1⃣Interest rates are the main driver in Forex markets; all of the above mentioned economic indicators are closely watched by the Federal Open Market Committee in order to gauge the overall health of the economy. The Fed can use the tools at its disposable to lower, raise, or leave interest rates unchanged, depending on the evidence it has gathered on the health of the economy. So while interest rates are the main driver of Forex price action, all of the above economic indicators are also very important.
2⃣. Major economic events in Forex
Now, let’s quickly go over some of the most important economic events that drive Forex price movement. This is just to familiarize you with some more of the jargon that you will likely come across on your Forex journey, you don’t need to worry too much about these economic events besides being aware of the times they are released each month
🔴. Consumer Price Index (CPI)
The CPI report is the most widely used measure of inflation. This report is released at 8:30 am EST around the 15th of each month and it reflects the previous month’s data. CPI measures the change in the cost of a bundle of consumer goods and services from month to month.
🔴. The Producer Price Index (PPI)
Along with the CPI, the PPI is one of the two most important measures of inflation. This report is released at 8:30 am EST during the second full week of each month and it reflects the previous month’s data. The producer price index measures the price of goods at the wholesale level. So to contrast with CPI, the PPI measures how much producers are receiving for the goods while CPI measures the cost paid by consumers for goods.
🔴. Employment Indicators
The most important employment announcement occurs on the first Friday of every month at 8:30 am EST. This announcement includes the unemployment rate; which is the percentage of the work force that is unemployed, the number of new jobs created, the average hours worked per week, and average hourly earnings. This report often results in significant market movement. You will often hear traders and analysts talking about “NFP”, this means Non-Farm Employment report, and it is perhaps the one report each month that has the greatest power to move the markets.
🔴 Gross Domestic Product (GDP)
The GDP report is one of the most important of all economic indicators. It is the biggest measure of the overall state of the economy. The GDP number is released at 8:30 am EST on the last day of each quarter and it reflects the previous quarter’s activity. The GDP is the aggregate (total) monetary value of all the goods and services produced by the entire economy during the quarter being measured; this does not include international activity however. The growth rate of GDP is the important number to look for.
🔴. Trade Balance
Trade balance is a measure of the difference between imports and exports of tangible goods and services. The level of a country’s trade balance and changes in exports vs. imports is widely followed and an important indicator of a country’s overall economic strength. It’s better to have more exports than imports, as exports help grow a country’s economy and reflect the overall health of its manufacturing sector
If you aim to become a successful and profitable forex trader, there are a number of seriously damaging mistakes that you’ll want to avoid. It should go without saying that you will make some mistakes when learning how to trade.
It’s simply unavoidable. This is not necessarily a bad thing, as mistakes allow you to learn and grow. The ten mistakes that you’ll read about below are among the most common and as such, tend to be the most damaging when not noted and corrected.
1. Entering into too many trades at once
If you’re entering into multiple trades at once, you’re likely over-trading. Each trade deserves your full attention to help ensure that it is profitable. Dividing your attention among multiple trades will only decrease the odds of each of those trades resulting in profit. Less is more when trading FX and the sooner you realize this, the better off you’ll be.
2. Devoting too much time to analysis and trade planning
While trade analysis is necessary, it can take up too much of your time. You may even find that you’re spending way too much time in the planning phase and very little actually trading. There will only be a number of optimal entry points each day. Don’t miss out on too many of these by being locked into exorbitant trade planning.
3. Placing too much focus on short-term charts
Trading too frequently on the short-term charts can lead to over-trading and over-trading can lead to fast losses and a gambling-like approach to forex trading. Additional, critical data comes from higher time-frame charts such as those seen within the XM platform, and these charts tend to be more important than lower time-frame charts. With higher time frames, you’ll receive more reliable signals and a reduction in your stress levels.
4. Bypassing the opportunity to trade on a demo account
One should never trade with real money before trading with mock funds using a demo account. Even if you’ve done your homework and are certain that you know how to trade, you need to see trades in action within a platform. XM offers free, unlimited demo accounts to all. Visit them now to create a practice account and avoid this terrible mistake.
5. Trading solely based upon the news
Don’t assume that you know which way the market will move based solely on the news. Far too many traders have experienced serious losses due to making this mistake. You absolutely must carry out technical analysis with fundamental analysis on each and every trade.
6. Thinking that past “wins” guarantee current profits
So, you last ten trades using the same parameters and selections were all winners. Congrats! Now, don’t make the mistake of assuming that if you open yet another using the same selections that it too will be profitable. Yes, trading with the trend can result in a round of easy profits, but each trend has to end at some point. Always remember this.
