Weekly Outlook, Jun 7 – 11, 2021: Top Economic Events to Watch This Week
Arslan Butt • 5 min read
The broad-based US dollar succeeded in extending its previous bullish bias, posting its biggest gains in around a month. The US dollar will end this week on the bullish track, as investors continue to cheer the ongoing economic recovery from COVID-19, after positive US employment figures. On the data front, US initial jobless claims dropped to 385,000 in the previous week. The number of claims recorded a fifth straight week of falls to a record low, since the start of the COVID-19 pandemic in 2020. In the meantime, hiring by private US employers increased in May, with the ADP non-farm employment change rising to 978,000. In addition to this, the decreasing number of COVID-19 cases allowed businesses in the US to re-open, which also positively impacted the American currency. Alternatively, the upticks in the dollar could be short-lived, as the market risk-on sentiment, backed by a combination of other factors, tends to weaken safe-haven assets, including the US dollar..
Looking ahead to the coming week, the series of Trade Balance and Unemployment claims, along with the European Monetary Policy Statement and BOC Press Conference, could drive plenty of headlines to keep the markets on the move. Apart from this, the US-China trade headlines, the Israel-Palestine tussle and coronavirus headlines will also be closely followed. They could all play a key role in determining risk levels in the market.
Top Economic Events to Watch This Week
1 – Trade Balance CNY – Monday – Tentative
This data is normally released by the General Administration of Customs of the People’s Republic of China, which balances exports and imports of total goods and services. Upward readings show a trade surplus, whereas negative readings indicate a trade deficit. This is why this data is understood as one of the key factors that creates some volatility for the Chinese currency. Since the Chinese economy affects the international economy, this economic indicator impacts the entire Forex market. Therefore, high readings are bullish for the Chinese currency; on the contrary, low figures are considered bearish for the currency.
DATE: May 07, 2021 (Apr)
2 – EUR Gross Domestic Product s.a. (QoQ) – Tuesday -:10:00 GMT:
Typically, Eurostat releases this data, which measures the total value of all goods and services produced in the Eurozone. The GDP is understood as a comprehensive measure of the Eurozone’s economic activity and health. Put simply, a rise in value has a positive impact on the EUR currency. Conversely, if the value falls, it is seen as bearish for the EUR currency.
ACTUAL: — 0.6 %
CONS:- -0.6 %
DATE: Tue May 18, 2021 14:00
3 – Goods Trade Balance – Tuesday – 13:30 GMT
This data is normally released by the US Bureau of Economic Analysis and the US Census Bureau. It provides information regarding the balance between exports and imports of goods. The reading is released monthly, between 4 and7 days before the International Trade Balance, and it presents advanced statistics for the reference month. An increased value shows a trade surplus, while a downward reading suggests a trade deficit. This data is therefore seen as one of the critical factors that create some volatility for the American currency. If a steady demand in exchange for US exports is seen, it will result in positive growth in the trade balance, and that is understood as a positive factor for the USD currency. At the same time, low readings are seen as negative for the USD.
4 – Bank of Canada Monetary Policy Report – Wednesday – 15:00 GMT
The Bank of Canada publishes a study of economic changes in the economy of Canada. This report indicates signs of a new fiscal policy. Any changes in this report leave an impact on the CAD. If the Bank of Canada shows a hawkish view of the Canadian economy, it is seen as bullish. Conversely, a dovish stance is seen as negative for the Canadian dollar.
i – BoC Interest Rate Decision – The Bank of Canada announces this decision. Suppose the Bank of Canada delivers a hawkish view about the inflationary outlook of the Canadian economy and raises the interest rates. This would be seen as positive for the Canadian currency. Alternatively, if the Bank of Canada has a dovish view about the inflationary outlook of the Canadian economy and cuts the interest rate or keeps the ongoing interest rate, it is seen as negative for the Canadian currency.
ACTUAL: — 0.25 %
DEV:– 0.00 0.25 %
CONS: 0.6 %
DATE: Wed Apr 21, 2021 19:00
ii – BoC Rate Statement – This statement is the principal medium used by the Bank of Canada (BoC) to interact with investors regarding monetary policy decisions, specifically those regarding interest rates. This statement contains the result of their decision on interest rates and a commentary about the economic conditions that influenced their decision.
5 – BoC Press Conference – Wednesday – Tentative
The BOC Governor and the Senior Deputy Governor typically schedule this press conference after releasing the BOC Monetary Policy Report. The press conference has two parts. First, the prepared statement is read, then the conference is opened to questions from the press. The questions normally lead to unscripted answers that create heavy market volatility. It is also worth mentioning that this press conference is an audio webcast on the BOC website.
6 – ECB Monetary Policy Statement and Press Conference – Thursday – 12:45 GMT
Following the ECB’s economic policy decision, the ECB President gives a press conference about the monetary policy. Her comments typically affect the volatility of the European currency and determine a short-term bullish or bearish trend. A hawkish outlook is understood as bullish for the European currency. In contrast to this, a dovish view is seen as negative or bearish for the European currency.
7 – Consumer Price Index (MoM) – Tuesday – 13:30 GMT
This data is typically released by the US Bureau of Labor Statistics. It is a measure of price movements, which compares the retail prices of a representative shopping basket of goods and services. The buying power of the dollar is dragged down by inflation. The Consumer Price Index CPI is a key indicator for measuring inflation and changes in purchasing trends. Therefore, high readings are seen as positive for the USD. In contrast, low readings are seen as Bearish for the USD.
ACTUAL: 0.8 %
CONS: 0.2 %
DATE: Wed May 12, 2021 17:30
i – Consumer Price Index ex Food & Energy (MoM) – This data is typically released by the US Department of Labor Statistics. It provides a measure of price movements by comparing the retail prices of a representative shopping basket of goods and services. Volatile products, such as food and energy, are excluded, in the interest of capturing an accurate calculation. High readings are seen as positive for the American currency. In contrast to this, low readings are seen as bearish for the greenback.
ACTUAL: 0.9 %
CONS: 0.3 %
DATE: Wed May 12, 2021 17:30
8 – US Unemployment Claims – Thursday – 13:30 GMT
US Unemployment Claims data is typically released by the US Department of Labor. It measures the number of people filing initial claims for state unemployment insurance. Higher readings show weakness in this US labor market, which in turn leaves a negative impact on the strength and direction of the US economy. In contrast to this, low readings are seen as positive or bullish for the American currency.
9 – UK Gross Domestic Product (MoM) – Friday – 7:00 GMT
UK Gross Domestic Product data is released by National Statistics. It measures the total value of all goods and services produced in Britain. The GDP is seen as a critical measure of the UK’s economic activity. High readings are understood as positive for the GBP, whereas low readings are seen as negative (or bearish) for the British currency.
ACTUAL: – 2.1 %
CONS: -1.4 %
DATE: Wed May 12, 2021 11:00
10 – Goods Trade Balance – Friday – 7:00 GMT
Goods Trade Balance data is released by National Statistics. It shows the balance between exports and imports of goods. Higher readings indicate a trade surplus. On the other hand, lower readings show a trade deficit. This data is seen as the key factor that creates some volatility for the UK currency. If a steady demand in exchange for UK exports is seen, it will result in positive growth in the trade balance, and that is considered a positive factor for Britain’s currency. At the same time, low readings are seen bearish for the GBP.
DATE: Fri Jun 11, 2021 11:00