Review of the main events of the Forex economic calendar for the next trading week (11.12.2023 – 17.12.2023)

No important macro statistics sceduled to be released. However, market participants monitoring the dynamics of quotes of the Australian dollar and the AUD/USD pair should pay attention to the speech (at 22:20 GMT) by head of the RBA Michelle Bullock.

In her speech, she will assess the current situation in the Australian economy and indicate further plans for the monetary policy of the department entrusted to her. Any signals from her regarding plans to change the parameters of the RBA’s monetary policy will cause a sharp increase in volatility in the AUD and in the Australian stock market. If the head of the Central Bank of Australia does not touch upon the topic of monetary policy, the market reaction to her speech will be weak.

Also, the trading day on Monday may open with a gap, especially in pairs with AUD, NZD, CNY, due to the publication of November consumer price indices by the National Bureau of Statistics of China on Saturday.

Tuesday, December 12

07:00 GBP Report on the average wages of the British over the last 3 months. Unemployment rate

Every month, the UK Office for National Statistics (ONS) publishes a report on average wages covering the period for the last 3 months, with and without bonuses.

This report is a key short-term indicator of the dynamics of changes in the level of wages of employees in the UK. Wages growth is a positive factor for GBP, while a low indicator is negative. Forecast: The December report suggests that average wages with bonuses rose again in the last 3 months calculated (August-October), after rising +7.9%, +8.1%, +8.5%, +8 ,2%, +6.9%, +6.5%, +5.8%, +5.9%, +6.0%, +6.5%, +6.%, +6.1% , +5.5%, +5.2%, +6.4%, +6.8%, +7.0%, +5.6%, +4.8%, +4.3%, + 4.2% in previous periods); wages without bonuses also increased after the growth of +7.7%, +7.8%, +7.8%, +7.8%, +7.3%, +7.2%, +6.7%, + 6.6%, +6.6%, +6.7%, +6.5%, +6.1%, +5.8%, +5.5%, +5.2%, +4, 7%, +4.4%, +4.2%, +4.2%, +4.1%, +3.8%, +3.7%, +3.8% in previous periods). Thus, the data indicates continued growth in wages, which is positive for the pound. If the data turns out to be better than the forecast and/or previous values, then 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, unemployment data in the UK is published. It is expected that for 3 months (August-October) unemployment was at 4.2% (against 4.2%, 4.2%, 4.3%, 4.2%, 4.0%, 3.8% , 3.9%, 3.8%, 3.7%, 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 fallen steadily (from 8.0% in September 2012). This is a positive factor for the pound; rising unemployment is a negative factor.

If 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 of data from the British labor market, volatility is expected to increase in the pound quotes and on the London Stock Exchange.

13:30 USD Consumer price indices

Consumer Price Index (CPI) determines changes in the prices of a selected basket of goods and services over a given period and is a key indicator for assessing inflation and changes in consumer preferences. Food and energy are excluded from the Core CPI to provide a more accurate estimate.

A high result strengthens the US dollar because the likelihood of a rate hike increases, while a low result weakens it.

Previous values (annualized):

•      CPI: +3.2%, +3.7%, +3.7%, +3.2%, +3.0%, +4.0%, +4.9%, +5.0%, +6.0%, +6.4% (in January 2023),
•      Core CPI: +4.0%, +4.1%, +4.3%, +4.7%, +4.8%, +5.3%, +5.5%, +5.6% , +5.5%, +5.6% (in January 2023)

The data shows a continued slowdown in consumer inflation after strong gains in the earlier months of 2022, which saw annual U.S. inflation hit a 40-year high of 9.1% in June.

If the data is confirmed or turns out to be weaker than forecast, the dollar will most likely react with a short-term decline. Data stronger than expected will strengthen the dollar, as it will increase the likelihood of the Fed maintaining interest rates at high levels or raising them further.

