Economic calendar for the week 31.07.2023 – 06.08.2023

01:00 CNY Chinese Manufacturing and Services PMI from the China Logistics and Purchasing Federation (CFLP)

This is an important indicator of the state of the Chinese economy as a whole. A result above 50 is seen as positive and strengthens the CNY, while a result below 50 as negative for the yuan. Previous values: 49.0, 48.8, 49.2, 51.9, 52.6, 50.1 in January. Relative growth of the index and a value of 50 should have a positive effect on the CNY. A result above the value of 50 indicates an increase in activity, which has a positive effect on the quotes of the national currency. Otherwise, and if the value of the indicator is below 50, the yuan will be under pressure and probably will decrease.

Services PMI assesses the state of the services sector in the Chinese economy. A result above 50 is considered positive and strengthens the yuan. Previous values: 53.2, 54.5, 56.4, 58.2, 56.3, 54.4 in January. Despite the relative decline, the indicator is still above 50, which is likely to have a positive impact on the yuan quotes. Otherwise, and if the value of the indicator is below 50, the yuan will be under pressure and probably will decrease.

06:00 EUR Retail sales

Retail sales is the main indicator of consumer spending in Germany showing the change in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. Previous values: +0.4% (-3.6% YoY), +0.8% (-4.3% YoY), -2.4% (-8.6% YoY) , -1.3% (-7.1% YoY), -0.3% (-6.9% YoY), -5.3% (-6.4% YoY), + 1.1% (-5.9% YoY), -2.8% (-5.0% YoY), +0.9% (-0.9% YoY), -1, 3% (-4.3% YoY), +1.9% (-2.6% YoY), -1.5% (-9.6% YoY), +1.2% (+1.1% YoY), -5.4% (-0.4% YoY), +0.9% (-1.7% YoY), +0.2% (+ 6.9% YoY), -0.2% (+10.1% YoY) in January 2022.

The data speaks of the instability in the recovery of this sector of the German economy. Data better than the forecast and / or the previous value is likely to have a positive impact on the euro, but only in the short term.

Forecast for June: -0.2% (-6.3% in annual terms).

09:00 EUR Consumer Price Index. Core Consumer Price Index (preliminary release). Eurozone GDP for the 2nd quarter (preliminary estimate)

Consumer Price Index (CPI) is published by Eurostat and measures the change in prices of a selected basket of goods and services over a given period. The index is a key indicator for assessing inflation and changing consumer preferences. A positive result strengthens the EUR, a negative result weakens it.

Previous values: +5.5% in June, +6.1% in May, +7.0% in April, +8.5% in February, +8.6% in January, +9.2% in December , +10.1% in November, +10.6% in October, +9.9% in September, +9.1% in August, +8.6% in June, +8.1% in May, + 7.4% in April and March, +5.9% in February, +5.1% in January, +5.0% in December. If the data turns out to be worse than the forecast, then the euro may sharply decline in the short term. Data better than the forecast and / or the previous value may strengthen the euro in the short term. Target level of consumer inflation of the ECB is slightly below 2.0%, and the data indicate an acceleration of inflation in the Eurozone.

Core Consumer Price Index (Core 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 EUR, while a low result weakens it. In January 2022, Core CPI increased by +5.3%, +2.3%, in February – by +2.7%, in March – by +2.9%, in April – by +3.5%, in May – by +3.8%, in June – by +3.7%, in August – by +4.3%, in September – by +4.8%, in October – by +5.0%, in November – by +5.0%, in December – by +5.2%.

Previous values: +5.5% in June, +5.3% in May, +5.6% in April, +8.5% in February 2023, +8.6%, +9.2%, + 10.1%, +10.6%, +9.9%, +9.1%, +8.9%, +8.6%, +8.1%, +7.4%, +7, 4%, +5.9%, +5.1% (in January 2022).

If the data for July 2023 turns out to be worse than the previous value or forecast, this may negatively affect the euro. If the data turns out to be better than the forecast or the previous value, the euro is likely to react with an increase in quotations. Core inflation in the Eurozone is accelerating, which is positive (under normal economic conditions) for the euro.

Forecast for July: +5.2%, +5.4%, respectively.

GDP is considered an indicator of the overall health of the economy. The growing trend of the GDP indicator is considered positive for the EUR, while a low result weakens the EUR.

Recently, macro data from the Eurozone have been indicating a gradual recovery in the growth rate of the European economy after a sharp drop in early 2020.

