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Economic calendar for the week 05.07.2021 – 11.07.2021

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Review of the main events of the Forex economic calendar for the next trading week (05.07.2021 – 11.07.2021)

Trading on key Forex news: next week we expect the publication of important macro statistics from Australia, Germany, Eurozone, the US, China, Canada, as well as the results of the RB of Australia meeting.

The dollar rose immediately after the publication on Friday of contradictory data provided by the US Department of Labor, according to which the number of jobs in June increased by 850,000. The data for May was revised upwards from +559,000 to +583,000, 5.9% from 5.8% in May. Economists had forecast 706,000 job growth and 5.6% unemployment. The DXY dollar index first rose to 92.75 from 92.65, but then fell to 92.45, ending Friday with a decline, but still finishing the week with an increase of 0.6%.

The fall in the dollar after the publication of the NFP can also probably be associated with profit taking by many market participants at the end of the trading week. Still, this decline is likely to be limited. More and more factors speak in favor of the strengthening of the dollar. Job growth was the highest since August last year and surpassed economists’ forecasts. Another positive signal for the dollar was the reduction in the number of initial jobless claims in the week of June 20-26 by 51,000, to 364,000, which is the minimum for the period of the pandemic.

 The dollar is also in demand again as a defensive asset amid the worldwide spread of the new delta strain of coronavirus.

The American stock indices S&P 500 and NASDAQ100 finished the last week at new record highs, and the industrial DJIA with a decent gain. The June employment report confirmed that the US economy continues to actively recover.

Next week, financial market participants will pay attention to the publication of important macro statistics from Australia, Germany, the Eurozone, the US, China, Canada, as well as the results of the meeting of the RB of Australia.

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, July 5

01:30 AUD Retail Sales Index

Retail Sales Index is published monthly by the Australian Bureau of Statistics and measures 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. Previous index value (for April) +1.1% (+0.1% preliminary estimate for May). 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.

Tuesday, July 6

04:30 AUD RBA’s decision on interest rate. RBA’s accompanying statement

In March 2020, the RBA made 2 rate cuts, bringing it to the level of 0.25%, and launched a quantitative easing program. At the same time, for the 3-year government bonds of Australia, the target level of yield is set at 0.25%. The RBA has launched a lending program for the banking system in the amount of at least A$ 90 billion.

In early November 2020, the RB of Australia lowered its key rate again, bringing it and its 3-year bond target to 0.10% from 0.25%, and announced A$ 100 billion quantitative easing program to support the incipient economic recovery.

The main negative factors for the Australian economy are weak wages growth, a weak labor market and a slowdown in growth. Annual inflation has remained below the RBA’s target range of 2% -3% for four years.

Unemployment in the country has remained above the 5% level for many years, unwilling to decline. Now, the Australian economy is experiencing difficulties due to the coronavirus pandemic, which has hit the tourism and transport sectors hard.

It is expected that at this meeting the Central Bank of Australia will leave the rate at the current level of 0.1%, although unexpected decisions are not ruled out.

In an accompanying statement, the leaders of the RBA will explain the reasons for the decision on the rate. If the RBA signals the possibility of further easing of monetary policy in the near future, the risks of a fall in the Australian dollar will increase.

06:00 AUD Speech by the head of the RBA Philip Lowe

In his speech, Philip Lowe will assess the current situation in the Australian economy and comment on the bank’s decision on monetary policy.

Market participants would also like to hear Lowe’s views on the outlook for central bank policy amid the ongoing coronavirus pandemic and Australia’s first recession in 30 years. According to Lowe, “there is no serious argument in favor of tightening monetary policy in the short term,” and “it will be some time before interest rates rise.”

Any signals from him regarding a change in the plans of the RBA’s monetary policy will cause a sharp increase in volatility in the AUD trading and on the Australian stock market. If he does not touch upon the topic of monetary policy, the market reaction to his speech will be weak.