23:50 JPY Tankan Large Manufacturers Index (Q4)

The index reflects overall business conditions for Japan’s major manufacturing companies and is an indicator of the current state of Japan’s export-oriented economy, which is heavily dependent on the industrial sector.

An indicator value above 0 (zero is the middle line) is a positive factor for JPY, and an indicator value below 0 is negative.

Previous quarterly values: 9, 5, 1 (in the 1st quarter of 2023). A relative increase in the indicator will support the yen; a relative decline and especially a move into negative territory will put pressure on the yen.

Wednesday, December 13

13:30 USD Producer Price Index (PPI)

Producer Price Index estimates the average change in wholesale prices determined by manufacturers at all stages of production. It is one of the leading measures of inflation in the United States measuring the average change in wholesale producer prices.

As rising production costs increase wholesale prices, this ultimately increases consumer inflation. An increase in inflation (in normal economic conditions) usually puts upward pressure on the quotes of the national currency, since it implies a tighter monetary policy of the Central Bank.

Previous values: -0.5% (+1.3% annualized), +0.5% (+2.2% annualized), +0.7% (+1.6% annualized) , +0.3% (+0.8% annualized), +0.1% (+0.2% annualized), -0.3% (+0.9% annualized), + 0.2% (+2.3% annualized), -0.5% (+2.7% annualized), -0.1% (+4.9% annualized), +0, 7% (+5.7% annualized) in January 2023.

If the data turns out to be better than expected (above forecast values), the dollar is likely to strengthen. And, on the other hand, data below the forecast and previous values will put less pressure on the Fed when it makes its next decision to tighten monetary policy, which will have a negative impact on the dollar.

19:00 USD The Fed’s interest rate decision. The Fed’s monetary policy statement. Summary of Economic Projections of the Federal Open Market Committee

In 2020, the dollar declined because investors withdrew funds from protective assets to buy riskier and more profitable assets on the stock market, which continued to grow despite the threat of a second wave of the coronavirus epidemic and the associated economic slowdown. The role of the dollar as a defensive asset was also declining. However, in 2021 the situation changed – the dollar strengthened.

Now market participants are waiting for the US central bank to either pause or begin a cycle of easing monetary policy. Economists’ wildest predictions are that the Fed will begin cutting interest rates in May or even March 2024.

However, there is also the possibility of another interest rate hike at this meeting, as the Fed Chairman Jerome Powell has repeatedly warned about.

For now, the rate is widely expected to remain unchanged at 5.50% at this meeting.

During the publication of the rate decision, volatility may rise sharply throughout the financial market, primarily in the American stock market and in dollar quotes, especially if the rate decision differs from the forecast or unexpected statements are made by the Fed leaders.

Powell’s comments could impact both short- and long-term USD trading. A more hawkish stance on the Fed’s monetary policy is seen as positive and strengthens the US dollar, while a more cautious stance is seen as negative for the USD. Investors want to hear Powell’ss thoughts on the Fed’s future plans for next year.

Also the Fed will release a report with projections for inflation and economic growth for the next two years and, no less important, the individual opinions of FOMC members on interest rates.

19:30 USD Press conference of the FOMC (United States Federal Open Market Committee)

The press conference of the US Federal Open Market Committee lasts about an hour. The first part reads the ruling followed by a series of questions and answers that could increase market volatility. Any unexpected statements by Powell on the Fed’s monetary policy will cause increased volatility in dollar quotes and the American stock market.

21:45 NZD New Zealand GDP for the 3rd quarter

The release of the data will cause increased volatility in the NZD. Given the recent rise in commodity and agricultural prices (especially dairy, which is a key component of New Zealand’s exports), and the fact that New Zealand has been least affected by the coronavirus pandemic compared to other large economies, it is likely that the New Zealand GDP report for the 3rd quarter of 2023 will be released with positive indicators.

Previous values (annualized): +1.8%, +2.2%, +2.3%, +6.4%, +0.3%, +1.0%, +3.0% (in the 4th quarter of 2022).