According to the forecast of economists (preliminary estimate), GDP of the Eurozone is expected to grow by +0.1% (+0.4% YoY) in the 2nd quarter of 2023 after -0.1% (+1.0% YoY) in Q1 2023, 0% (+1.9% YoY) in Q4 2022, up +0.7% (+4.0% YoY) in Q3 Q2, +0.8% (+4.1% YoY) Q2 2022, +0.6% (+5.4% YoY Q1, +0.3% (+4.6% YoY) in Q4, +2.2% (+3.9% YoY) in Q3, +2.2% (+14.3% YoY) in the 2nd quarter and falling by -0.3% (by -1.3% YoY) in the 1st quarter of 2021.

If the data turns out to be weaker than the forecast and / or previous values, the euro may decline. Better-than-expected data may strengthen the euro in the short term, although the full recovery of the European economy even to pre-crisis levels is still far away.

Tuesday, August 1

01:45 CNY Caixin Manufacturing PMI of the Chinese economy

The Caixin Purchasing Managers’ Index (PMI) is a leading indicator of China’s manufacturing sector. The Chinese economy is the second largest in the world, so the publication of important macroeconomic indicators from China can have a strong impact on the entire financial market.

Forecast for July: 50.3 (against the previous values of 50.5, 50.9, 49.5, 50.0, 51.6, 49.2).

Although a value above 50 indicates growth, a relative decrease in the value of the indicator may have a negative impact on the yuan quotes and positive impact on the dollar quotes.

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. To curb inflation, which hit 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 raised by 0.25% to 0.35% and then to 0.85%, 1.85%, 3.10% (December 2022), 3.85% May 2023. In addition, the RBA signaled a likely 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 governor of the central bank Philip Lowe. – This will require further interest rate hikes in the future.”

According to the RBA forecast, next year the unemployment rate 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.

However, at a meeting in June, the leaders of the RBA again raised the interest rate to 4.10%. What the decision of the leaders of the RBA will be this time is not entirely clear, although it is possible that at this meeting the Central Bank of Australia will again raise the interest rate. However, unexpected decisions are also possible, for example, a pause, a decrease or a stronger increase in the interest rate.

In the 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.

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

The US Manufacturing PMI published by the Institute for Supply Management (ISM) is an important indicator of the state of the US economy as a whole. A result above 50 is considered positive and strengthens the USD, while one below 50 is considered negative for the US dollar.

Previous values of the indicator: 46.0 in June, 46.9 in May, 47.1 in April, 46.3 in March, 47.7 in February, 47.4 in January, 48.4 in December, 49.0 in November, 50.2 in October, 50.9 in September, 52.8 in August, 53.0 in June, 56.1 in May, 55.4 in April, 57.1 in March, 58.6 in February, 57.6 in January). The index is above the level of 50 and, despite the relative decline, has a relatively high value, which is likely to support the dollar. The data above the value of 50 indicate an acceleration of activity, which has a positive effect on the quotes of the national currency. If the indicator falls below the forecast and especially below the value of 50, the dollar may sharply weaken in the short term.

22:45 NZD Employment rate. Unemployment rate (data for the 2nd quarter)

The employment rate reflects the quarterly change in the number of employed New Zealanders. The growth of the indicator has a positive impact on consumer spending, which stimulates economic growth. A high value is positive for the NZD, while a low value is negative.

Previous values: +0.8% in Q1 2023, +0.2% in Q4 2022, +1.3% in Q3, 0% in Q2 2022, +0.1% in Q1 and Q4, +2.0% in Q3, +1.0% in Q2, +0.6% in Q1 2021.

Also at the same time, the New Zealand Bureau of Statistics publishes a report on the unemployment rate – an indicator that assesses the ratio 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 NZD.

Previous (quarterly) values: 3.4% in the 1st and 4th quarters, 3.3% in the 2nd and 3rd quarters of 2022, 3.2% in the 1st and 4th quarters, 3.4% in Q3, 4.0% in Q2, 4.7% in Q1 2021).

If other indicators of the New Zealand Bureau of Statistics report come out with a decline, this is likely to negatively affect the NZD. Worse-than-expected data will have an even stronger negative impact on the NZD.