7. Trading out of desperation
If you’re feeling a sense of urgency to trade, then you’re likely better off walking away. Terrible decisions come from trading during desperate times. Take a break, collect yourself, and make a new plan before trading again.
8. Failing to follow the process
Although each trader may use their own strategies, there are general steps that all traders should follow when trading. Skipping past some of these (particularly analysis) can result in losses. Follow the process laid out by the successful traders who have come before you if you want to have the best odds of being successful.
9. Making unplanned changes to live trades
Just because trading platforms such as the MT4 and MT5 platform provided by XM allows for changes does not mean that you should make them. No doubt, strong emotions can come from watching price movement during a live trade. Acting on these can cause problems though, so unless you are 110% positive that you’re doing the right thing, leave your open trades alone!
10. Entering the market after an optimal entry point has passed
Missed an optimal entry point? Move on. Never assume that you can jump into a trade soon after a missed entry using the same expected price movement and profit. Yes, it can sting to miss out on a great entry point, but others will come along.
What truly sets the best forex traders apart from the worst is that the best are those who have made mistakes such as the ones mentioned above, but took action to correct them going forward. Those who do not do this may end up making the same mistakes over and over again, eventually draining their trading account.
Select a top-tier broker such as XM, establish a solid plan for trading, and make corrections when necessary. If you do these things, you can expect to come out on top.
Gold dropped to fresh session lows, around the $1717-16 region in the last hour, albeit lacked any strong follow-through and was last seen trading in the neutral territory.
It later gained some ground to trade at $1727
GBP/USD retreats from highs after mixed UK jobs figures
GBP/USD is trading below 1.2650, as UK jobless claims rise only 528.9K, more than expected. On the other hand, the unemployment rate beat with 3.9%. The dollar is on the back foot amid hopes for fiscal and monetary stimulus.
EUR/USD slides below 1.1300 as Fed’s Powell testifies, after robust retail sales
EUR/USD is falling below 1.13 as Fed Chair Powell testifies on Capitol Hill and repeats his projection of a slow recovery. US Retail Sales rose more than expected in May.
To start trading you need a platform. For mobile 📱 users we use the following apps.. Meta Trader 4 or Meta trader 5. The apps you can freely download from Google Play Store 🏪. You can also create a demo account from here..
When you download the app it will automatically create for you a demo account. A demo account will help you to know how trade
This is the interface for Meta trader 5 demo account
Quotes give the markets available… Check the photo below
Quotes from a micro account
Quotes from a standard account
How to trade without risk management
Just click on any quotes and decide if you want to sell or buy(It’s important to use the charts so as to know market trends). Will look at the chart later
Forex trading is accessible, exciting, educational, and offers traders lots of opportunities. Despite all this, many traders fail to learn how to become successful traders, and don’t achieve good results in this market. In fact, a high percentage of Forex traders are losing money..
A trader is someone who places orders on the market, sometimes on behalf of financial institutions (big banks, investment funds, hedge funds), or other times, as an independent trader.
There are several categories of traders depending on the traded markets: foreign exchange (forex), equities, bonds, metals, coffee, meat, etc. In today’s world, there is a trading market for almost all goods (meat, coffee, etc.) and commodities. Most existing contracts are settled in foreign currency, and do not deal with physical delivery.
Types of Successful Traders
There are two general types of traders:
Those who trade on behalf of clients- Traders who work for financial institutions or brokers buy and sell shares on behalf of their employer’s clients, and not with their own money. This means that rather than making a profit or a loss on the trading itself, they earn a salary as a trader.
Those who trade on a personal account – Those who trade on their own personal account are using their own money to earn profit for themselves on each individual trade, and not through a salary. These accounts are funded with their personal funds, and trades are executed through online trading platforms. Even though online brokers offer leverage, the amounts traded by home traders are much smaller than those of a professional trader. Since online trading is often done on the OTC (Over the Counter) market, the success of traders in their own accounts are only estimates.
How to Become a Trader: Defining Success
The first thing that you need to do when it comes to trading Forex is to understand what you want to achieve, and how you define success. What do you want to achieve?In deciding what you want, you have to be realistic. Set yourself a realistic and quantifiable goal. This could be something like: achieve 20% annual return on investment, earn 5000 USD of profit, get a total of 100 pips per month or something similar
Once you have set your main trading goal for the year, it is now time to start learning how to achieve it. The best way is to identify which resources are available to you. This may include the size of your deposit, the amount of time you are willing to spend on trading, and the amount of available funds you are willing to spend on trading-related matters (software, etc.).
Once you have a clear vision here, it is time to make an action plan. This action plan should include the currency pairs you are planning to trade and the number of trades you are going to commit to.
