Review of the main events of the Forex economic calendar for the next trading week (24.10.2022 – 30.10.2022)

On Friday, the yen rose sharply amid the suspicions of foreign exchange intervention by the Bank of Japan and the Ministry of Finance to protect the Japanese currency. During the European trading session, the USD/JPY rose above 151.90, reaching its highest level since August 1990, but then fell sharply by 3.2% from its high to 146.18. On Friday, the yen strengthened against all major currencies.

So was there really an intervention? The Bank of Japan has not yet announced this, but all signs point to this given the poor fundamental background.

Meanwhile, high geopolitical tensions persist in the world and inflation continues to rise. This, in particular, is evidenced by the inflation indicators published last week by the Eurozone, Canada, and the UK, where the government suddenly found itself without a prime minister again.

Next week there will be meetings of the central banks of Japan, the Eurozone, and Canada. In addition, next week we expect a series of important macro statistics from Europe, China, and the US. Market participants will also pay attention to the publication of important macro statistics from Australia, Germany, and the UK.

Next week, therefore, promises to be extremely volatile, while at the same time providing a lot of trading opportunities for market participants.

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

** GMT time

Monday, October 24

07:30 EUR Germany Manufacturing PMI according to S&P Global (preliminary release). Composite PMI 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: 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, one below 50 is considered negative for the euro. Previous monthly values: 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.

08:00 EUR Eurozone Composite Manufacturing PMI 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: 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.

08:30 GBP UK Services PMI according to S&P Global (preliminary release)

UK Services PMI 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, one below 50 is considered negative for the GBP.

Previous values ​​of the indicator: 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, in March, 60.5 in February, 54.1 in January, 53.6 in December, 58.5 in November, 59.1 in October, 55.4 in September, 55.0 in 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.

Tuesday, October 25

08:00 EUR Bank Lending Survey in the Eurozone

The survey of the state of the bank lending system is conducted by EU experts in the financial sector 4 times a year. The main purpose of the survey is to obtain extended information about the conditions of bank lending in the Eurozone.

The data obtained are used by the ECB management in making decisions on the bank’s monetary policy. This report could cause increased volatility in the euro quotes and in the European stock market at the time of its publication if it contains unexpected conclusions about the conditions for lending to businesses and households in the Eurozone.

14:00 USD Consumer Confidence Index

This indicator is published by the Conference Board and 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. The previous value of the indicator is 108.0. An increase in the indicator will strengthen the USD, and a decrease in the value will weaken the dollar.

Wednesday, October 26

00:30 AUD RBA Trimmed Mean Core Inflation Index (for the 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 for 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: +1.5% (+4.9% yoy) in Q2 2022, +1.4% (+3.7% yoy) in 1Q 2022, +1.0% (+2.6% YoY) in Q4, +0.7% (+2.1% YoY) in Q3, +0.5% (+1 .6% YoY) in Q2, +0.3% (+1.1% YoY) in Q1 2021.

According to the forecast, it is expected that the value of the indicator for the 3rd quarter of 2022 will be at +1.5% (+5.6% in annual terms).

While this is still a weak value, the data points to mounting inflationary pressures. If the value of the indicator turns out to be worse than the forecast, this is likely to have a negative impact on the AUD. The growth of 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 evaluates the dynamics of retail prices for goods and services in Australia. CPI is the most significant indicator of inflation and changes in consumer preferences. A high value is positive for the AUD, while a low value is negative. Previous values ​​of the indicator: +1.8% (+6.1% in annual terms) in the 2nd quarter of 2022, +2.1% (+5.1% in annual terms) in the 1st quarter of 2022, +1.3% (+3.5% YoY) in Q4, +0.8% (+3.0% YoY) in Q3, +0.8% (+3 .8% YoY) in Q2, +0.6% (+1.1% YoY) in Q1 2021.

According to the forecast, it is expected that the value of the indicator for the 3rd quarter of 2022 will be at +1.5% (+6.9% in annual terms).

The Australian central bank’s CPI inflation target is in the range of 2% – 3%. As follows from the minutes of a recent RBA meeting, in order to return inflation to the target level, “further interest rate increases will be required over time”, and “further steps are needed in the coming months to normalize monetary conditions in Australia.”

