Weekly Outlook, Nov 09-13: Top Five Economic Events to Watch This Week
Arslan Butt • 5 min read
The broad-based US dollar steadied against many currencies at the end of the week, but market traders are expecting more losses, as a hostile US presidential election has diminished hopes for a large stimulus to support the economy. Investors are speculating that Democrat leader Joe Biden will be the next president, but that, on the other hand, the Republicans are likely to retain control of the Senate, which will make it difficult for the Democrats to pass the fiscal spending package.
Looking ahead into the coming week, the series of manufacturing and services PMIs, along with the RBNZ Monetary Policy Statement and the speech by BoE’s Governor Bailey, could drive plenty of headlines to keep the markets on the move. The geopolitical tensions and coronavirus headlines will also be closely followed, as they play a key role in determining risk levels in the market.
Top Five Economic Events to Watch This Week
1 – German Trade Balance – Monday – 12:00am
Eurostat is due to release the German Trade Balance on Monday. This significant data, which is officially released by the Statistisches Bundesamt Deutschland, measures the balance between exports and imports of total goods and services. Thus, a positive value shows a trade surplus, while a negative value shows a trade deficit. This data could also be considered one of the key events that generates some volatility for the shared currency. If a steady demand is seen in exchange for German exports, this will turn into a positive growth in the trade balance, and that should be bullish for the shared currency.
ACTUAL: EUR 15.7 B
CONS: EUR 18.2B
DATE: 10/08/2020 06:00
The German Trade Balance data is expected to rise from 15.7B to 17.2B, which may support the EUR currency.
Sentix Investor Confidence (Nov)
On the other hand, the Sentix Investor Confidence is a monthly survey that reflects the market sentiment regarding the current economic situation and the expectations for the next semester. However, the index, which is usually released by Sentix GmbH, is derived from 36 different indicators. Usually, a higher number is seen as positive or bullish for the Eurozone; likewise, a lower figure is seen as negative or bearish for the EUR currency.
DATE: 10/05/2020 08:30
The Sentix Investor Confidence is expected to drop from -8.3 to -15.0, which tends to undermine the EUR currency.
2) Speech by BoE’s Governor Bailey – Monday 10:35
Andrew Bailey is the Governor of the Bank of England. He took up his position on March 16, 2020, at the end of Mark Carney’s season. Before being elected, Bailey worked as the Chief Executive of the Financial Conduct Authority. It is worth mentioning that this British central banker was also the Deputy Governor of the Bank of England from April 2013 to July 2016 and Chief Cashier of the Bank of England from January 2004 until April 2011. However, any dovish tone from Andrew Bailey may negatively impact the country’s currency, as the doves tend to support low-interest rates and an expansionary monetary policy, because they value indicators like low unemployment over keeping inflation low. On the other hand, the hawks are the exact opposite of the doves.
3) Unemployment Rate Data – Tuesday 12:00 am
The ILO Unemployment Rate data, which is normally released by the National Statistics, is the number of unemployed workers divided by the total civilian labor force. It is considered one of the key indicators for the UK Economy. If the rate goes up, it indicates a lack of expansion within the UK labor market. This, in turn, weakens the UK economy. Likewise, if the figure decreases, it is positive (or bullish) for the GBP currency.
ACTUAL: 4.5 %
CONS: 4.3 %
DATE: 10/13/2020 06:00
From the projected view, the Unemployment Rate data is expected to rise from 4.5 to 4.7%, which tends to undermine the GBP currency.
Claimant Count Change
On the other hand, the Claimant Change is released by the National Statistics, and represents the number of unemployed people in the UK. However, the rise in this indicator has negative implications for consumer spending, which hinders economic growth. The high figures are seen as negative (or bearish) for the British Pound; likewise, the low reading is seen as positive (or bullish).
ACTUAL: 28 K
CONS: 78.8 K
DATE: 10/13/2020 06:00
4) RBNZ Rate Statement – Wednesday 6:00 pm
The RBNZ Rate Statement contains explanations of the decisions on interest rates and commentaries about the economic conditions that have influenced it.
RBNZ Interest Rate Decision:
The Reserve Bank of New Zealand is due to release the RBNZ interest rate decision. If the RBNZ is hawkish regarding the inflationary outlook for the economy, and it raises the interest rates, this is positive or bullish for the country’s currency.
ACTUAL: 0.25 %
CONS: 0.25 %
DATE: 09/23/2020 02:00
Monetary Policy Statement :
The New Zealand Reserve Bank normally releases the Monetary Policy Statement (MPS) quarterly. Each Monetary Policy Statement must set out: how the Reserve Bank proposes to achieve its targets, how it proposes to formulate and implement monetary policy over the next five years; and how monetary policy has been implemented since the last Monetary Policy Statement.
Consumer Price Index (MoM) – Thursday 6:30 am
The Consumer Price Index is normally published by the US Bureau of Labor Statistics. It is a measure of price movements, effected by comparing the retail prices of a representative shopping basket of goods and services. The purchasing power of the greenback fluctuates due to inflation. The CPI is one of the leading indicators to measure inflation and changes in purchasing trends. Hence, a high reading is seen as positive (or bullish) for the buck, and a low reading is seen as negative (or bearish) for the USD.
ACTUAL: 0.2 %
CONS: 0.2 %
DATE: 10/13/2020 12:30
From the projected view, the Consumer Price Index is expected to remain unchanged at 0.2%.
Initial Jobless Claims
The Initial Jobless Claims, which are normally published by the US Department of Labor, are a measure of the number of people filing first-time claims for state unemployment insurance. However, the larger-than-expected number indicates weakness in this market, which tends to undermine the growth of the US economy. Thus, low numbers are taken as positive or bullish for the buck.
ACTUAL: 751 K
CONS: 732 K
DATE: 11/05/2020 13:30
From the projected view, the Initial Jobless Claims are expected to drop from 751K to 745K, which may underpin the US dollar.
5) Gross Domestic Product – Friday 3:00 am
The Gross Domestic Product is normally published by Eurostat. it is a measure of the total value of all goods and services produced or provided by the Eurozone. However, the GDP is considered as a leading measure of the economic activity and health of the Eurozone. Normally, the high reading has a positive effect on the shared currency; likewise, the low figure is seen as negative or bearish for the EUR.
ACTUAL: 12.7 %
CONS: 9.4 %
DATE: 10/30/2020 10:00
From the projected view, the Gross Domestic Product is expected to remain unchanged at 12.7%.
Employment Change (YoY)
The Employment Change is normally published by Eurostat. It reflects the change in the number of employed people in Europe. Thus, the rise in this indicator has positive implications for consumer spending, which underpin economic growth. Therefore, a high reading is seen as bullish for the shared currency; likewise, a low reading is seen as negative (or bearish) for the EUR.
ACTUAL: -3.1 %
CONS: -2.9 %
DATE: 09/08/2020 09:00
From the projected view, the Gross Domestic Product is expected to rise from -2.9% to 0.7%, which may underpin the sentiment surrounding the EUR currency. Good luck fellas, and enjoy your weekend!