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10 Steps to Become a Forex Trader
Set aside expectations- Problems arise when new traders become obsessed with chasing profits, and this anxiety can lead to mistakes that cause losses. So the first rule to become a trader is to forget unrealistic goals and objectives. The prospect of earning money in Forex with just a few quick trades is extremely unlikely. Operating in a risky and overconfident way can lead you to lose your initial investment. By setting a high profit objective, you create great emotional pressure, which could result in one of the biggest errors people make when trying to become traders: falling into excessive actions or overtrading.
Define your trading risk profile- Before making any substantial commitments, get a good understanding of the fundamental aspects of the market. Assess your capital at hand, read trader testimonials so you have realistic expectations of returns, and research the markets and currency pairs you’re interested in. If you don’t feel comfortable with the dynamics, don’t invest in forex, even if it’s profitable. This applies to any market. If, on the contrary, you think that your investment approach is in line with the Forex market, go ahead! Invest only what you can afford to lose without affecting your standard of living.
Choose a trading strategy- Once you’ve chosen to become a trader, the next step is to come up with a general strategy. There is no right or wrong way to trade, what really matters is that you define the strategy you will use in different situations. Sometimes you will see that one trading strategy works well for a currency pair in a given market, while another strategy is more suitable for the same pair in a different market, or in other market conditions.To become a successful Forex trader, try to focus on harmonising your online trading strategy with your risk profile. Research all the trading tools that are within your reach. Study the techniques that seem logical, and think about how they can be used in your strategy. In addition, you can study how markets behave and learn how the industry works.
Set aside your emotions- This may sound very simple, but it is necessary. Emotions are the worst enemy of people who want to become traders. Some traders try to see trading as a game where they try to beat the market, and then when they start losing, they feel overcome with disappointment. Forex trading is a financial activity that is a mix of analysis and discipline. You should not blame the market, or worry about your losing trades. To become a successful trader, you must understand the mechanics of forex, trust your analysis, and follow the rules and strategy you set. This is the definitive key to reaping the benefits of forex. Emotions can ruin a trader’s experience, so it is vital to set them aside and not involve them in trading. Excessive trading confidence can cause great losses. One of the best ways to prepare yourself for the emotions of trading is by testing your skills on a free demo account. Open one HereFree Forex Demo Trading Account
Set your stop loss and take profit.. No matter what your trading strategy is, you should always set a stop loss. This type of order allows you to define the closing price of your trade. Your trade will close once it reaches that level, even when you are not present. In other words, setting a stop loss will give you the peace of mind of not losing more than the limit you defined. Stop Loss and Take Profit- earn money in Forex. The take profit is the most frequently used order in the forex market. This order allows the trader to close a position automatically when prices reach a predefined level.
Keep up with the markets- Staying up to date with market news is vital. Many market movements are driven by news, central bank announcements, political events, or the expectation of any of these. This is what’s called fundamental trading. For example, if you have a reliable trading strategy and several technical indicators that indicate a long trade, check the forex calendar anyway to make sure your order matches current events. Even if your technical trading strategy works perfectly, the fundamental news can change everything.
Avoid overtrading- Overtrading is the result of seeing opportunities to make money in forex where there really aren’t any. There are two common types of overtrading: Trading too frequently, and Trading with too much volume. Trading too frequently, outside of scalping strategies, is a sure way to lose more money than can be made. There is no harm in waiting for more than a day for an opportunity to arise. You can simply wait until favourable price action arrives, and this shows that you really know what you are doing, and that is when you enter the game. You just need a couple of trades.” The other context for overtrading is to operate with too much volume. For many people, leverage is the culprit. Trading with excessively high volume makes an account more susceptible to margin calls. The important thing is to learn to avoid overtrading and understand leverage. You can learn more about leverage, you can read all about it in this article, and empower your trading knowledge.
Losing is part of forex trading – Every trader wants to become a success. In reality, ‘success’ does not mean that you always win in each trade, but that the average across all your trades end up with a positive balance. Closing each and every one of your trades with a profit is simply impossible. Some professional traders may be consistently profitable on a daily basis, but none can show a trading statement that does not include a single losing trade. The trick to being a successful trader is for the winning trades to be profitable enough that they produce enough profit to cover their losses and maintain a net positive. Keep in mind that this is very common with traders who have participated in the markets for a long time. It takes a lot of mental strength to admit mistakes in decision making, and to close an order with a small early loss. On the contrary, it also takes a lot of strength to trust oneself and not close an operation with benefits too soon. You need to be patient and follow the trend.
