Economic calendar for the week 12.12.2022 – 18.12.2022

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Review of the main events of the Forex economic calendar for the next trading week (12.12.2022 – 18.12.2022)

This week was, one might say, unsuccessful for dollar buyers. The DXY index failed to gain a foothold in the zone above the 105.00 level, which many economists were counting on. Last month, the DXY dollar index lost about 5.2%, and December has been unprofitable for dollar buyers so far: the DXY fell by another 1%.

All this despite the fact that the traditional pre-New Year rally has not yet begun on the US stock market. If it does take place, buyers of the dollar can expect another strong disappointment.

However, they will have a chance to get a breather next week if the Fed makes hawkish comments about the prospects for monetary policy. But for now, I wouldn’t count on it. Moreover, markets are preparing for a slowdown in the Fed’s monetary tightening, which is negative for the dollar, while the US national debt is increasing by about $2 million every minute to more than $30 trillion, and inflation in the country is unwilling to decline to the Fed’s target level of 2%.

In addition to the Fed, next week three other world’s largest central banks (Bank of England, ECB, Switzerland) will hold their meetings on monetary policy issues. I probably don’t need to remind you what a surge of volatility (and maybe shocks) the markets can expect, especially if the decisions of the central banks of the US, Switzerland, UK, and the Eurozone differ significantly from those expected.

In addition, next week we will see important macro statistics from the US, UK, Germany, Eurozone, Japan, China, Australia, and New Zealand.

In other words, we are in for a very stormy week. But, in addition to high risks, it also carries additional trading opportunities.

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

** GMT time

Monday, December 12

No important macro statistics is scheduled to be released. However, traders should still attention to the publication of a block of macro data for the UK (at 07:00 GMT). Among other indicators, it will include the UK GDP data for October. The quarterly report is of the utmost importance, considering this is the indicator of the general state of the British economy. However, the monthly report can also shake the pound quotes, especially if the data turns out to be out of the average or worse / better than the forecast. The growing trend of the GDP is considered positive for the GBP. 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 turn 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 October: -0.1%.

20:25 CAD Speech by head of the Bank of Canada Tiff Macklem

The Canadian economy, as well as the entire global economy, has been slowing down since 2020 (first due to the coronavirus pandemic). Earlier, Tiff Macklem said that the country’s economy is quite stable. However, the situation has changed rapidly, and not for the better. Now traders waould like to hear Macklem’s opinion on the stability of the Canadian economy and the central bank’s monetary policy.

If Macklem touches upon the subject of the monetary policy of the Bank of Canada, the volatility in the quotes of the Canadian dollar will increase sharply. The tough tone of his speech will help strengthen the Canadian dollar. The soft rhetoric of Macklem’s speech and the tendency to conduct a loose monetary policy will negatively affect the CAD quotes.

He will probably also explain the Bank of Canada’s recent interest rate decision and may provide some guidance for investors ahead of the next central bank meeting now next year.

Tuesday, December 13

07:00 GBP Report on the average wages of the British for the last 3 months. Unemployment rate

Every month, the National Office for Statistics (ONS) publishes a report on average wages covering the period for the last 3 months, withs and without bonuses.

This report is a key short-term indicator of the dynamics of changes in the wages of employees in the UK. Wages growth is a positive factor for the GBP, while the low value of the indicator is negative. Forecast: The December report suggests that the average wages with bonuses rose again in the last reported 3 months (August-October), by +5.4% after the growth of +6.0%, +6.0%, +5.5%, +5.2%, +6.4%, +6.8%, +7.0%, +5.6%, +4.8%, +4.3%, +4.2 %, +4.9%, +5.8%, +7.2%, +8.3%, +8.8%, +7.3%, +5.6%, +4.0% in previous periods ); wages without bonuses also increased (by +5.7% after growth of +5.7%, +5.4%, +5.2%, +4.7%, +4.4%, +4.2% , +4.2%, +4.1%, +3.8%, +3.7%, +3.8%, +4.3%, +4.9%, +6.0%, + 6.8%, +7.4%, +6.6%, +5.6%, +4.6% in previous periods). Thus, the data points to the continued growth of wages, which is a positive factor for the pound. If the data turns out to be better than the forecast and / or previous values, the pound is likely to strengthen on the foreign exchange market. Data worse than forecast/previous values will have a negative impact on the pound.