Wednesday, August 2

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. The US private sector workforce is expected to grow again in June after rising 497k in June, 267k in May, 291k in April, 142k in March, 261k in February, 119,000 in January, 253 000 in December, 212,000 in November, 183,000 in October, 262,000 in September, 266,000 in August, 458,000 in July, 188,000 in May, 198,000 in April, 287,000 in March, 551,000 in February, 353 000 in January 2022, by 807,000 in December, 534,000 in November, 571,000 in October, 568,000 in September, 374,000 in August, 330,000 in July, 692,000 in June, 978,000 in May, 742,000 in April, 517,000 in March, 117,000 in February, 174,000 in January 2021). The relative growth of the indicator may have a positive impact on the dollar quotes, and the relative decline of the indicator has a negative effect. 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, the ADP report is often its harbinger having a noticeable impact on the market.

Thursday, August 3

01:30 AUD Balance of Trade

The indicator 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: AU$11.791 billion (May), AU$11.158 billion (April), AU$15.269 billion (March), AU$13.870 billion (February), AU$11.688 billion (January), 12.237 billion Australian dollars (for December), 13.475 billion Australian dollars (for November), 12.743 billion Australian dollars (for October), 12.444 billion Australian dollars (for September), 8.664 billion Australian dollars (for August), 8.733 billion Australian dollars (for July), AUD 17.131 billion (June), AUD 15.016 billion (May), AUD 13.248 billion (April), AUD 9.738 billion (March), AUD 7.437 billion (February), AUD 11.786 billion ( 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.

01:45 CNY Caixin Services PMI of the Chinese economy

The Caixin Purchasing Managers’ Index (PMI) is a leading indicator of China’s services sector. The Chinese economy is the second largest in the world, so the publication of important macroeconomic indicators from China can have a strong impact on the entire financial market.

Previous values: 53.9, 57.1, 56.4, 57.8, 55.0, 52.9 (in January 2023).

Although a value above 50 indicates growth, a relative decrease in the value of the indicator may have a negative impact on the yuan quotes and positively affect the dollar quotes.

06:30 CHF Consumer Price Index

Consumer Price Index (CPI) reflects the dynamics of retail prices for a group of goods and services included in the consumer basket. The CPI index is a key indicator of inflation. Its publication causes active movement of the franc on the foreign exchange market.

In the previous reporting month (in June), the growth in consumer inflation amounted to +0.1% (+1.7% in annual terms). The data suggests still high inflationary pressures, which is likely to support the franc. A value of the indicator below the forecast/previous value could provoke a weakening of the franc, as low inflation will force the Swiss Central Bank to maintain an easy monetary policy.

11:00 GBP Bank of England’s interest rate decision. Minutes of the meeting of the Bank of England. Planned volume of purchases of assets by the Bank of England. Monetary Policy Report

Following the results of the December meeting, the Bank of England unexpectedly raised its key interest rate to 0.25%, becoming the first leading central bank to increase the cost of borrowing since the start of the coronavirus pandemic. In February, the interest rate was raised to 0.50%, in March to 0.75%, in May to 1.00%, in December to 3.50%, and in June 2023 to 5.00 %. Members of the Monetary Policy Committee felt that raising the cost of borrowing in a strong labor market to curb price increases was entirely appropriate. At the same time, further tightening of monetary policy may be required to bring inflation to the target level of 2.0%.

The Bank of England is expected to raise interest rates again at this meeting. However, despite the high level of inflation in the country and the fact that positive macro data is coming from the UK, the interest rate may remain at the same level of 5.00%, given the difficult geopolitical situation in Europe, in particular, in Ukraine. Such a decision could cause a weakening of the pound.

Also at this time, the minutes of the Monetary Policy Committee (MPC) of the Bank of England are published with the votes “for” and “against” the increase / decrease in the interest rate. The main risks for the UK after Brexit are associated with expectations of a slowdown in the country’s economic growth, as well as with a large current account deficit in the UK’s balance of payments.

The intrigue about the further actions of the Bank of England remains. There will be plenty of trading opportunities in the pound and FTSE100 index futures trading during the publication of the bank’s rate decision.

Also at the same time we will see the report of the Bank of England on monetary policy containing an assessment of economic prospects and inflation. At this time, the volatility in the pound quotes can rise sharply. One of the main benchmarks for the Bank of England regarding the prospects for monetary policy in the UK, in addition to GDP, is the inflation rate. If the tone of the report is soft, then the British stock market will receive support, and the pound will decline. Conversely, the report’s tough rhetoric on curbing inflation, which implies a further increase in the interest rate in the UK, will lead to a strengthening of the pound.

