Home News Economic calendar for the week 04.07.2022 – 10.07.2022

Economic calendar for the week 04.07.2022 – 10.07.2022

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Review of the main events of the Forex economic calendar for the next trading week (04.07.2022 – 10.07.2022)

On Friday, after another powerful breakthrough “to the north”, the DXY dollar index ended the last week of June with an increase of almost 1.5%, having successfully consolidated above the 105.00 mark.

The last trading week was incomplete (4 trading days instead of 5), but it was the last week of the month, quarter, half year, and these time periods also remained under complete dominance of the dollar. The main factor behind this dominance remains the Fed’s monetary policy, which is the most stringent (at the moment) in comparison with other major world central banks.

As the New York Fed President Williams and Cleveland Fed President Loretta Mester said last week, “it’s smart to go to 3.5% to 4.0% in terms of the federal funds rate” this year and then to 3.5% – 4.0% next year and “monetary policy will need to act more decisively to get inflation back on target.” According to Williams, “a 75bp rate change was the right thing to do” and the July Fed meeting will discuss whether to raise by 50 or 75 bp.

Speaking at the ECB Central Banks Forum last Tuesday, the Fed Chairman Powell also said, in fact repeating his own recent statements, that the biggest risk for the Fed now is “failure to restore price stability”, and the Fed needs to act more decisively in this regard.

Thus, it would be more logical to expect further strengthening of the dollar, which is also supported by high demand for it as a protective asset from investors avoiding purchases of risky stock market assets: the US and European stock markets are currently under the rule of the bears.

The past week has been extremely volatile and interesting. Now the focus of market participants will be on the publication of minutes of the June meeting of the Fed and monthly data from the US labor market. They will also pay attention to the publication of important macro statistics from the Eurozone, the US, Australia, Canada, as well as the results of the RBA meeting on monetary policy issues. As you can see, next week also provides market participants with a lot of trading opportunities.

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

**GMT time

Monday, July 4

No important macro statistics is scheduled to be released, and the United States is celebrating Independence Day – banks and exchanges will be closed in this country. On Monday, especially during the American trading session, trading volumes will be low, which, however, does not eliminate the possibility of a sharp short-term increase in volatility in the thin market.

Tuesday, July 5

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

The main negative factors for the Australian economy are weak wages growth, a weak labor market and a slowdown in growth. However, Australia’s economic recovery is accelerating. The government of the country expects that in the 2022-23 financial year, the country’s economy will grow by + 3.5%, the unemployment rate will fall to a minimum since the early 1970s (in April, unemployment in Australia fell to 3.9%, the lowest since August 2008) and wages will increase by about 3.25%. This, in turn, will allow the Reserve Bank of Australia to continue on the course of monetary policy normalization it launched in May by raising interest rates for the first time since November 2010. To curb inflation, which reached a 20-year high (in Q1 2022, Australian headline annual consumer price inflation was 5.1% and core inflation was 3.7%), the rate was increased by 0.25%, to 0.35% and then to 0.85%, which beat economists’ forecasts. In addition, the RBA signaled the likelihood of a further increase in the coming months.

“The Board will do everything necessary to ensure that over time, inflation in Australia returned to the target level – said the governor of the central bank Philip Lowe. – This will require further interest rate hikes in the future.”

According to the RBA forecast, in 2022 headline inflation will be at the level of 6%, while core inflation will accelerate to 4.75%. At the same time, the unemployment rate next year may fall to 50-year lows.

“With the move towards full employment and data on prices and wages, some scaling back of the emergency monetary support provided during the pandemic is appropriate,” Lowe said.

Economists now expect the RBA to raise its key rate to 2.6% by December 2022 and keep it at that level next year.

Thus, the Australian dollar received a momentum to grow. As you know, (under normal economic conditions) an increase in the interest rate usually leads to the strengthening of the national currency.

It is possible that at this meeting the Central Bank of Australia will again raise the interest rate, although unexpected decisions are not ruled out, for example, a decrease or a stronger increase in the interest rate.

In an accompanying statement, the RBA officials will explain the reasons behind the rate decision. If the RBA signals the possibility of easing monetary policy in the near future, the risks of the fall of the Australian dollar will increase. And, on the contrary, tough rhetoric of the RBA’s accompanying statement may provoke the strengthening of the Australian dollar.

Wednesday, July 6

09:00 EUR Retail sales in the Eurozone

Retail sales is the main indicator of consumer spending showing changes in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. Forecast for May: +0.4% (+5.4% YoY) against -1.3% (+3.9% YoY) in April, -0.4% (+0.8% YoY) yoy) in March, +0.3% (+5.0% yoy) in February, +0.2% (+7.8% yoy) in January. The data suggests that, despite rising indices, retail sales have not yet reached pre-coronavirus levels after a sharp drop in March-April 2020, when tight quarantine measures were in place in Europe. However, better-than-expected data is likely to have a positive impact on the euro.

