A result above 50 is seen as positive and strengthens the EUR, one below 50 as negative for the euro. May forecast (preliminary release): 57.2 against 55.8, 57.3, 51.1, 50.8, 52.0, 51.7 in previous months. The publication of this indicator with the specified expected value is likely to support the euro in the short term, despite the relative decline. The data worse than the forecast and below the value of 50.0 will have a negative impact on the euro.

08:00 EUR Eurozone Composite Manufacturing PMI by Markit Economics (preliminary release)

The Eurozone Manufacturing PMI is an important indicator of the health of the entire European economy. A result above 50 is seen as positive and strengthens the EUR, one below 50 as negative for the euro. Forecast for May (preliminary release): 54.9 against 53.8, 53.2, 62.5, 48.8, 47.8, 49.1, 45.3 in previous months, which is likely to have a positive impact on euro, despite the relative decline in the indicator. If the data turns out to be worse than forecast, the euro may fall sharply in the short term.

08:30 GBP UK’s Services PMI by Markit Economics (preliminary release)

The UK’s Services PMI is an important indicator of the health of the UK economy. The services sector employs most of the UK’s working-age population and accounts for approximately 75% of GDP. Financial services continue to be the most important part of the service industry. If the data turns out to be worse than the forecast and the previous value, then the pound is likely to drop sharply in the short term. The data better than the forecast and the previous value will have a positive impact on the pound. At the same time, a result above 50 is seen as positive and strengthens the GBP, below 50 as negative for the GBP.

Previous values ​​of the indicator: 61.0 in April, 56.3 in March, 49.5 in February, 39.5 in January 2021 after falling to 29.0 in May, 13.4 in April, 34.5 in March 2020 year. Preliminary forecast for May: 62.0.

12:30 CAD Retail Sales Index

Retail Sales Index is published monthly by Statistics Canada and estimates total retail sales. The index is often considered an indicator of consumer confidence and reflects the health of the retail sector in the near term. A rise in the index is usually positive for the CAD; a decrease in the indicator will negatively affect the CAD. The previous value of the index (for February) was +4.8% after falling in March 2020 by -9.9%, in April – by -25% and growth in May by +18.7%. If the data for March turns out to be weaker than the forecast +2.3%, the CAD may sharply decline in the short term.

Price chart of EURUSD in real time mode

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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