It is worth noting that earlier the minutes of the RBA said that “the Central Bank will not raise rates until it reaches the CPI inflation target of 2-3% on a sustainable basis. It won’t happen before 2024.” It seems that the situation has changed, and now the RBA, like most other major world central banks, is facing the problem of accelerating inflation.

The expected positive value of the indicator 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.

02:00 CNY China GDP for the 3rd quarter. Retail Sales Index

The National Bureau of Statistics of China will present data on GDP growth in the 3rd quarter of 2022.

Chinese GDP is expected to grow in the 3rd quarter of 2022 by +3.5% (+3.4% yoy) after -2.6% (+0.4% yoy) in the 2nd quarter , +1.3% (+4.8% YoY) in 1Q 2022, +1.6% (+4.0% YoY) in Q4, by +0.2 % (+4.9% YoY) in Q3, +1.3% (+7.9% YoY) in Q2 and +0.6% (+18.3% in annual terms) in the 1st quarter of 2021.

China is the largest buyer of raw materials and a supplier of a wide range of finished products to the world commodity market. China’s economy is already the largest in the world, according to many sources, pushing the US economy to second place. Therefore, the publication of important macroeconomic indicators from China can have a strong impact on the entire financial market.

The relative decline in GDP may have a negative impact on the yuan quotes, as well as on the quotes of commodity currencies and currencies of the Asia-Pacific region, because it may indicate a slowdown in the growth of the Chinese economy.

The growth of the indicator will have a positive impact on the Chinese yuan, as well as on world stock indices, primarily Asian, as well as on quotations of commodity currencies such as the New Zealand and Australian dollars. China is the largest trade and economic partner of Australia and New Zealand and the buyer of raw materials from these countries.

Therefore, positive macro statistics from China may also have a positive impact on the quotes of these commodity currencies, although the expected data indicate a slowdown in the world’s largest economy, and this is a negative factor for stock markets and commodity currency quotes.

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 wellbeing 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) -6.7% (after an increase of +8% in the last months of 2019 and a fall of -20.5% in February 2020).

Forecast: In September 2022, retail sales increased by +3.3% (y-o-y). 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.

14:00 CAD Bank of Canada’s interest rate decision. Bank of Canada’s accompanying statement

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

In fact, quantitative easing and a significant reduction in the interest rate should contribute to the weakening of the national currency.

The negative effects of the coronavirus on the Canadian economy and the country’s labor market, as well as the weakness of the housing market, still put pressure on the Bank of Canada to maintain an easy monetary policy. However, following the results of the meetings held in 2022, the Bank of Canada decided to raise the interest rate (to 3.25% at the moment) and spoke in favor of its further increase. The Bank of Canada now expects GDP and consumer price index (CPI) growth to be stronger this year than previously expected. The bank officials also acknowledged that the uncertainty caused by Russia’s special military operation in Ukraine could dampen economic growth and fuel inflation.

It is possible that at the meeting on Wednesday, the Bank of Canada will raise interest rates again, by 0.50% or 0.75%, and possibly more.

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

15:00 CAD Press conference of the Bank of Canada

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

Thursday, October 27

12:15 EUR ECB’s 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, 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 is “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, following 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 (+9.9% in annual terms in September), 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.

12:30 USD Durable goods orders. Capital goods orders (ex defense and aviation). US annual GDP for the 3rd quarter (preliminary estimate)

This indicator reflects the value of orders received by producers of durable goods and capital goods (capital goods are durable commodities used to produce durable goods and services) involving large investments. Goods produced in the defense and aviation sectors of the US economy are not included in this indicator. A high result strengthens the USD.

Previous values ​​of the indicator “durable goods orders”: -0.2% in August, -0.1% in July, +2.2% (in June), +0.8% in May, +0.4% in April, +0.6% in March, -1.7% in February, +1.6% in January.

Previous values ​​of the indicator “capital goods orders ex defense and aviation”: +1.3% in August, +0.3% in July, +0.9% in June, +0.6% in May, +0. 3% in April, +1.1% in March, -0.3% in February, +1.3% in January.