Also at this time the office publishes data on unemployment in the UK. It is expected that for 3 months from August to October, unemployment was at the level of 3.6% (against 3.6%, 3.5%, 3.6%, 3.8%, 3.8%, 3.8%, 3.7%, 3.8%, 3.9%, 4.1%, 4.2%, 4.3%, 4.5%, 4.6%, 4.7%, 4.8%, 4.7%, 4.8%, 4.9%, 5.0%, 5.1%, 5.0% in previous periods).

Since 2012, the UK unemployment rate has steadily declined (from 8.0% in September 2012). This is a positive factor for the pound, while the rise in unemployment is a negative factor.

If the data from the UK labor market turns 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 publication of data from the British labor market, we should expect increased volatility in the quotes of the pound and on the London Stock Exchange.

07:00 EUR Harmonized Index of Consumer Prices (HICP) in Germany (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. This is an indicator for assessing inflation 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: +11.6% in October, +10.9% in September, +8.8% in August, +8.5% in July, +8.2% in June, +8.7% in May, +7.8% in April, +7.6% in March, +5.5% in February, +5.1% in January 2022 (annualized). If the November 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 suggests mounting inflationary pressures in Germany, which in turn is putting pressure on the ECB to tighten its monetary policy. Data worse than the previous value will have a negative impact on the euro. Forecast: +11.3% in November (preliminary estimate was +11.3%).

13:30 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 June +0.7% (+ 5.9% in annual terms), in September +0.6% (+6.6% in annual terms), +0.3% (+6.3% in annual terms) in October, which indicates an increase in consumer inflation after the index fell in March and April 2020 amid 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 November: +0.6% and +6.4% (in annual terms), which indicates continued inflationary pressure in the US economy.

22:30 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 point out the further plans of the monetary policy of the department.

Market participants would also like to hear Lowe’s views on the outlook for central bank policy. In his speech after the June meeting of the bank and the increase in interest rates by 50 b.p. (up 0.85%), Philip Lowe warned Australians to be ready for a significant increase in interest rates by the end of this year.

“I say this because the midpoint of our inflation target is 2.5 percent, so the 2.5 percent inflation-adjusted interest rate is actually a zero interest rate, which is historically very low,” Lowe said. In December 2022, the interest rate was raised again to 3.10%.

Any signals from him regarding changes in the RBA’s monetary policy plans will cause a sharp increase in volatility in the AUD 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.

23:50 JPY Tankan Large Manufacturers Index

This index reflects general business conditions for Japan’s large manufacturing companies and is an indicator of the current state of Japan’s export-oriented economy, which is heavily dependent on the industrial sector.

Growing values and the value of the indicator above 0 (zero is the median line) is a positive factor for the JPY, and the value of the indicator below 0 is negative.

According to the forecast, the index is expected to rise to a value of 10 (for the 4th quarter of 2022) after the previous quarterly values of 8, 9, 14, 17, 18, 14, 5 (in the 1st quarter of 2021), which is likely to support yen, but mostly Japanese stock indices.

Wednesday, October 14

07:00 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 included in the British consumer basket. The CPI index is a key indicator of inflation. Its publication causes active movement of the pound on the foreign exchange market, as well as the index of the London Stock Exchange FTSE100.

In the previous reporting month (in October), the growth in consumer inflation amounted to +2.0% (+11.1% in annual terms). The data suggests growing inflationary pressures, which is likely to support the pound. A value of the indicator below the forecast/previous value could provoke a weakening of the pound, as low inflation will force the Bank of England to maintain an easy monetary policy.

Forecast for November: +1.2% (+11.5% in annual terms).

Core Consumer Price Index (Core CPI) is published by the Office for National Statistics and determines the change in prices of a selected basket of goods and services (excluding food and energy) over a given period. It is a key indicator for assessing inflation and changing consumer preferences. A positive result strengthens the GBP, a negative result weakens it.

In October, Core CPI (in annual terms) increased by +6.5%. It is likely that the publication of the indicator will have a positive impact on the pound in the short term if its value is higher than the forecast and previous values. The indicator reading below the forecast and/or previous values may provoke a weakening of the pound.

