Most Important Economic Events of the Week 04.12.2021 – 04.18.2021
Speaking last Thursday at a virtual conference of the International Monetary Fund, Fed Chairman Jerome Powell again tried to reassure market participants, assuring them that the leadership of the American central bank remains committed to pursuing its extra soft policy. Powell also reiterated concerns about "long-term damage" to the US labor market and pledged that the central bank will continue to support those who have lost their jobs due to the coronavirus pandemic and the ensuing recession. Powell's comments confirm that the economic recovery will be uneven and incomplete, even regardless of what the data will indicate in the coming months. Other Fed officials also said last week that "monetary policy will remain unchanged for some time", because "the crisis has not yet been overcome."
The minutes released last week from the Fed's March meeting also indicated an almost unanimous desire by the Fed leadership to adhere to the central bank's policy guidelines and not raise rates until at least the end of 2023.
Taking into account the statements of the FRS leaders and the incoming macro statistics, the dollar declined last week, while the DXY dollar index lost 0.8%. At the same time, the yield on 10-year US bonds also declined last week (to 1.639%), nevertheless remaining close to the levels of 15-month highs.
Next week, financial market participants will pay attention to the publication of important macro statistics for the Eurozone, USA, China, Germany, Australia, as well as the results of the meeting of the Central Bank of New Zealand.
Of the most significant macroeconomic data, the publication of which is expected next week, it is worth noting the following:
*) new events can be added to the calendar and/or some scheduled events canceled during the coming week
**) specified time – GMT
Monday, April 12
09:00 EUR Retail sales in the Eurozone
Retail sales is a major consumer spending indicator that shows the change in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. Forecast for February: +1.0% and -5.7% (in annual terms) versus -5.9% and -6.4% (in annual terms) in January, +2.0% (+0.6 % in annual terms) in December, -6.1% (-2.9% in annual terms) in November, +1.5% (+4.3% in annual terms) in October. The data suggests that retail sales have yet to hit pre-coronavirus levels after a sharp drop in March-April 2020, when tough quarantine measures were in place in Europe. Thus, the publication of data with the indicated values is unlikely to provide significant support to the euro.
Tuesday, April 13
12:30 USD Consumer Price Index (excluding food and energy)
The Consumer Price Index (CPI) determines the change in prices of a selected basket of goods and services for a given period and is a key indicator for assessing inflation and changes in consumer preferences. Food and energy have been excluded from this indicator to provide a more accurate estimate. A high score strengthens the US dollar, while a low score weakens it. In December 2020, the value of the indicator was +0.1% (+1.6% in annual terms, and in January 0% and +1.4%, respectively. Forecast for March: +0.2% and +1.6 % (in annual terms), which indicates some improvement in the situation after the index fell in March and April 2020 amid the coronavirus pandemic. If the data turn out to be weaker than forecast, the dollar is likely to respond with a short-term decline.
Wednesday, April 14
01:00 NZD RB of New Zealand interest rate decision. Accompanying statement RBNZ. Monetary Policy Commentary
After, during an unscheduled meeting in March 2020, the bank's management decided to cut the rate by 0.75% at once, the current interest rate of the RB of New Zealand is at 0.25%. The bank's management explained its decision by a loss of momentum in the New Zealand economy and a sharp slowdown in the global economy amid the coronavirus pandemic.
"Global economic activity continues to weaken, which weakening demand for goods and services from New Zealand. Increased uncertainty and contraction in international trade are contributing to a decline in economic growth in trading partner countries", - said in a recent statement from the RBNZ.
The RBNZ believes that wage growth remains weak. At the same time, inflationary expectations are falling, and low levels of business confidence indicate a slowdown in hiring and wage growth.
Subdued economic growth (New Zealand's GDP growth has slowed since the second half of 2018) and a weakening labor market, as well as escalating international trade wars and a deteriorating global economic outlook, are forcing the Reserve Bank of New Zealand to keep interest rates low. An additional and unforeseen risk to the global and New Zealand economies is the coronavirus epidemic.
It is expected that at this meeting, the RBNZ will not begin to reduce or raise the rate yet, but may speak in favor of lowering it in the coming months if the economic situation in the country and in the world worsens.
In the accompanying statement and comments, the RBNZ management will provide an explanation of the decision on the interest rate and comments on the economic conditions that facilitated the adoption of this decision.
At this time, the volatility in the quotations of the New Zealand dollar may rise sharply.
Earlier, the RBNZ said that against the background of "many factors of uncertainty" monetary policy "will remain soft for the foreseeable future", but "may be adjusted accordingly". According to the bank's management, for the stable recovery of the New Zealand economy and the growth of inflation, "a lower rate of the New Zealand dollar is necessary".
Probably, the head of the RBNZ Adrian Orr will reaffirm the bank's propensity to pursue a soft monetary policy, which will lead to the pressure on the New Zealand currency.
Thursday, April 15
01:30 AUD Employment rate. Unemployment rate
The employment rate reflects the monthly change in the number of Australian citizens employed. The growth of the indicator has a positive impact on consumer spending, which stimulates economic growth. A high reading is positive for the AUD, while a low reading is negative. Forecast: In March, the number of employed Australian citizens increased (after falling by 607,400 in April, by 264,100 in May 2020 and by 29,100 in January 2021).
