Review of the main events of the Forex economic calendar for the next trading week (23.10.2023 – 29.10.2023)

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Despite the contradicting comments of individual representatives of the Fed management, the dollar maintains positive dynamics.

In their opinion, in order to reduce inflation in the United States, it is enough to maintain interest rates at a consistently high current level, while the September consumer price index does not indicate new risks of accelerating inflation.

Meanwhile, macro data from the United States have been relatively more positive than those from other economically developed countries and regions. In the meantime, a severe armed conflict is flaring up in the Middle East.

The Fed is not likely to cut its key interest rate any time soon, and the US dollar will likely continue to be in demand as a safe-haven asset.

The next week (23.10.2023 – 29.10.2023) will be full of important publications of macro statistical data. Also during the week, the Central Banks of Canada and the Eurozone will hold their meetings on monetary policy issues.

In addition to these meetings, market participants will pay attention to important macro statistics for the UK, Germany, Eurozone, USA, Japan, and Australia.

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

** GMT time

Monday, October23

No important macro statistics scheduled to be released.

Tuesday, October 24

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

Every month, the UK Office for National Statistics (ONS) publishes a report on average wages covering the period for 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 a positive factor for GBP, while a low indicator is negative. Forecast: The October report suggests that average wages with bonuses rose again in the last 3 months (June-August), after rising +8.5%, +8.2%, +6.9%, +6 .5%, +5.8%, +5.9%, +6.0%, +6.5%, +6.%, +6.1%, +5.5%, +5.2% , +6.4%, +6.8%, +7.0%, +5.6%, +4.8%, +4.3%, +4.2% in previous periods); wages without bonuses also increased after the growth of +7.8%, +7.8%, +7.3%, +7.2%, +6.7%, +6.6%, +6.6%, + 6.7%, +6.5%, +6.1%, +5.8%, +5.5%, +5.2%, +4.7%, +4.4%, +4, 2%, +4.2%, +4.1%, +3.8%, +3.7%, +3.8% in previous periods). Thus, the data indicates continued growth in wages, which is positive for the pound. If the data turns out to be better than the forecast and/or previous values, the pound is likely to strengthen in the foreign exchange market. Data worse than forecast/previous values will have a negative impact on the pound.

Also at this time, data on unemployment in the UK are published. It is expected that in the 3 reporting months (June-August), unemployment was at 4.3% (against 4.3%, 4.2%, 4.0%, 3.8%, 3.9%, 3.8% , 3.7%, 3.7%, 3.7%, 3.7%, 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 declined steadily (from 8.0% in September 2012). This is a positive factor for the pound, while rising unemployment is a negative factor.

If 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, volatility is expected to increase in the pound quotes and on the London Stock Exchange.

07:30 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 and Services PMIs are important indicators of business conditions and the overall health of the German economy. These economic sectors form a significant part of Germany’s GDP. A result above 50 is seen as positive and strengthens the EUR, while a result below 50 is negative for the euro. Data worse than the forecast and/or the previous value will have a negative impact on the euro.

Previous values:

  •      Manufacturing PMI: 39.6, 38.8, 40.6, 43.2, 44.5, 44.7, 46.3, 47.3, 47.1, 46.2, 45.1, 47 ,8, 49.1, 49.3, 52.0, 54.8, 54.6,
  •      Services PMI: 50.3, 52.3, 54.1, 57.2, 56.0, 53.7, 50.9, 50.7, 49.2, 46.1, 46.5, 45 ,0, 47.7, 49.7, 52.4, 55.0, 57.6, 56.1, 55.8,
  •      Composite PMI: 46.4, 48.5, 50.6, 53.9, 54.2, 52.6, 50.7, 49.9, 49.0, 46.3, 45.1, 45.7 , 46.9, 48.1, 51.3, 53.7, 54.3, 55.1, 55.6.

08:00 EUR Manufacturing and services PMIs. Eurozone Composite Manufacturing PMI according to S&P Global (preliminary release)

The Eurozone Manufacturing and Services PMIs are important indicators of the health of the entire European economy. A result above 50 is seen as positive and strengthens the EUR, while a result below 50 is negative for the euro. Data worse than the forecast and/or the previous value will have a negative impact on the euro.