Forecast for November: +6.6% (in annual terms).

19:00 USD The Fed’s interest rate decision. The Fed’s monetary policy statement. Summary of Economic Projections by the Federal Open Market Committee

In 2020, the dollar was declining because investors were withdrawing funds from safe-haven assets, buying more risky and profitable assets of the stock market, which continued to grow despite the threat of a second wave of the coronavirus epidemic and the associated economic slowdown. The role of the dollar as a defensive asset also declined. However, in 2021 the situation changed and the dollar strengthened. Now market participants are waiting for the US central bank to continue the cycle of tightening monetary policy.

It is expected that at this meeting, the rate will be raised again (by 0.50% to 4.50%). During the publication of the rate decision, volatility can increase sharply throughout the financial market, primarily in the US stock market and in dollar quotes, especially if the rate decision differs from the forecast or unexpected statements are received from the Fed management.

Powell’s comments could affect both short-term and long-term USD trading. A more hawkish stance on the Fed’s monetary policy is seen as positive and strengthens the US dollar, while a more cautious stance is seen as negative for the USD. Investors want to hear Powell’s opinion on the Fed’s plans for this year.

Traders should also have a look at the Fed’s report with forecasts for inflation and economic growth for the next two years and, no less important, individual opinions of FOMC members on interest rates.

19:30 USD Press conference of the FOMC (Federal Open Market Committee of the US Federal Reserve)

The press conference of the federal Open Market Committee of the US Federal Reserve lasts about an hour. The first part reads the ruling, followed by a series of questions and answers that can increase market volatility. Any unexpected statements by Powell on the Fed’s monetary policy will cause an increase in volatility in dollar quotes and in the US stock market.

21:45 NZD New Zealand GDP for the 3rd quarter

The publication of the data will cause increased volatility in the NZD. Given the rise in prices of commodities and agricultural products recently (especially dairy products, which are the most important component of New Zealand’s exports), and the fact that the coronavirus pandemic has affected New Zealand the least compared to other major economies, it is likely that the New Zealand GDP report for the 3rd quarter will be released with positive figures.

GDP in the 3rd quarter of 2022 is expected to grow in annual terms by +1.9% (previous values in annual terms: +0.4%, +1.2%, +3.1%, -0.2 %, +2.9%, -0.8%, +0.2%, -11.3%, 0%, +1.7%). The data so far remain conflicting, although they indicate a continued gradual recovery of the New Zealand economy after its fall in the first half of 2020. Data worse than previous values will negatively affect NZD quotes. Forecast for Q3 2022: -1.9% (+1.9% YoY).

Thursday, December 15

00:30 AUD Employment rate. Unemployment rate

The employment rate reflects the monthly change in the number of employed Australian citizens. 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: +32,200 in October, +900 in September, +33,500 in August, -40,900 in July, +88,400 in June, +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 indicates 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.

Forecast: Unemployment in Australia remained at its lowest level in November at 3.3% (against 3.4% in October, 3.5% in September and August, 3.4% in July, 3.5% in June, 3 .9% in May and April, 4.0% in March and February, 4.2% in January) approaching pre-coronavirus levels, and the employment rate rose by another +50,000 Australian workers.

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 the 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, the Australian dollar may decline significantly in the short term. Better-than-expected data will strengthen the AUD in the short term.

02:00 CNY Retail Sales Index

Retail Sales Level Index is released 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) -0.5% (after an increase of +8% in the last months of 2019 and a fall of -20.5% in February 2020).

Outlook: November 2022 retail sales up +1.0% YoY in China. This is positive data after a contraction in previous months, which indicates an acceleration in the pace of recovery after a strong fall in February-March 2020. If the data turns out to be weaker, the CNY may weaken.

08:30 CHF SNB’s decision on the interest rate. SNB’s monetary policy statement

Before the June 2022 meeting of the SNB, the current deposit rate was in negative territory and amounted to -0.75%. However, as a result of this meeting of the central bank, the rate was raised to the level of -0.25%.

In the accompanying statement, the head of the Swiss National Bank Thomas Jordan noted that the Swiss franc is no longer grossly overvalued and that “tighter monetary policy aims to prevent inflation from spreading more widely in Switzerland.”