Also at the same time, the Australian Bureau of Statistics will publish a report on the unemployment rate - an indicator that estimates the ratio of 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 decline in the indicator is a positive factor for the AUD. Forecast: unemployment in Australia in March was at the level of 5.7% (against 5.8% in February, 6.4% in January, 6.6% in December). In general, the indicators cannot be called positive yet. However, in other large economies, the labor market has deteriorated on an even larger scale due to the coronavirus.
The leaders of the RBA have 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 indicators of the level of household debt and expenditures, the growth of workers' salaries, as well as the state of the country's labor market.
In November 2020, the RB of Australia cut its key interest rate by another 0.15%, to a new record low of 0.1%, due to the coronavirus. In the opinion of the RBA management, an unemployment rate of 4.5% or lower is required to raise wages and accelerate inflation to the target range. Unemployment in the country is not decreasing, and a return of inflation to the middle of the target range of 2% -3% is not visible even in the distant horizon.
At the same time, AUD may react positively to the publication of data from the country's labor market, since they are better than previous values. If the values of the indicators turn out to be worse than the forecast, then the Australian dollar may significantly decline in the short term.
06:00 EUR Harmonized Consumer Price Index (HICP) in Germany (final edition)
This index is published by the EU Statistical Office and is calculated on the basis of a statistical methodology 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 one weakens it.
In January, the HICP index (on an annualized basis) increased by +1.4% (+1.6% on an annualized basis). The preliminary forecast for March was: +0.5% and +2.0%, respectively. If the data turn out to be better than the forecast and the first estimate, then the euro may strengthen in the short term. The growth of the indicator is a positive factor for the euro. The data show that inflationary pressures are still low in Germany. The data is worse than the forecast and the previous value will negatively affect the euro.
12:30 USD Retail sales. Retail control group
This report (Retail Sales) reflects the total sales of retailers of all sizes and types. Changes in retail sales are the main indicator of consumer spending. The report is a leading indicator, and in the future the data may be greatly revised. A high result strengthens the US dollar, a low one 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 effect on the USD. In the previous month (February), the indicator decreased by -3.0% (after an increase of +7.6% in January and a fall of -1.0% in December), which indicates that the improvement in this sector of the American economy is still unstable after partial lifting of strict quarantine restrictive measures in a number of states. Forecast for March: +5.5%, which is likely to have a positive effect on the USD if the forecast is confirmed.
Retail sales is the leading indicator of consumer spending in the United States, showing changes in retail sales. The Retail Control Group metric 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 vice versa, 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 (-3.5% in February, +8.7% in January, -2.4% in December, -0.9% in November) may negatively affect the dollar in the short term. Forecast for March: -0.9%.
Friday, April 16
On this day, Europe will host a meeting of the Eurogroup, which is attended by its president, the finance ministers of the EU member states, the Commissioner for Economy and Monetary Policy and the head of the ECB, as well as a meeting of the Council of Finance Ministers of all European Union member states. They consider such issues as the coordination of economic measures, the budget, public spending, capital flows, the state of finance and the relevant institutions of the European Union. Unexpected statements or decisions made at these meetings can cause an increase in volatility in the financial markets, and especially in the quotations of the euro and European stock indices.
02:00 CNY China Q1 GDP
The National Bureau of Statistics of China will present data on GDP growth in the 1st quarter of 2021. In the 2nd quarter of 2020, China's GDP grew by +11.5% (+3.2% in annual terms), in the 3rd quarter - by 2.7% (+4.9%, respectively), after a decrease by -6.8% (-9.8% YoY) in the 1st quarter. China's GDP is expected to grow by +1.5 %% (+18.8% on an annualized basis) in the first quarter of 2021.
China is the largest buyer of raw materials and a supplier of the widest range of finished products to the world commodity market. China's economy is already the first in the world, according to some reports, pushing the American 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 negatively affect the yuan quotes, as well as the quotes of commodity currencies and currencies of the Asia-Pacific region, since may indicate a slowdown in the growth rate of the Chinese economy.
The growth of the indicator will have a positive effect on the Chinese yuan, as well as on the world, primarily Asian stock indices, as well as on the quotes 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 a buyer of commodities from these countries.
Therefore, the positive macro statistics from China may also have a positive effect on the quotes of these commodity currencies.
02:00 CNY Retail Sales Index
This 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 positive for the CNY; a decrease in the indicator will negatively affect the CNY. The previous value of the index (in annual terms) was +33.8% (after an increase of +8% in the last months of 2019 and a fall of -20.5% in February 2020). Forecast: In March 2021, retail sales in China increased by +27.2% (YoY), suggesting an intensifying recovery after a strong fall in February-March 2020. If the data turns out to be even better, then CNY will strengthen even more.
14:00 USD University of Michigan Consumer Confidence (Pre-Release)
This indicator reflects the confidence of American consumers in the economic development of the country. A high level indicates economic growth, while a low level indicates stagnation. Previous values of the indicator: 84.9 in March, 76.8 in February, 79.0 in January 2021. An increase in the indicator will strengthen the USD, while a decrease in the value will weaken the dollar. This indicator is expected to be released in April with a reading of 88.9. There is a steady trend towards a gradual recovery in the growth of the indicator, which is positive for the USD. The data worse than the forecast may negatively affect the dollar in the short term.