11:30 GBP Speech by Bank of England Governor Andrew Bailey

Financial market participants expect Andrew Bailey to clarify the situation regarding the future policy of the UK central bank. Volatility during speeches by the head of the Bank of England usually rises sharply in the quotes of the pound and the FTSE London Stock Exchange index if he gives any hints of tightening or easing monetary policy of the Bank of England. Probably, Andrew Bailey will also give explanations regarding the decision taken by the Bank of England on the interest rate and touch upon the state and prospects of the British economy after Brexit against the backdrop of a sharp rise in energy prices and inflation. If Bailey does not touch on monetary policy issues, the reaction to his speech will be weak.

14:00 USD Services PMI index (from ISM)

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.

Previous values: 53.9 in June, 50.3 in May, 51.9 in April, 51.2 in March, 55.1 in February, 55.2 in January, 49.6 in December, 56.5 in November , 54.4 in October, 56.9 in August, 56.7 in July, 55.3 in June, 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 generally positive impact on the USD. However, a relative decline in the index, and especially a value below 50 may have a short-term negative impact on the dollar.

Friday, August 4

01:30 AUD RBA’s monetary policy statement

The Monetary Policy Commentary provides an overview of economic and financial conditions and an assessment of the risks to financial stability and sustained economic growth. The statement is, in a way, a guideline for determining the RBA’s monetary policy plans. A tougher stance on the monetary policy of the RBA is seen as positive and strengthens the Australian dollar, while a more cautious stance is seen as negative for the AUD.

09:00 EUR Retail sales in the Eurozone

Retail sales is the main indicator of consumer spending showing the change in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it.

Previous values: 0% (-2.9% yoy) in June, 0% (-2.6% yoy) in May, -1.2% (-3.8% yoy) in April , -0.8% (-3.0% yoy) in March, +0.3% (-2.3% yoy) in February, -2.7% (-2.8% yoy) in January, +0.8% (-2.5% YoY) in December, -1.8% (-2.6% YoY) in November, +0.4% (0% YoY) in yoy) in September, -0.3% (-1.4% yoy) in August, +0.3% (-1.2% yoy) in July, -1.2% (-3 .2% YoY) in June, +0.2% (+0.4% YoY) in May, -1.3% (+4.0% YoY) in April, -0.4 % (+1.6% YoY) in March, +0.3% (+5.0% YoY) in February, +0.2% (+7.8% YoY) in January.

The data suggests that retail sales have not yet reached pre-coronavirus levels after a sharp drop in March-April 2020, when tight lockdown measures were in place in Europe. However, better-than-expected data is likely to have a positive impact on the euro.

12:30 USD Average hourly wages. Non-farm payrolls. Unemployment rate

The most important indicators of the state of the labor market in the US in July. Forecast: +0.3% (against +0.4% in June, +0.3% in May, +0.5% in April, +0.3% in March, +0.2% in February, + 0.3% in January and December, +0.6% in November, +0.4% in October, +0.3% in September and August, +0.5% in July, +0.3% in June , 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) / +0.184 million (against +0.209 million in June, +0.339 million in May, +0.253 million in April, +0.236 million in March, +0.311 million in February, +0.517 million in January, +0.233 million in December, +0.263 million in November, +0.261 million in October, +0.263 million in September, +0.315 in August, +0.528 million in July, +0.372 million in June, +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 June, 3.7% in May, 3.4% in April, 3.5% in March, 3.6% in February , 3.4% in January, 3.5% in December, 3.7% in November and October, 3.5% in September, 3.7% in August, 3.5% in July, 3.6% in June, 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 described as encouraging. Nevertheless, it is often difficult to predict the market reaction to the publication of indicators, 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, with increased risks of recession and high inflation. In any case, when the data from the US labor market is published, a surge in volatility is expected in trading not only in USD, but throughout the financial market. The most cautious investors might 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 July. Unemployment has risen in Canada in recent months, partly amid massive coronavirus-related business closures and layoffs. Unemployment rose from the usual 5.6% – 5.7% to 7.8% in March and already 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 June 2023, unemployment was at 5.4% (against 5.2% in May, 5.0% in April, March, February, January, December, 5.1% in November, 5.2% in October and September, 5.4% in August, 4.9% in July and June, 5.1% in May, 5.2% in April, 5.3% in March, 5.5% in February, 6.5% in January 2022).

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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