The franc has largely lost its status as a safe-haven currency lately, and the threat of intervention is certainly holding back the franc from excessive growth. According to the leaders of the SNB, intervention in the foreign exchange market remains “an important means of maintaining the low attractiveness of investments in francs and easing upward pressure on the currency.”

The deposit rate is widely expected to be maintained at 0.50% following the December 2022 meeting.

Traders will also scrutinize the SNB’s statement for signals regarding the SNB’s future monetary policy plans. Tough rhetoric of the statement will help strengthen the franc. The SNB’s soft tone and propensity to continue its extra loose monetary policy will have a negative impact on the franc. High volatility is expected in the foreign exchange market and, above all, in trading in the franc, if the SNB management makes unexpected statements.

09:00 CHF Press conference of the SNB

After the publication of the decision on the rate, the press conference of the National Bank of Switzerland will begin. During the conference and the speech of head of the SNB Thomas Jordan, the volatility of CHF trading increases, and traders are waiting for signals regarding the further plans of the SNB monetary policy. Tough rhetoric of Jordan’s speech will help strengthen the franc. The soft tone of the speech and the propensity to continue the extra loose monetary policy of the SNB will have a negative impact on the franc.

High volatility is expected in the foreign exchange market and, above all, in the franc trading.

12:00 GBP Bank of England’s interest rate decision. Minutes of the meeting of the Bank of England. Planned volume of asset purchases by the Bank of England. Monetary Policy Report

Following the results of the December meeting, the Bank of England unexpectedly raised its key interest rate to 0.25%, becoming the first leading central bank to increase the cost of borrowing since the start of the coronavirus pandemic. In February, the interest rate was raised to 0.50%, in March to 0.75%, in May to 1.00%, and in November to 3.00%. Members of the Monetary Policy Committee felt that raising the cost of borrowing in a strong labor market to curb price increases was entirely appropriate. At the same time, further tightening of monetary policy may be required to bring inflation to the target level of 2.0%.

The Bank of England is expected to raise interest rates again at this meeting. However, despite the positive macro data from the UK, the interest rate may remain at the same level of 3.00%, given the situation in Ukraine. Such a decision could cause a weakening of the pound.

Also at this time, the minutes of the Monetary Policy Committee (MPC) of the Bank of England are published with the votes “for” and “against” the increase / decrease in the interest rate. The main risks for the UK after Brexit are associated with expectations of a slowdown in the country’s economic growth, as well as with a large current account deficit in the UK’s balance of payments.

The intrigue about the further actions of the Bank of England remains. And in the trading of  the pound and FTSE100 index futures, there are plenty of trading opportunities during the publication of the bank’s rate decision.

Also at the same time we expect the report of the Bank of England on monetary policy containing an assessment of economic prospects and inflation. At this time, the volatility in the pound quotes can rise sharply. One of the main benchmarks for the Bank of England regarding the prospects for monetary policy in the UK, in addition to GDP, is the inflation rate. If the tone of the report is soft, the British stock market will receive support, and the pound will fall. Conversely, the report’s tough rhetoric on curbing inflation, which implies a further increase in the interest rate in the UK, will lead to a strengthening of the pound.

13:15 EUR ECB’s rate decision

The ECB will publish its decision on the key rate and on the deposit rate. The ECB’s tough stance on inflation and the level of key interest rates contributes to the strengthening of the euro, while a soft position and rate cuts weaken the euro. Despite the rise in inflation in the Eurozone, according to the ECB management, the balance of risks for the economic outlook for the Eurozone “still shifted to the negative side.”

“If inflation stabilizes around 2% over the medium term, a gradual further normalization towards a neutral rate would be appropriate. The ECB will take all the necessary steps for this,” said the head of the ECB Christine Lagarde back in May at one of the events of the World Economic Forum in Davos.

Thus, if we follow this signal from the head of the ECB, at this meeting, the key interest rate will be raised again (by 0.5% or even 0.75%). The ECB deposit rate for commercial banks is also likely to be increased (by 0.5% or 0.75%).

Since inflation in the Eurozone continues to grow stubbornly (+10.7% in annual terms in October), the ECB may also announce an increase in interest rates at the next meetings.

