Review of the main events of the Forex economic calendar for the next trading week (24.05.2021 – 30.05.2021)
Trading on key Forex news: next week we expect the publication of important macro statistics from the US, as well as the results of the meeting of the central bank of New Zealand.
The dollar ended last week with another decline. As follows from the minutes published last Wednesday, following the April meeting, the Fed announced that it will continue to buy assets at the current pace until the economy shows “further significant progress” towards the Fed’s goals – maximum employment and inflation, at 2% on average. At the same time, the Central Bank does not intend to raise interest rates until these goals are fully achieved or even exceeded.
“Based on the April labor market report, we have not made further significant progress,” said Fed Deputy Chairman Richard Clarida last Monday. Clarida also noted that central bank officials “need to watch and be attentive to the incoming data,” although he thinks that the recent rise in inflation is likely to be temporary for the most part.
After rethinking the results of the April Fed meeting and carefully studying the minutes published last Wednesday, market participants returned to selling the dollar.
So far, the trend of its further weakening continues.
The next week will not be full of important macro statistics. Nevertheless, financial market participants will pay attention to the publication of important macro statistics from the US and the results of the meeting of the central bank of New Zealand.
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
Monday, May 24
No important macro statistics are scheduled to be published. Banks in several European countries are closed, and Catholics around the world celebrate Whit Monday. The trading volumes on this day will be low.
Market participants trading in the yen will want to pay attention to the speech (at 11:05 GMT) by the head of the Bank of Japan Haruhiko Kuroda. In his speech, Kuroda will probably give some comments on the bank’s monetary policy, although traders hardly should expect anything new from him in this regard. “We need to patiently continue to ease monetary policy,” Kuroda has traditionally said. If he does not touch on monetary policy issues, the reaction to his speech will be weak.
Tuesday, May 25
No important macro statistics are scheduled to be published.
Wednesday, May 26
02:00 NZD Interest rate decision by the Reserve Bank of New Zealand. Accompanying statement. Monetary policy comment
After the bank’s management decided to cut the rate by 0.75% at an unscheduled meeting in March 2020, the current interest rate of the Reserve Bank of New Zealand is at 0.25%. The bank’s management explained its decision by a loss of momentum in the New Zealand economy and a sharp slowdown in the global economy amid the coronavirus pandemic.
“Global economic activity continues to weaken, which wears down demand for goods and services from New Zealand. Increased uncertainty and contraction in international trade are contributing to lower economic growth in trading partner countries,” a recent statement from the RBNZ said.
The RBNZ believes that wages growth remains weak. At the same time, inflationary expectations are declining, and low levels of business confidence indicate a slowdown in hiring and wages growth.
Restrained economic growth (New Zealand’s GDP growth has slowed since the second half of 2018) and a weakening labor market, as well as escalating international trade wars and a deteriorating global economic outlook, are forcing the Reserve Bank of New Zealand to keep interest rates low. An additional and unforeseen risk to the global and New Zealand economies is the coronavirus epidemic.
It is expected that at this meeting, the RBNZ will not cut or increase the rate yet, but may speak in favor of lowering it in the coming months if the economic situation in the country and in the world worsens.
In the accompanying statement and comments, the RBNZ management will provide an explanation of the decision on the interest rate and comments on the economic conditions that facilitated the adoption of this decision.
At this time, the volatility in the quotations of the New Zealand dollar may rise sharply.
Earlier, the RBNZ stated that against the background of “many factors of uncertainty” monetary policy “will remain soft for the foreseeable future,” but “may be adjusted accordingly.” According to the bank’s management, for a stable recovery of the New Zealand economy and inflation growth, “a lower rate of the New Zealand dollar is necessary.”
Probably, the head of the RBNZ Adrian Orr will reaffirm the bank’s propensity to pursue a soft monetary policy, which will lead to continued pressure on the New Zealand currency.
03:00 NZD Press conference of the RBNZ
During the press conference, the head of the RBNZ Adrian Orr will make an explanation of the bank’s decision. His speeches often serve as an unofficial source of information on the future direction of the RBNZ’s monetary policy. In his opinion, the country’s monetary policy should correlate with the dynamics of employment and financial stability of the state.
Earlier, the RBNZ stated that against the background of “many factors of uncertainty” monetary policy “will remain soft for the foreseeable future,” but “may be adjusted accordingly.” For a stable recovery of the New Zealand economy and rising inflation, “a weaker NZ dollar is needed.”
It is likely that the head of the RBNZ Adrian Orr will reaffirm the bank’s propensity to pursue a soft monetary policy, which will lead to continued pressure on the New Zealand currency.
In any case, volatility in the New Zealand dollar trade is expected to rise during the RBNZ press conference.
Thursday, May 27
12:30 USD Durable goods orders. Capital goods orders (ex defense and aviation)
This indicator reflects the value of orders received by manufacturers of durable goods and capital goods (capital goods are durable commodities used to produce durable goods and services) involving large investments. The goods produced in the defense and aviation sectors of the US economy are not included in this indicator. A strong result strengthens the USD. Previous values of the indicator “durable goods orders”: +1% in March, -1.2% in February, +3.4% in January 2021, +1.2% in December, +1.3% in November, +1.8% in October, -18.3% in April, -16.7% in March, +2.0% in February, -0.2% in January 2020.
Previous values of the indicator “capital goods orders ex defense and aviation”: +1% in March, -0.9% in February, +0.6% in January 2021, +1.5% in December, +1.2% in November, +1.9% in September, +2.1% in August, -6.6% in April, -1.3% in March, -0.6% in February, +0.9% in January 2020 year.
In theory, the relative growth of the indicator has a positive effect on the dollar; the market reaction to its negative value may be negative for the dollar in the short term. Data worse than the previous value will also negatively affect the dollar quotes.
Forecast for April: +0.8% (durable goods orders), +1.5% (capital goods orders ex defense and aviation).
It seems that the growth of indicators continues after their recovery in previous months from a strong drop in March and April 2020, which should have a positive effect on the dollar quotes. Better-than-expected data will also have a positive impact on the dollar.
12:30 USD US Annual GDP for Q1 (second estimate)
GDP data is one of the key indicators (along with data on the labor market and inflation) for the Fed in terms of its monetary policy. Strong result strengthens the US dollar; weak GDP report negatively affects the US dollar. In the previous 4th quarter, GDP grew by +4.3% after rising +33.4% in Q3 2020, and after falling -31.4% in Q2 and -5.0% in Q1 2020.
If the data indicate a decline in GDP in the 1st quarter, the dollar will be under pressure. The positive data on GDP will support the dollar and the American stock indices, although they are already mostly priced in. The preliminary forecast for the 1st quarter of 2021 was +6.4%.
Friday, May 28
No important macro statistics are scheduled to be published.
However, traders should still pay attention to the publication in the period from 12:30 to 14:00 (GMT) of the block of macro statistics for the United States, which includes data on personal income/expenses of Americans, as well as the PMI index in Chicago for April and updated Consumer Confidence Index by the University of Michigan for May. This indicator reflects the confidence of American consumers in the economic development of the country. The indicator is expected to come out in May with a revised value of 82.9, which is better than the preliminary value of 82.8.
It is likely that at the end of the last full trading week of the month, many market participants will want to take profit or loss. The driver of these decisions can be the publication of the above economic indicators.
Price chart of NZDUSD in real time mode
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