Previous values:

  •      Manufacturing PMI: 47.2, 42.7, 43.4, 44.8, 45.8, 47.3, 48.5, 48.8 (January 2023)
  •      Services PMI: 48.7, 50.9, 52.0, 55.1, 56.2, 55.0, 52.7, 50.8 (January 2023)
  •      Composite PMI: 47.2, 48.6, 52.8, 54.1, 53.7, 52.0, 50.3, 49.3 (in January 2023).

08:30 GBP Manufacturing and services PMIs. UK Composite Manufacturing PMI according to S&P Global (preliminary release)

The UK Manufacturing and Services PMIs are important indicators of the health of the UK economy. The services sector employs the majority of the UK’s working population and contributes approximately 75% of its GDP. The most important part of the services industry is still financial services. If the data turns out to be worse than the forecast and the previous value, the pound will most likely decline 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 as positive and strengthens the GBP, while a result below 50 as negative for the GBP.

Previous values:

  •      Manufacturing PMI: 44.3, 45.3, 46.5, 47.1, 47.8, 47.9, 49.3, 47.0, 45.3, 46.5, 46.2, 48 ,4,
  •      Services PMI: 49.3, 51.5, 53.7, 55.2, 55.9, 52.9, 53.5, 48.7, 49.9, 48.8, 48.8, 50 ,0, 50.9, 52.6,
  •      Composite PMI: 48.5, 50.8, 52.8, 54.0, 54.9, 52.2, 53.1, 48.5 (in January 2023).

13:45 USD US Manufacturing and Services PMI (from S&P Global). Composite PMI (preliminary releases)  

PMIs in the most important sectors of the US economy prepared by S&P Global are important indicators of the state of the American economy as a whole. A result above 50 is considered positive and strengthens the USD, while a result below 50 is considered negative for the US dollar.

Previous values:

  •    Manufacturing PMI: 49.8, 49.0, 46.3, 48.4, 50.2, 47.3, 46.9, 46.2, 47.7, 50.4, 52.0, 51, 5,
  •    Services PMI: 50.1, 52.3, 54.4, 54.9, 53.6, 50.6, 46.8, 44.7, 46.2, 47.8, 49.3, 43, 7, 47.3, 52.7, 53.4, 55.6.
  •    Composite PMI: 50.2, 52.0, 53.2, 54.3, 53.4, 52.3, 50.1, 46.8 (in January 2023).

Wednesday, October 25

00:30 AUD RBA core inflation index using the trimmed mean method (3rd quarter). Consumer Price Index (3rd quarter)

This indicator is published by the RBA and the Australian Bureau of Statistics. It reflects the dynamics of retail prices of goods and services included in the consumer basket. The simple trimmed mean method takes into account the weighted average kernel: the central 70% of the index components. Previous index values: +1.0% (+5.9% annualized) in the 2nd quarter, +1.2% (+6.6% annualized) in the 1st quarter of 2023, +1.7% (+6.9% annualized) in the 4th quarter of 2022, +1.8% (+6.1% annualized) in the 3rd quarter, +1.5% (+4 .9% annualized) in the 2nd quarter of 2022, +1.4% (+3.7% annualized) in the 1st quarter of 2022, +1.0% (+2.6% annualized) in the 4th quarter, +0.7% (+2.1% annualized) in the 3rd quarter, +0.5% (+1.6% annualized) in the 2nd quarter, +0.3% (+1.1% annualized) in the 1st quarter of 2021.

The data suggests easing inflationary pressures. If the indicator value turns out to be worse than forecast, this will likely have a negative impact on the AUD. An increase in the indicator above the forecast should have a positive impact on the AUD in the short term.

