Review of the main events of the Forex economic calendar for the next trading week (13.03.2023 – 19.03.2023)
Due to the sharp drop in the dollar after the publication of the US Department of Labor report last Friday (in February, NFPR increased by 311,000, and unemployment rose to 3.6% against the forecast of +205,000 and 3.4%, respectively), the index dollar DXY closed last week with a decrease. The price of DXY futures again fell below 105.00.
The dollar did not even benefit from the two speeches in the US Congress by the head of the Federal Reserve Jerome Powell, although its quotes rose sharply immediately after Powell’s statements regarding the prospects for the US Central Bank’s monetary policy. Powell confirmed that Fed officials are “committed to cutting prices.” At the same time, he made some statements that caused overly optimistic buyers of the dollar to reduce their aggressive expectations for the US currency. Powell said that the Fed officials “have not yet made any decision regarding the March meeting, it depends on the data coming in.”
The next week will be a little quieter than the last one, and market participants will pay attention to the publication of important macro statistics from the UK, US, China, New Zealand, and Australia. The focus will be on the ECB meeting. Note also that this weekend, America switches to daylight saving time.
* during the coming week, new events may be added to the calendar and / or some scheduled events may be cancelled.
** GMT time
Monday, March 13
No important macro statistics scheduled to be released.
Tuesday, March 14
07:00 GBP Report on the average wages of the British for the last 3 months. Unemployment rate
Every month, the Office for National Statistics (ONS) publishes a report on average wages, including the period for the last 3 months, with bonuses and without bonuses.
This report is a key short-term indicator of the dynamics of changes in 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 March report suggests that the average wages with bonuses rose again in the last calculated 3 months (November-January), after an increase of +5.9%, +6.4%, +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 after growth of +6.7%, +6.4%, +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 in 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 (November-January) unemployment was at the level of 3.8% (against 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 steadily declined (from 8.0% in September 2012). This is a positive factor for the pound, 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, the data from the British labor market is expected to increase volatility in the quotes of the pound and the London Stock Exchange.
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% YoY), in April +0.6% (+6.2% YoY), in June +0.7% (+ 5.9% YoY), in September +0.6% (+6.6% YoY), +0.3% (+6.3% YoY) in October, +0.2% (+6.0% YoY) in November, +0.3% (+5.7% YoY) in December, +0.4% (+5.6% YoY) in January 2023, which indicates a slight decrease in consumer inflation after growth in the previous months of 2022. 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 February: +0.4% (+5.5% YoY), which indicates continued inflationary pressure in the US economy.
23:50 JPY Minutes of the meeting of the Monetary Policy Committee of the Bank of Japan
If the tone of the minutes indicates the firm intentions of the Bank of Japan regarding the monetary policy in the country, this will negatively affect the stock market in Japan and strengthen the yen. And, conversely, soft rhetoric regarding the prospects for the bank’s monetary policy will contribute to the weakening of the yen and the growth of the Japanese stock market.
As a result of the last meeting, the Bank of Japan kept its extra soft monetary policy unchanged. The board of the bank decided to leave in place the key short-term rate at -0.1% and the zero target yield level of 10-year government bonds (in the range from -0.5% to +0.5%). The management of the Bank of Japan emphasized its intention to keep interest rates at an extremely low level for a long period of time.
Wednesday, March 15
02:00 CNY Retail Sales Index
Retail Sales 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) was -1.8%, -5.9% (after an increase of +8% in the last months of 2019 and a fall of -20.5% in February 2020).
The data suggests an uneven pace of recovery after a strong drop in February-March 2020. If the data turns out to be weaker than the forecast or previous values, the CNY may weaken sharply.
12:30 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, while 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 (January), the value of the indicator was +3.0% (after -1.1%, -0.6%, +1.3%, 0%, +0.3%, 0%, +0.8 %, -0.1%, +0.7%, +1.4%, +0.8%, +4.9% in the previous months of 2022).
Retail sales is the main indicator of consumer spending in the US showing the change in retail sales. 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. The data worse than the previous period (+1.7%, -0.7%, -0.2%, +0.7%, +0.4%, 0%, +0.8%, +0.7% , -0.3%, +0.5%, +1.1%, -0.9%, +6.7% in January 2022) could negatively impact the dollar in the short term.
21:45 NZD New Zealand GDP for the 4th 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 4th quarter will be released with positive figures.
GDP in the 4th quarter of 2022 is expected to grow in annual terms by +2.0% (previous values in annual terms: +6.4%, +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 Q4 2022: +0.8% (+2.0% YoY).
Thursday, March 16
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: -11500 in January, +14600 in December, +64000 in November, +32200 in October, +900 in September, +33500 in August, -40900 in July, +88400 in June, +60600 in May, + 4000 in April, +17900 in March, +77400 in February, +12900 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 proportion 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, despite growth, remained at the lowest levels in February and at 3.9% (against 3.7% in January, 3.5% in December, 3.4% in November and 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), and the employment rate fell by -18,600 working Australians.
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 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.
13:15 EUR ECB rate decision
The ECB will publish its decision on the key rate and on the deposit rate. The ECB’s tight 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. Given the high level of inflation in the Eurozone, according to the ECB management, the balance of risks for the economic outlook for the Eurozone “remains skewed to the negative side.”
“The Governing Council believes that interest rates will still need to rise significantly … in order to ensure a timely return of inflation to a medium-term target of 2%,” the ECB said in a statement following the December meeting.
Speaking at the World Economic Forum in Davos in January 2023, the ECB President Christine Lagarde said that “inflation expectations are not easing” and “the ECB will continue to raise rates.” In her opinion, “inflation is too high”, and “the ECB intends to bring it down to 2% in a timely manner.”
The ECB believes that GDP growth may decline due to the energy crisis in the EU, high uncertainty, weakening global economic activity and tightening financing conditions among other things. However, the recession should not drag on too long, although strong growth is not expected either.
“In the near future, growth will recover as the current headwinds ease. Overall, Eurosystem staff forecast economic growth of 0.5% in 2023, 1.9% in 2024 and 1.8% in 2025,” the ECB said in a statement following its December meeting.
Thus, if we follow this signal from the head of the ECB, following this meeting, the key interest rate will be raised again, most likely by 0.25% (up to 3.25% and 2.75%, respectively). But other, tougher solutions are not ruled out (an increase of 0.5% or even 0.75%). The ECB deposit rate for commercial banks is also likely to be raised.
Well, since inflation in the Eurozone is still unacceptably high for the leaders of the ECB, they may announce an increase in interest rates at the next meetings.
Perhaps this will also be mentioned in the accompanying statements of ECB leaders.
13:45 EUR Press conference of the ECB. ECB 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 moved by 3% -5% in a short time.
A soft tone of statements will have a negative impact on the euro. And, on the contrary, a tough tone of the speech of the ECB management regarding the monetary policy of the central bank will strengthen the euro.
Friday, March 17
15:00 USD University of Michigan Consumer Confidence Index (preliminary release)
This indicator reflects the confidence of American consumers in the economic development of the country. A high level indicates growth in the economy, while a low level indicates stagnation. Previous values of the indicator: 67.0 in February, 64.9 in January, 59.7 in December, 56.8 in November, 59.9 in October, 58.6 in September, 58.2 in August, 51.5 in July, 50.0 in June, 58.4 in May, 65.2 in April, 59.4 in March, 62.8 in February, 67.2 in January 2022. An increase in the indicator will strengthen the USD, and a decrease in the value will weaken the dollar. The data shows uneven recovery of this indicator, which is negative for the USD. Data worse than previous values may have a negative impact on the dollar in the short term.
Forecast for March: 67.5.
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