The G20 summit took place in Bali, Indonesia, on November 2022…
August 19-23: key events for major currencies
Information is not investment advice
The economic calendar for the upcoming week contains a number of important events. The following information will prepare you for successful trading.
Tuesday, Aug. 20, 04:30 MT time
RBA’s Monetary Policy Meeting Minutes
Pairs to trade: AUD/USD, AUD/NZD, AUD/JPY
The minutes of the latest Reserve Bank of Australia’s meeting should provide some insight into the plans of the central bank. The last time, the RBA let the market know that it’s not in a hurry to cut interest rates. This provided the AUD with support versus the USD and helped it to strengthen against the NZD. This time, the AUD will be able to keep stabilizing if the RBA sticks to this opinion and doesn’t signal the upcoming rate cuts. At the same time, if the regulator sounds dovish, the AUD will lose the ground it fought so hard to gain.
Wednesday, Aug. 21, 15:30 MT time
Pairs to trade: USD/CAD, CAD/JPY
When most central banks start to turn dovish, the remaining ones are under pressure to follow suit. Canada has released weaker-than-expected employment figures at the start of August. That’s why investors will be especially eager to see whether the other key Canadian economic indicators falter or not. As a result, they will watch CPI (consumer price index, i,e, the indicator of inflation) on Wednesday and the release of the nation’s retail sales on Friday. The higher the readings relative to the forecast and the previous levels, the better for the CAD.
Wednesday, Aug. 21, 21:00 MT time
FOMC Meeting Minutes
Pairs to trade: EUR/USD, USD/JPY, AUD/USD
The Federal Reserve was less dovish than expected at its July meeting and this supported the USD and helped it strengthen, especially versus commodity currencies like the AUD. The minutes of the meeting will give us more information on what the Federal Reserve’s members discussed at the end of last month and how they viewed the prospects of the US economy. The release will have a strong impact on the USD in all major pairs, but the Fed’s symposium in Jackson Hole at the end of the week will be even more important for the greenback (you will find more about this event at the end of the article).
Thursday, Aug. 22, 10:15-11:00 MT time
European Flash Manufacturing & Services PMIs; ECB Monetary Policy Meeting Accounts
Pairs to trade: EUR/USD, EUR/GBP, EUR/JPY
Purchase Managers Indexes due in the euro area offer a fresh scan of the region’s economic health. So far, there were many reasons to worry about the euro: the euro zone’s industrial production contracted by 1.6% m/m in June. Figures from Germany, Europe’s key economy, also turned out to be quite bad. The policy of the European Central Bank depends on the incoming data, so the PMIs will give the regulator more information to consider. In addition, the accounts of the ECB’s previous meeting might hint how much the members of the regulator are willing to ease policy in order to save the struggling economy. All in all, the odds are that the PMIs will be low and that the EUR will once again feel the negative pressure.
Friday, Aug. 23, 01:45 MT time
New Zealand’s Retail Sales
Pairs to trade: NZD/USD, AUD/NZD
The Reserve Bank of New Zealand has surprised the market this month by cutting its interest rate not by 25, but by 50 bps. The question, of course, is what the central bank is going to do next. It’s not surprising that this largely depends on the economic data released in the country, in particular, retail sales for the second quarter. So far, the figures out of New Zealand have been mixed: employment change was positive, but the Business NZ manufacturing index fell below the key level of 50 points for the first time since 2012. As a result, a strong retail sales reading will encourage bullish correction in the NZD, while a weak reading will make traders continue selling the currency.
Thursday, Aug. 22, Friday, Aug. 23
Jackson Hole Symposium
Pairs to trade: all majors
This event will gather together the top officials of the Federal Reserve as well as the representatives of other central banks. The Fed’s members will have to comment on the recent spike in trade tensions between the United States and China. In addition, the inversion in the Treasury yield curve last week made a lot of investors panic because such a thing usually occurs ahead of a recession. As a result, the Fed will have to address this topic as well. The future fate the of the USD will depend on whether the American central bank chooses to soothe the market with the promise of more easing (in this case, the USD will decline) or say that it’s necessary to wait and see how serious are the risks (in this case, the USD will strengthen).
Other things to watch
There are also fundamental factors which aren’t included in the economic calendar but that will still make a great impact on exchange rates. Here they are:
- The US-Sino trade war. The latest news is that the US delayed some of the new tariffs on China’s imports. However, President Trump said on Friday that "the longer the trade war goes on, the weaker China gets and the stronger we get." Beijing, in its turn, has promised to retaliate. Expect further comments that will move the market. If the comments are positive, it will be good for the AUD, the NZD, and the CAD. If not, then the JPY and the USD will strengthen.
- A confidence vote in Italian Prime Minister Giuseppe Conte will take place on August 20. This means political risk and the possibility of snap election (negative for the EUR).
- Political news from Britain. Opposition to Prime Minister Johnson’s intention to take Britain out of the EU with or without a deal is growing. There’s more volatility ahead for the GBP.
The deafening news shocked the whole world yesterday: the British Queen Elizabeth II died peacefully at the age of 96…
After months of pressure from the White House, Saudi Arabia relented and agreed with other OPEC+ members to increase production.
This week, there are a few high-probability trade ideas I'd like to recommend to you. Trading these setups, be sure to implement a proper risk management approach.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.