14:00 USD Services PMI (from ISM) of the US economy

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

A result above 50 is seen as positive for the USD. June forecast: 54.5 (against 55.9 in May, 57.1 in April, 58.3 in March, 56.5 in February, 59.9 in January, 62.0 in December), which is likely to have a positive impact on the USD. However, the relative decline of the index, and especially below the value of 50, may negatively affect the dollar in the short term.

18:00 USD Minutes of the last (June) meeting of the Federal Open Market Committee

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

Following the meeting, which ended on March 15-16, the leaders of the central bank raised the interest rate by 0.25% (for the first time since 2018) and announced their intention to raise interest rates another 6 times in 2022, also allowing for the possibility of a tougher decision. In June, the Fed also began to reduce the size of its balance sheet, and at a meeting on June 14-15 decided to raise interest rates to 1.75%.

Economists and market participants are now evaluating how effective the Fed will be in dealing with inflation, which has reached its highs in the past 40 years.

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

Thursday, July 7

01:30 AUD Balance of Trade

The indicator (balance of trade) evaluates the ratio between exports and imports. The growth of exports from Australia leads to an increase in the trade surplus, which has a positive impact on the AUD. Previous values: ​​10.495 billion Australian dollars (for April), 9.314 billion Australian dollars (for March), 7.457 billion Australian dollars (for February), 12.891 billion Australian dollars (for January). A decrease in the trade surplus may have a negative impact on the Australian dollar. Conversely, a growing trade surplus is positive for the AUD. Forecast for May: 10.600 billion Australian dollars.

12:15 USD ADP National Employment Report

Usually, the ADP report on the level of employment in the private sector has a strong impact on the market and dollar quotes. An increase in the value of this indicator has a positive effect on the dollar. It is expected that the growth in the number of employees in the US private sector in June was +200,000 (against an increase of 128,000 in May, 247,000 in April, 455,000 in March, 475,000 in February, 509,000 in January 2022). The relative growth of the indicator may have a positive impact on the dollar quotes, and the relative decline of the indicator is negative. The market reaction may be negative, and the dollar may decline if the data also turns out to be worse than the forecast.

Millions of Americans have previously been laid off due to the coronavirus pandemic and related quarantine measures. Most of the layoffs were concentrated in the tourism and retail sectors. Other important sectors of the economy also suffered. The ADP previously reported that the most significant drop in employment was recently noted in the construction sector and the financial services sector.

Although the ADP report does not have a direct correlation with the US Department of Labor official data on the labor market, which will be published on Friday, however, the ADP report is often its harbinger, having a noticeable impact on the market.

Friday, July 8

12:30 USD Average hourly wages. NFPR. Unemployment rate

The most important indicators of the state of the labor market in the US in June. Forecast: +0.3% (against +0.3% in May and April, +0.4% in March, 0% in February, +0.7% in January 2022, +0.6% in December, +0.3% in November, +0.4% in October, +0.6% in September and August 2021) / +0.250 million (against +0.390 million in May, +0.428 million in April, +0.431 million, +0.678 million in February, +0.467 million in January 2022, +0.199 million in December, +0.210 million in November, +0.531 million in October, +0.194 million in September, +0.235 million in August 2021) / 3.6 % (against 3.6% in May, April and March, 3.8% in February, 4.0% in January 2022, 3.9% in December, 4.2% in November, 4.6% in October , 4.8% in September, 5.2% in August 2021), respectively.

In general, the figures can be called encouraging. The data shows continued improvement in the US labor market after its precipitous fall in the first half of 2020. Before the coronavirus pandemic, the US labor market remained strong, indicating the stability of the US economy and supporting the dollar quotes.

Predicting the market reaction to the publication of indicators is often difficult, because many indicators for previous periods are subject to revision. Now it will be even more difficult to do this, because the economic situation in the US and many other major economies remains controversial due to the coronavirus. In any case, when the data from the US labor market is published, a surge in volatility is expected in trading not only in the USD, but throughout the financial market. Probably the most cautious investors will prefer to stay out of the market during this period of time.

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, including against the backdrop of massive business closures due to the coronavirus and layoffs. Unemployment rose from the usual 5.6% – 5.7% to 7.8% in March and to 13.7% in May 2020. If unemployment continues to rise, the Canadian dollar will decline. If the data turns out to be better than the previous value, the Canadian dollar will strengthen. Decreasing unemployment rate is a positive factor for the CAD, rising unemployment is a negative factor. In May 2022, unemployment was at 5.1% (against 5.2% in April, 5.3% in March, 5.5% in February, 6.5% in January 2022). Forecast for June 2022: 5.2%.

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 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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