The data remains inconsistent, although it points to a continued gradual recovery of the New Zealand economy after its collapse in the first half of 2020. Data worse than previous values will have a negative impact on the NZD quotes.

Thursday, December 14

00:30 AUD Employment level. Unemployment rate

The employment rate reflects the monthly change in the number of employed Australians. The growth of the indicator has a positive impact on consumer spending, which stimulates economic growth. A high value of the indicator is a positive factor for the AUD, and a low value is a negative factor. Previous values of the indicator: +55000 in October, +6700 in September, +64900 in August, -14600 in July, +32600 in June, +75900 in May, -4300 in April, +53000 in March, +64600 in February, – 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 ratio of the unemployed population to the total number of working-age citizens. An increase in the indicator indicates a weak labor market, which leads to a weakening of the national economy. A decrease in the indicator is a positive factor for the AUD.

Forecast: unemployment in Australia remained at its lowest levels in November at 3.7% (against 3.7% in October, 3.6% in September, 3.7% in August and July, 3.5% in June, 3 .6% in May, 3.7% in April, 3.5% in March and February, 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 employment rose again.

The RBA leaders have previously repeatedly stated that in addition to the situation in international trade, the Australian economy and the central bank’s monetary policy plans are influenced by the level of debt and household spending, the growth of workers’ wages, as well as the state of the country’s labor market. If the indicators turn out to be worse than forecast, the Australian dollar may decline significantly in the short term. Better-than-forecast data will strengthen the AUD in the short term.

08:30 CHF SNB’s decision on interest rates. Monetary policystatement

Before the June 2022 SMB meeting, the current deposit rate was in negative territory and amounted to -0.75%. However, following this meeting of the central bank, the rate was raised to -0.25%.

In an accompanying statement, Swiss National Bank Governor Thomas Jordan noted that the Swiss franc is no longer grossly overvalued and that “tighter monetary policy aims to prevent inflation from becoming more widespread in Switzerland.”

The franc has recently become a popular safe haven asset again, but the threat of intervention is certainly keeping the franc from rising too high. According to the SNB leaders, intervention in the foreign exchange market remains “an important means of maintaining the low attractiveness of investments in francs and easing upward pressure on the currency.”

It is widely expected that the deposit rate will be kept at 1.75% at the end of the December 2023 meeting.

Traders will also be carefully studying the SNB’s statement to pick up signals regarding the SNB’s future monetary policy plans. Tough rhetoric of the statement will help strengthen the franc. The soft tone and the tendency to continue the extra soft monetary policy of the SNB will negatively affect the franc. High volatility is expected in the foreign exchange market and, above all, in franc trading if the SNB makes unexpected statements.

09:00 CHF Press conference of the SNB. Speech by head of the SNB Thomas Jordan

After the publication of the decision on the rate, a press conference of the Swiss National Bank will begin. During its course and the speech of the head of the SNB Thomas Jordan, the volatility of CHF trading increases, and traders are waiting for signals regarding the further plans of the SNB monetary policy. Tough rhetoric of Jordan’s speech will help strengthen the franc. The soft tone of the speech and the tendency to continue the extra soft monetary policy of the SNB will negatively affect the franc.

High volatility is expected in the foreign exchange market and, above all, in the franc trading.

12:00 GBP Bank of England interest rate decision. Minutes of the meeting of the Bank of England. Planned volume of asset purchases by the Bank of England. Monetary Policy Report

Following its December 2021 meeting, the Bank of England unexpectedly raised its key interest rate to 0.25%, becoming the first leading central bank to increase borrowing costs since the outbreak of the coronavirus pandemic. In February, the interest rate was increased to 0.50%, in March – to 0.75%, in May – to 1.00%, in December – to 3.50%, and in August 2023 – to 5.25 %. Members of the Monetary Policy Committee considered raising borrowing costs in a strong labor market to curb price increases to be 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 are coming from the UK, the interest rate may remain at the same level of 5.25%, given the difficult geopolitical situation in Europe, in particular in Ukraine. Such a decision could cause the pound to weaken.