09:00 EUR Retail sales in the Eurozone

Retail sales is a major consumer spending indicator that shows the change in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. Forecast for May: +4.1% (+7.9% yoy) against -3.1% and + 23.9% (yoy) in March, +3.0% and -2.9% (in annual terms) in February, -5.9% and -6.4% (in annual terms) in January. The data suggests that, despite the rise in indices, retail sales have not yet reached pre-coronavirus levels after a sharp drop in March-April 2020, when strict quarantine measures were in force in Europe. Nevertheless, better-than-expected data is likely to have a positive effect on the euro.

14:00 USD Services PMI from ISM

This indicator assesses the state of the services sector in the US economy. These services sectors (as opposed to the manufacturing sector) have practically no impact on the country’s GDP.

This indicator came out with a value of 64.0 in May, and 55.3 in February. A result above 50 is seen as positive for the USD. However, a relative decline in the index could negatively affect the dollar in the short term. Forecast for June: 63.5, which is likely to have a positive overall effect on the USD.

Wednesday, July 7

18:00 USD Minutes of the June meeting of the Fed Open Market Committee (“FOMC minutes”)

The publication of the minutes is extremely important for determining the course of the current Fed policy and the prospects for raising interest of the 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 meeting.

As you know, following the results of the next meeting, which ended on June 16, the Fed leaders kept key interest rates in the range of 0.00% -0.25%, and the volume of the QE asset purchase program at the level of $120 billion per month. The accompanying statement said that the Fed will continue to adhere to the current parameters of monetary policy until the target levels for inflation and maximum employment are reached, and the level of interest rates will not change.

Recently, more and more often you can hear contradictory statements from the Fed leaders, which seem to have completely confused market participants. Some of the leaders of the Fed are of the opinion that it is possible to start curtailing the stimulus policy earlier than it was planned earlier.

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

Thursday, July 8

02:15 AUD Speech by the head of the RBA Philip Lowe

In his speech, Philip Lowy will assess the current situation in the Australian economy and point out further plans for the monetary policy of the department.

Market participants would also like to hear Lowe’s views on central bank policy amid the ongoing coronavirus pandemic and Australia’s first recession in 30 years. According to Lowe, “there is no serious argument in favor of tightening monetary policy in the short term,” and “it will be some time before interest rates rise.”

Any signals from him regarding a change in the plans of the RBA’s monetary policy will cause a sharp increase in volatility in the AUD trading and on the Australian stock market. If he does not touch upon the topic of monetary policy, the market reaction to his speech will be weak.

Friday, July 9

01:30 CNY Consumer Price Index (CPI)

The National Bureau of Statistics of China will release another monthly data reflecting the dynamics of consumer prices in China. The rise in 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. Increased growth in consumer inflation may cause appreciation of the yuan, a weak result will put pressure on the yuan.

China’s economy, according to various estimates, is already the largest in the world, pushing the US economy into second place. 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, commodity currencies, as well as on Chinese and Asian stock indices. China is the largest buyer of raw materials and a supplier of the widest range of finished products to the world commodity market.

In January 2021, the growth of the consumer inflation index amounted to +1.0% (-0.3% in annual terms), in February +0.6% (-0.2% in annual terms), and in May -0.2 % (+1.3% in annual terms).

Deterioration in macroeconomic indicators, including a decrease in consumer inflation, may negatively 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 grow by zero in May, but an increase of +1.4% in annual terms.

The rise in the consumer inflation index will have a positive effect on the quotes of the yuan, as well as commodity currencies. However, the data is worse than forecast and the relative decline in CPI may negatively affect them.

12:30 CAD Unemployment rate in Canada

Statistics Canada is to publish data on the country’s labor market for June. Unemployment has risen in Canada in recent months amid massive business closures due to coronavirus and layoffs. Unemployment rose from the usual 5.6% – 5.7% to 7.8% in March and already up to 13.7% in May 2020. If unemployment continues to rise, the Canadian dollar will decline. If the data is better than the previous value, the Canadian dollar will strengthen. A decrease in the unemployment rate is a positive factor for the CAD, an increase in unemployment is a negative factor. Unemployment is expected to be 8.2% in June (against 8.2% in May, 8.1% in April, 7.5% in March, 8.2% in February, 9.4% in January, 8.8% in December, 8.6% in November).

Price chart of AUDUSD 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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