Consumer Price Inflation Index (CPI) published by the RBA and the Australian Bureau of Statistics measures the dynamics of retail prices of goods and services in Australia. CPI is the most significant indicator of inflation and changes in consumer preferences. A high value of the indicator is a positive factor for AUD, and a low value is a negative factor. Previous values of the indicator: +0.8% (+6.0% annualized) in the 2nd quarter, +1.4% (+7.0% annualized) in the 1st quarter of 2023, +1.9% (+7.8% annualized) in the 4th quarter of 2022, +1.8% (+7.3% annualized) in the 3rd quarter, +1.8% (+6 .1% annualized) in the 2nd quarter of 2022, +2.1% (+5.1% annualized) in the 1st quarter of 2022, +1.3% (+3.5% annualized) in the 4th quarter, +0.8% (+3.0% annualized) in the 3rd quarter, +0.8% (+3.8% annualized) in the 2nd quarter , +0.6% (+1.1% annualized) in the 1st quarter of 2021.

The Australian central bank’s CPI inflation target is in the range of 2% – 3%. According to the minutes of one of the RBA’s most recent meetings, bringing inflation back to target “further interest rate increases will be required over time” and “further steps will need to be taken in the coming months to normalize monetary conditions in Australia.”

It is worth noting that earlier the RBA minutes stated that “the Central Bank will not raise rates until it reaches the target CPI inflation level of 2-3% on a sustainable basis. This will not happen until 2024.” The situation appears to have changed and the RBA, like most of the world’s other major central banks, now faces the challenge of accelerating inflation.

The expected positive value is likely to support the AUD. If the indicator comes out with a value worse than the forecast, this will negatively affect the AUD in the short term.

14:00 CAD Bank of Canada’s interest rate decision. Accompanying statement from the Bank of Canada

The Bank of Canada will decide on the interest rate. In March 2020, the bank lowered the rate 3 times, bringing it to 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, and laying the foundation that will allow the economy to return to normal.” The central bank’s press release also said the spread of the coronavirus and the sharp drop in global oil prices are combining to put severe pressure on Canadians and the Canadian economy.

In essence, quantitative easing and a significant reduction in interest rates should help weaken the national currency.

The negative impact of the coronavirus on the Canadian economy and the country’s labor market, as well as the weakness of the housing market, are still putting pressure on the Bank of Canada to maintain an easy monetary policy. However, following meetings held in 2022 and 2023, the Bank of Canada decided to increase the interest rate (to 5.00% currently) and spoke in favor of further increases. The Bank of Canada now expects GDP and consumer price index (CPI) growth this year to be stronger than previously expected. Bank executives also acknowledged that uncertainty caused by Russia’s military special operation in Ukraine could weaken economic growth and fuel inflation.

It is possible that the Bank of Canada will again raise interest rates at its meeting on Wednesday.

The tough tone of the Bank of Canada’s accompanying statement regarding rising inflation and the prospect of further tightening of monetary policy will cause the Canadian dollar to strengthen. If the Bank of Canada signals the need for loose monetary policy, the Canadian currency will decline.

15:00 CAD Bank of Canada press conference

During the press conference, Bank of Canada Governor 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 regarding the monetary policy of the Bank of Canada, the Canadian dollar will strengthen in the foreign exchange market. If Macklem speaks out in favor of loose monetary policy, the Canadian currency will decline. In any case, high volatility in the CAD quotes is expected during his speech.

Thursday, October 26

12:15 EUR ECB rate decision

The ECB will publish its decision on the key rate and the deposit rate. The ECB’s tough position on inflation and the level of key interest rates helps to strengthen the euro, while a soft position and rate cuts weaken the euro. Given the high level of inflation in the Eurozone, according to the ECB management, the balance of risks to the economic prospects of the Eurozone “remains skewed in the negative direction.”

“The Governing Council believes that interest rates will still need to be raised significantly… to ensure a timely return of inflation to the medium-term target of 2%,” the ECB said in a statement following its December meeting.

Speaking at the World Economic Forum in Davos in January 2023, head of the ECB Christine Lagarde said that “inflation expectations remain unabated” and “the ECB will continue to raise rates.” In her opinion, “inflation is too high” and “the ECB intends to reduce it to 2% in a timely manner.”