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

Intrigue about the Bank of England’s further actions remains. And in trading the pound and futures on the FTSE100 index, there are plenty of trading opportunities during the period when the bank’s decision on rates is published.

Also at the same time, the Bank of England’s monetary policy report will be published, containing an assessment of the economic outlook and inflation. At this time, volatility in pound quotes may increase sharply. One of the main benchmarks for the Bank of England regarding the outlook for monetary policy in the UK, in addition to GDP, is the rate of inflation. If the tone of the report is soft, the British stock market will receive support and the pound will decline. Conversely, the report’s tough rhetoric on curbing inflation implying further interest rate hikes in the UK will lead to a stronger pound.

13:15 EUR ECB rate decision

The ECB will publish its decision on the key rate and the deposit rate. The ECB’s tough position on inflation and the level of key interest rates helps to strengthen 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 to the economic prospects of the Eurozone “remains biased in the negative direction.”

“The Governing Council believes that interest rates will still need to be raised significantly… to ensure a timely return of inflation to the medium-term target of 2%,” the ECB said in a statement following its December meeting.

Speaking at the World Economic Forum in Davos in January 2023, head of the ECB Christine Lagarde said that “inflation expectations remain unabated” and “the ECB will continue to raise rates.” In her opinion, “inflation is too high” and “the ECB intends to reduce it to 2% in a timely manner.”

The ECB believes that GDP growth may decline, including due to the energy crisis in the EU, high uncertainty, weakening global economic activity and tightening financing conditions. However, the recession should not drag on too long, although strong growth should not be expected either.

“Growth will recover in the near term as current headwinds ease. Overall, Eurosystem staff forecast economic growth to be 0.5% in 2023, 1.9% in 2024 and 1.8% in 2025,” the ECB said in one release.

Thus, if we follow this signal from the head of the ECB, at the end of this meeting the key interest rate and the ECB deposit rate for commercial banks will be raised again, most likely by 0.25% (to 4.75% and 4.25% , respectively). But other decisions are not excluded, both tougher ones (an increase of 0.5% or even 0.75%), and softer ones, for example, a pause in increases.

This decision (pause) is supported, for example, by the fact that consumer inflation in the Eurozone continued to slow down in November: the growth rate of the annual consumer price index decreased to +2.4% (from +2.9% earlier with a forecast of +2.7%), which was the slowest growth rate since July 2021). Core CPI decreased in November by -0.6% and to +3.6% in annual terms (from +4.2% in October with a forecast of +3.9%).

The dynamics of a decline in European inflation towards the ECB’s target level of 2% are clearly visible, while the threat of recession in the region is growing.

13:30 USD Retail sales. Retail control group

Retail sales. This Census Bureau report reflects the total sales of the US retailers of all sizes and types. Changes in retail sales are a leading indicator of consumer spending. The report is a leading indicator, and the data may be subject to significant revisions in the future. A high result strengthens the US dollar, a low result weakens it. A relative decrease in the indicator may have a short-term negative impact on the dollar, while an increase in the indicator will have a positive impact on the USD. In the previous month (October), the indicator value was -0.1% (after +0.7%, +0.6%, +0.7%, +0.2%, +0.3%, +0.4 %, -1.0%, -0.6%, +3.2%, -0.8%, -1.1%, +1.1%, -0.2%, +0.7%, -0.4%, +1.0% in previous months).