In theory, the relative growth of the indicator has a positive impact on the dollar, and the decline of the indicator is negative. The market reaction to its negative value may also be negative for the dollar in the short term. Data worse than the previous value and/or the forecast will also have a negative impact on dollar quotes.

Better-than-expected data will have a positive impact on the dollar.

GDP data is one of the key indicators (along with data on the labor market and inflation) for the Fed in terms of its monetary policy. A strong result strengthens US dollar; a weak report on GDP has a negative impact on the US dollar. In the previous Q2, GDP declined by -0.6% after falling by -1.6% in Q1, +6.9% growth in Q4 2021, +2.3% in Q3. In the 2nd quarter, GDP grew by +6.7%, in the 1st quarter of 2021 – by +6.3%. If the data points to a decline in GDP in the 3rd quarter of 2022, the dollar will come under strong pressure. Positive data on GDP will support the dollar and US stock indices. Forecast: +2.4%.

12:45 EUR Press conference of the 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 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.

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, October 28

03:00 JPY Bank of Japan’s interest rate decision. Bank of Japan’s press conference and monetary policy statement

The Bank of Japan will decide on the interest rate. At the moment, the main rate in Japan is in negative territory, amounting to -0.1%. Most likely, the rate will remain at the same level. If it is reduced and deepens into negative territory, such a decision will cause a sharp decline in the yen in the foreign exchange market and an increase in the Japanese stock market. In any case, a jump in volatility in the quotations of the yen and in the Asian financial market is expected during this period of time.

Since February 2016, the Bank of Japan has kept the deposit rate at -0.1%. The yield target for 10-year bonds is currently in the 0% region. One of the recent accompanying statements from the Bank of Japan said that the management of the bank will continue to “increase the monetary base until inflation is stable above 2%.” “We will not hesitate to take additional easing measures if necessary,” the bank also traditionally said in a statement.

During the press conference, the head of the Bank of Japan Haruhiko Kuroda will comment on the bank’s monetary policy. The Bank of Japan continues to adhere to its ultra-soft monetary policy. As Kuroda has repeatedly stated earlier, “it is appropriate for Japan to patiently continue the current loose monetary policy.” Markets usually react actively to Kuroda’s speeches. He will surely again touch upon the topic of monetary policy during his speech, which will cause an increase in volatility not only in yen trading, but throughout the Asian and global financial markets.

If bank officials decide that the Japanese economy is stable and inflation momentum towards the 2% target is not diminishing, they will refrain from changing policy.

06:00 JPY Bank of Japan’s press conference

During the press conference, the head of the Bank of Japan Haruhiko Kuroda will comment on the bank’s monetary policy. Despite earlier measures taken by the bank to stimulate the Japanese economy, inflation remains low, production and consumption are falling, which negatively affects export-oriented Japanese manufacturers. Markets usually react actively to Kuroda’s speeches. If he touches on the topic of monetary policy during his speech, volatility will increase not only in trading in the yen, but throughout the Asian and global financial markets.

06:00 EUR Germany GDP for the 3rd quarter (preliminary release)

GDP is considered the most important indicator of the overall health of the economy. The growing trend of the GDP indicator is considered positive for the national currency. The German economy is the locomotive of the entire European economy. A high value of the GDP indicator is considered a positive factor for the EUR, and a low value is considered a negative one.

The growth of the European and German economies slowed down sharply in 2019, and in 2022 the European economy has already entered a recession in many respects. The coronavirus pandemic, and then the military conflict in Ukraine, added to domestic political risks after Brexit.

If the GDP data turns out to be weaker than the forecast, this will put even more downward pressure on the euro. Better-than-expected data may strengthen the euro in the short term. However, the risks for the euro are directed towards its further weakening.

Forecast: German GDP contracted in the 3rd quarter of 2022 by -0.2%.

12:00 EUR Harmonized Index of Consumer Prices (HICP) in Germany (preliminary 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: +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 data for October is 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: +10.9% in October (according to preliminary estimates).

Price chart of EURUSD in real time mode