The ECB believes that GDP growth may decline amid the energy crisis in the EU, high uncertainty, weakening global economic activity, and tightening financing conditions. However, the recession should not drag on too long, although strong growth should not be expected either.

“Growth will recover in the near term as current headwinds ease. Overall, Eurosystem staff forecast economic growth to be 0.5% in 2023, 1.9% in 2024 and 1.8% in 2025,” the ECB said in one release.

Thus, if we follow this signal from the head of the ECB, at the end of this meeting the key interest rate and the ECB deposit rate for commercial banks will be raised again, most likely by 0.25% (to 4.75% and 4.25%, respectively). But other decisions are not excluded, both tougher ones (an increase of 0.5% or even 0.75%), and vice versa, softer ones, for example, a pause in increases.

Well, since inflation in the Eurozone still remains unacceptably high for the ECB leaders, they may announce an increase in interest rates at the next meetings.

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

12:30 USD US annual GDP for 3rd quarter (preliminary estimate)

GDP is one of the key indicators (along with labor market and inflation data) for the Fed in terms of its monetary policy. A strong result strengthens the US dollar; a weak GDP report has a negative impact on the US dollar. In the previous 2nd quarter of 2023, GDP grew by +2.1%, after growing by +2.0%, +2.6%, +3.2% in the 3rd quarter of 2022, falling by -0. 6% in the 2nd quarter, -1.6% in the 1st quarter, +6.9% growth in the 4th quarter of 2021, +2.3% in the 3rd quarter, GDP increased in the 2nd quarter by +6.7%, and in the 1st quarter of 2021 – by +6.3%.

If data points to a contraction in GDP in the 3rd quarter of 2023, the dollar will come under severe pressure. Positive GDP data will support the dollar and US stock indices.

12:45 EUR ECB press conference. ECB Monetary Policy Statement

The press conference will be of major interest to market participants. During it, a surge in volatility is possible not only in euro quotes, but throughout 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, following the results of some ECB meetings and subsequent press conferences, the euro exchange rate changed by 3%-5% in a short time.

A soft tone of the statements will have a negative impact on the euro. Conversely, a tough tone from the ECB leaders regarding the central bank’s monetary policy will strengthen the euro.

23:30 JPY Consumer Price Index (CPI) in the Tokyo region. Core Consumer Price Index (Core CPI) in the Tokyo region (excluding food and energy prices)

Tokyo consumer price indices are published by the Japan Bureau of Statistics and measure changes in the prices of a selected basket of goods and services over a given period. They are key indicators for assessing inflation and changes in consumer preferences.

Previous values (annualized):

  •      Tokyo CPI: +2.8%, +2.9%, +3.2%, +3.2%, +3.2%, +3.5%, +3.3%, +3.4 %, +4.4% (in January 2023),
  •      Tokyo CPI (excluding food and energy): +4.0%, +4.0%, +4.0%, +3.8%, +3.9%, +3.8%, +3 .4%, +3.1%, +3.0% (in January 2023).

An indicator value below the forecast and/or previous values may trigger a weakening of the yen.

Friday, October 27

12:30 USD Personal Consumption Expenditures (PCE Core Price Index)

Personal consumption expenditure data measures the average amount of money consumers spend per month on durable goods, consumer goods and services. Core PCE price index does not include food and energy prices. Annual Core PCE is the Fed’s main measure of inflation.

In turn, the inflation rate (in addition to data from the labor market and GDP) is important for the Fed when determining the parameters of its monetary policy. Rising prices put pressure on the central bank to tighten its policy and raise interest rates.

PCE data above the forecast and/or previous values could push the US dollar higher, while a decrease in the indicator would most likely have a negative impact on the dollar.

Previous values (annualized): +3.9%, +4.2%, +4.1% +4.6%, +4.7%, +4.6%, +4.7%, + 4.7%, +4.6%, +4.8%, +5.1%, +5.2%, +4.9%, +4.7%, +4.8%, +4, 7%, +4.9%, +5.2%, +5.3%, +5.2% (in January 2022).

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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