Retail sales are the leading indicator of consumer spending in the United States measuring changes in retail sales. Retail Control Group measures volume across the entire retail industry and is used to calculate price indices for most products. A strong result strengthens the US dollar, and conversely, a weak report weakens the dollar. A slight increase in indicators is unlikely to accelerate the growth of the dollar. The data is worse than the values of the previous period (+0.2%, +0.6%, +0.1%, +1.0%, +0.6%, +0.2%, +0.7%, -0 .3%, +0.5%, +2.3%, -0.3%, -0.5%, +0.4%, +0.5%, +0.4%, +1.1 % in the previous months of 2022) could negatively affect the dollar in the short term.

13:45 EUR ECB press conference. ECB Monetary Policy Statement

The press conference will be of primary interest to market participants. During this process, a surge in volatility is possible not only in euro quotes, but throughout the entire financial market if 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, following the results of some ECB meetings and subsequent press conferences, the euro exchange rate changed by 3%-5% in a short time.

The soft tone of the statements will have a negative impact on the euro. Conversely, a tough tone from the ECB leadership regarding the central bank’s monetary policy will strengthen the euro.

Friday, December 15

02:00 CNY Industrial production. Retail sales index

China is the largest buyer of raw materials and a supplier of a wide range of finished products to the global commodity market. China’s economy is the second largest in the world after America’s. Therefore, the publication of important macroeconomic indicators from China can have a strong impact on the entire financial market.

At the same time, China is the largest trade and economic partner of Australia and New Zealand and a 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. If the expected data indicates a slowdown in one of the world’s largest economies, this will be a negative factor for global stock markets and commodity currencies.

The China National Bureau of Statistics Industrial Production Data Report shows the output of Chinese industrial enterprises such as factories and production facilities. The growth of the indicator (industrial production) is a positive factor for the yuan, also indirectly signaling the possibility of accelerating inflation rates, which could put pressure on the People’s Bank of China to tighten monetary policy.

Conversely, a decrease in the indicator could have a negative impact on the yuan.

Previous values (annualized): +4.6%, +4.5%, +4.5%, +3.7%, +4.4%, +3.5%, +5.6%, +3.9%, +2.4% (in February 2023).

Retail Sales Index is published monthly by the National Bureau of Statistics of China and measures total retail sales and cash receipts. The index is often considered an indicator of consumer confidence and economic well-being and reflects the health of the retail sector in the near term. A rise in the index is usually a positive for CNY; a decrease in the indicator will have a negative impact on CNY. Previous index value (in annual terms): +7.6%, +5.5%, +4.6%, +2.5%, +3.1%, +12.7%, +18.4% , +10.6%, +3.5%, -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 shows an uneven pace of recovery after the strong fall in February–March 2020. If the data turns out to be weaker than the forecast or previous values, the CNY may weaken sharply.

08:30 EUR Manufacturing and services PMI of the German economy according to S&P Global. Composite PMI of the German economy according to S&P Global (Preliminary Release)

The PMIs for the manufacturing and services sectors are an important indicators of business conditions and the overall health of the German economy. These economic sectors form a significant part of Germany’s GDP. A result above 50 is seen as positive and strengthens the EUR, while a result below 50 as negative for the euro. Data worse than the forecast and/or the previous value will have a negative impact on the euro.

Previous values:

•      Manufacturing PMI: 42.6, 40.8, 39.6, 38.8, 40.6, 43.2, 44.5, 44.7, 46.3, 47.3, 47.1, 46 ,2, 45.1, 47.8, 49.1, 49.3, 52.0, 54.8, 54.6,
•      Services PMI: 49.6, 48.2, 50.3, 52.3, 54.1, 57.2, 56.0, 53.7, 50.9, 50.7, 49.2, 46 ,1, 46.5, 45.0, 47.7, 49.7, 52.4, 55.0, 57.6, 56.1, 55.8,
•      Composite PMI: 47.8, 45.9, 46.4, 48.5, 50.6, 53.9, 54.2, 52.6, 50.7, 49.9, 49.0, 46.3 , 45.1, 45.7, 46.9, 48.1, 51.3, 53.7, 54.3, 55.1, 55.6.

