Review of the main events of the Forex economic calendar for the next trading week (08.08.2022 – 14.08.2022)
The dollar ended the first week of August in the positive territory against its main competitors in the foreign exchange market. The reason for optimism and new hopes of buyers of the dollar was the publication last Friday of a very positive monthly report of the US Department of Labor with data for July. According to this report, unemployment fell to a new pre-pandemic level of 3.5%, and the number of non-farm payrolls in the US economy grew by 528,000 (against the forecast of an increase of 250,000 and the previous revised value of +398,000 from +372,000) . Average hourly wages also rose above expectations of +0.3% growth to +0.5%.
Thus, the labor market continues to be a strong point of the American economy. The published data significantly improved the assessment of the state of the US economy after the publication of a disappointing 2Q GDP report a week earlier.
Amid the increased optimism of investors, the DXY dollar index again broke up the mark of 106.00, having risen from the low of the week at 104.93. In general, judging by the DXY chart, the positive dynamics of the dollar continues. Recall that last month the dollar index updated a 20-year high, touching the mark of 109.14.
The next week will be calm with few publications of important macro statistics.
Nevertheless, market participants will pay attention to the macro data from China, Germany, the US, and the UK.
*) during the coming week, new events may be added to the calendar and / or some scheduled events may be cancelled.
** GMT time
Monday, August 8
No important macro statistics scheduled to be released.
Tuesday, August 9
No important macro statistics scheduled to be released.
Wednesday, August 10
01:30 CNY Consumer Price Index (CPI)
The National Bureau of Statistics of China will present regular monthly data reflecting the dynamics of consumer prices in China. Rising 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. Strengthening growth in consumer inflation may cause appreciation of the yuan, while a low result will put pressure on the yuan.
The Chinese economy, according to various estimates, is already the largest in the world, pushing the US economy to second place. Therefore, the publication of important macroeconomic indicators of this country has a significant impact on global financial markets, primarily on the positions of the yuan, other Asian currencies, the dollar, commodity currencies, as well as Chinese and Asian stock indices. China is the largest buyer of raw materials and a supplier of a wide range of finished products to the world commodity market.
In June 2022, the growth of the consumer inflation index amounted to 0% (+2.5% in annual terms).
The deterioration of macroeconomic indicators, including the decline in consumer inflation, may adversely affect the positions of the yuan, as well as commodity currencies such as the Canadian, Australian, New Zealand dollars. To a greater extent, this applies to the Australian dollar, since China is Australia’s largest trade and economic partner.
The growth of the consumer inflation index will have a positive impact on the quotes of the yuan, as well as commodity currencies. However, data than expected and the relative decline in the CPI may negatively affect them.
06:00 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. It is an indicator for assessing inflation and is 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: +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 (in annual terms). If the July 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 point to 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: +8.2% in July (preliminary estimate was +8.5%).
12:30 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), and in June +0.7% ( +5.9% in annual terms), which indicates an increase in consumer inflation after the fall of the index in March and April 2020 against the backdrop of 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 July: +0.5% and +6.1% (in annual terms), which indicates continued inflationary pressure in the US economy.
Thursday, August 11
No important macro statistics scheduled to be released.
However, traders might want to pay attention to the publication of the block of the US macro statistics at 12:30, which may increase volatility in the market if the data differs greatly from the forecast.
In particular, some slowdown in producer price growth is expected in July: +0.3% (+10.6% yoy) after rising +1.1% (+11.3% yoy) in June.
The US Department of Labor will also present a weekly report with data on the number of applications for unemployment benefits. If the number grows during the reporting week (until August 5), this will negatively affect the dollar.
Friday, August 12
06:00 GBP UK GDP for the 2nd quarter (first estimate)
GDP is considered an indicator of the overall health of the British economy. The growing trend of the GDP indicator is considered positive for the GBP. The UK GDP was one of the highest in the world until 2016, when the Brexit referendum was held. Then its growth slowed down, and with the onset of the global coronavirus pandemic, the growth rate of British GDP completely moved into negative territory.
Previous GDP values: +0.8% in Q1 2022, +1.3% in Q4, +1.0% in Q3, +5.5% in Q2 after falling by -1.6% in the 1st quarter of 2021. 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 turns out to be significantly worse than previous values, then this will put downward pressure on the pound. A strong GDP report will strengthen the pound.
14:00 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 indicator values: 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 testify to the 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 August: 52.0.
Price chart of EURUSD in real time mode
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