Perhaps this will also be mentioned in the accompanying statements of the leaders of the ECB.

13:30 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 (October), the value of the indicator was +1.3%, (after 0%, +0.3%, 0%, +0.8%, -0.1%, +0.7%, +1, 4%, +0.8%, +4.9% in the previous months of 2022). November forecast: -0.3%.

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 (+0.7%, +0.4%, 0%, +0.8%, +0.7%, -0.3%, +0.5%, +1.1% , -0.9%, +6.7% in January 2022) could negatively affect the dollar in the short term.

13:45 EUR Press conference of the ECB. ECB’s Monetary Policy Statement

The press conference will be of major interest to market participants. In its course, a surge in volatility is possible not only in euro quotes, but also in the entire financial market, if the ECB leaders make unexpected statements. The ECB leaders will assess the current economic situation in the Eurozone and comment on the bank’s decision on rates. In previous years, as a result of some meetings of the ECB and subsequent press conferences, the euro exchange rate changed by 3-5% in a short time.

The soft tone of statements will have a negative impact on the euro. And, on the contrary, the tough tone of the speech of the ECB management regarding the monetary policy of the central bank will strengthen the euro.

Friday, December 16

08:30 EUR Manufacturing PMI of the German economy according to S&P Global (preliminary release). Composite PMI of the German economy according to S&P Global (preliminary release)

Manufacturing PMI is an important indicator of the business environment and the general state of the German economy. This sector of the economy forms a significant part of Germany’s GDP. A result above 50 is considered positive and strengthens the EUR, while one below 50 is considered negative for the euro.

Previous monthly values: 46.2, 45.1, 47.8, 49.1, 49.3, 52.0, 54.8, 54.6, 56.9, 58.4, 59.8, 57, 4, 57.4, 57.8, 58.4, 62.6, 65.9, 65.1, 64.4, 66.2, 66.6, 60.7, 57.1, 58.3, 57.8. The growth of the indicator above the previous values will support the euro (in the short term). Data worse than the forecast and / or the previous value will have a negative impact on the euro.

Composite PMI is an important indicator of business conditions and the overall health of the German economy. A result above 50 is considered positive and strengthens the EUR, while one below 50 is considered negative for the euro. Previous monthly values: 46.3, 45.1, 45.7, 46.9, 48.1, 51.3, 53.7, 54.3, 55.1, 55.6, 49.9, 52, 2, 52.0, 55.5, 60.0, 62.4, 60.1, 56.2, 55.8, 57.3, 51.1, 50.8, 52.0, 51.7. Data worse than the forecast and / or the previous value will have a negative impact on the euro.

09:00 EUR Composite Manufacturing PMI of the Eurozone economy according to S&P Global (preliminary release)

Manufacturing PMI is an important indicator of the state of the entire European economy. A result above 50 is considered positive and strengthens the EUR, while one below 50 is considered negative for the euro. Previous monthly values: 47.8, 47.3, 48.1, 48.9, 49.9, 52.0, 54.8, 55.8, 54.9, 55.5, 52.3, 53.3, 55.4, 54.2, 56.2, 59.0, 60.2, 59.5, 57.1, 53.8, 53.2, 62.5, 48.8, 47.8, 49.1, 45.3. Data worse than the forecast and / or the previous value will have a negative impact on the euro.

09:30 GBP Services PMI of the UK economy according to S&P Global (preliminary release)

PMI in the UK services sector is an important indicator of the state of the British economy. The services sector employs the majority of the UK’s working-age population and contributes approximately 75% of GDP. The most important part of the service industry is still financial services. If the data turns out to be worse than the forecast and the previous value, the pound is likely to fall sharply in the short term. 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 considered positive and strengthens the GBP, while one below 50 is considered negative for the GBP.

Previous values of the indicator: 48.8 in November, 48.8 in October, 50.0 in September, 50.9 in August, 52.6 in July, 54.3 in June, 53.4 in May, 58.9 in April, 62.6, March, 60.5 February, 54.1 January, 53.6 December, 58.5 November, 59.1 October, 55.4 September, 55.0 August , 59.6 in July, 62.4 in June 2021 after falling to levels of 29.0 in May, 13.4 in April, 34.5 in March 2020.

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 LiteFinance. 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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