09:00 EUR Manufacturing and services PMI of the Eurozone economy according to S&P Global. Composite PMI of the Eurozone economy according to S&P Global (Preliminary Release)

The Eurozone Manufacturing and Services PMIs are important indicators of the health of the entire European economy. A result above 50 is seen as positive and strengthens the EUR, while one below 50 as negative for the euro. Data worse than the forecast and/or the previous value will have a negative impact on the euro.

Previous values:

•      Manufacturing PMI: 44.2, 43.1, 47.2, 42.7, 43.4, 44.8, 45.8, 47.3, 48.5, 48.8 (January 2023) ,
•      Services PMI: 48.7, 47.8, 48.7, 50.9, 52.0, 55.1, 56.2, 55.0, 52.7, 50.8 (January 2023) ,
•      Composite PMI: 47.6, 46.5, 47.2, 48.6, 52.8, 54.1, 53.7, 52.0, 50.3, 49.3 (in January 2023).

09:30 GBP Manufacturing and services PMI of the UK economy according to S&P Global. Composite PMI of the UK economy according to S&P Global (Preliminary Release)

The UK Manufacturing and Services PMIs are important indicators of the health of the UK economy. The services sector employs the majority of the UK’s working population and contributes approximately 75% of GDP. The most important part of the services industry is still financial services. If the data turns out to be worse than the forecast and the previous value, then the pound will most likely decline 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 as positive and strengthens the GBP, while one below 50 as negative for the GBP.

Previous values:

•      Manufacturing PMI: 47.2, 44.8, 44.3, 45.3, 46.5, 47.1, 47.8, 47.9, 49.3, 47.0, 45.3, 46 ,5, 46.2, 48.4,
•      Services PMI: 50.9, 49.5, 49.3, 51.5, 53.7, 55.2, 55.9, 52.9, 53.5, 48.7, 49.9, 48 ,8, 48.8, 50.0, 50.9, 52.6,
•      Composite PMI: 50.7, 48.7, 48.5, 50.8, 52.8, 54.0, 54.9, 52.2, 53.1, 48.5 (in January 2023).

14:45 USD Manufacturing and services PMI of the US economy according to S&P Global. Composite PMI of the US economy according to S&P Global (Preliminary Release)

PMIs in the most important sectors by S&P Global are important indicators 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:

•    Manufacturing PMI: 49.4, 50.0, 49.8, 49.0, 46.3, 48.4, 50.2, 47.3, 46.9, 46.2, 47.7, 50, 4, 52.0, 51.5,
•    Services PMI: 50.8, 50.6, 50.1, 50.5, 52.3, 54.4, 54.9, 53.6, 50.6, 46.8, 44.7, 46, 2, 47.8, 49.3, 43.7, 47.3, 52.7, 53.4, 55.6.
•    Composite PMI: 50.7, 50.7, 50.2, 50.2, 52.0, 53.2, 54.3, 53.4, 52.3, 50.1, 46.8 (in January 2023 ).

17:25 CAD Speech by head of the Bank of Canada Tiff Macklem

The Canadian economy, like the entire global economy, has been slowing since 2020 (first due to the coronavirus pandemic). Previously, Tiff Macklem said that the country’s economy is quite stable. However, the situation has rapidly changed, and not for the better. It will now be interesting to hear Macklem’s opinion regarding the stability of the Canadian economy and the monetary policy of the central bank.

If Macklem touches on the topic of the Bank of Canada’s monetary policy, the volatility in the Canadian dollar quotes will increase sharply. The tough tone of his speech will help strengthen the Canadian dollar. The soft rhetoric of Macklem’s speech and the tendency to pursue a soft monetary policy will negatively affect the CAD quotes.

It will also likely explain the Bank of Canada’s recent interest rate decision and may provide some guidance for investors ahead of the central bank’s next meeting, likely next month.

Price chart of EURUSD in real time mode