Develop a trading plan- There has been much talk about discipline in trading, but very little about being an organised trader. It all starts with your trading routine. You need to have a strict trading plan that covers most of your trading activity, which will help you reduce risk from unforeseen shifts in the market. Many beginning traders develop negative trading habits. One example is the aforementioned overtrading, in which once a trader starts getting lucky and they continue to trade until they overdraw their account. Many traders believe that luck will not abandon them, but as everyone knows, luck is not infinite and one it runs out, it will create consistent losses. Therefore, it is important to reinforce healthy trading habits, as these will help you achieve your goal of becoming a successful Forex trader.
Choose a broker that matches your risk profile If you are worried about the financial security or reputation of your Forex broker, it can be difficult to focus on your trading. If, on the other hand, you have confidence in your Forex broker, this will free up mental space for you to devote more time and attention to analysis and developing FX strategies. Research prior to committing to a specific broker can go a long way, and can improve your odds of being a successful trader in the competitive foreign exchange market.
Gold printed fresh daily highs after a short-lived correction to $1700 following the beginning of the American session. XAU/USD trades at $1722, the highest since Wednesday’s European session.
The precious metal is rising after falling during two consecutive days. It found support again above $1690 that has become a critical barrier. A firm break below should clear the way to more losses.
So far, XAU/USD avoided a consolidation under $1700 and rebounded despite higher US yields and the rally in Wall Street. The greenback itself is not receiving support from yields on Thursday. The DXY resumed the decline and tumbled to the lowest since mid-March under 97.00…. More here
Trading on key Forex news: we are expecting the publication of important macro statistics from China, the US, Australia, Germany, Canada, the Eurozone, as well as the results of the meetings of the central banks of Australia, Canada, and the Eurozone.
Last Wednesday, the European Commission presented a draft fund in the amount of 750 billion euros to provide loans and grants to countries in the region. The EU leaders will meet on June 19 to discuss this proposal. This helps mitigate the bearish risks for the euro in the short term, and also lays a stronger foundation for a more sustainable recovery in the future, economists say.
Last week, the EUR/USD pair reached its highest level in almost two months amid the optimism regarding the resumption of economic activity in the Eurozone and the recovery plan proposed by the European Commission. Nevertheless, some experts warn that negotiations between the EU leaders are likely to be difficult and a compromise may invalidate their outcome.
Economists expect the ECB to increase PEPP volume by at least 500 billion euros at the regular meeting on June 4. This will confirm the ECB’s promise to do everything necessary to help restore the Eurozone and will have a positive effect on the euro.
Global stock indices also continued to grow last week, despite another increase in trade and political tensions in relations between the United States and China.
At the same time, the demand for defensive assets such as gold and yen is maintained at a high level.
Next week will be full of important events. Nevertheless, the attention of most investors will be focused on the publication on Thursday of the ECB decision on the rates and QE program, as well as data from the US labor market on Friday.
The Euro-to-Dollar rate entered the new month on its front foot last week even as the market mood soured again and some technical analysts say it could rise further in the days ahead, although others are wary of a rebound by the Dollar.
Europe’s single currency rose 1.39% last week with much of that gain coming in the latter half after European Central Bank (ECB) suggested it will stand behind ‘periphery’ bond markets if falling prices and rising yields scupper its efforts to support the financially vulnerable economies of Southern Europe.
Thursday’s policy update drove a fall in Italian bond yields and helped put the Euro on its front foot at the tailend of a month where rocketing ‘periphery’ bond yields had aggravated concerns about debt sustainability in the Eurozone… more
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Gold futures jumped late in the session on Friday even after U.S. equity investors breathed a sigh of relief after President Donald Trump signaled no changes to the trade deal with China despite rising tensions.
During a much-awaited news conference, Trump said he would take action to eliminate special treatment towards Hong Kong. However, he did not indicate the U.S. would pull out of the phase one trade agreement reached with China earlier this year, easing trader concerns for the time being.
On Friday, August Comex gold settled at $1751.70, up $23.40 or +1.35%. For the week, the market finished down $1.80 or -0.10%. Gold closed up $50.70 or 2.98% for the month… you can read more from here
We will be providing signals for gold daily.. So bookmark this site
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USD: Data to play a secondary role The new week has started with range-bound moves in the G10 despite Asian equities having set an optimistic tone in early trading. US politics remains centre stage. Along with any developments in the US relief package talks, two threads will be closely monitored from an election perspective: (a) the $25 billion of funding to the US Postal service voted by the House, which should however be voted down by the Senate; (b) President Trump’s reported interest to fast-track the approval of Covid-19 vaccines, and the FDA having granted an emergency authorisation for blood plasma treatment. Developments in the first thread may impact the perceived chances of a contested result in November, while the latter is seen as a way for Trump to regain some consensus. Meanwhile, investors will keep a close eye on the course and the strength of two hurricanes set to hit the US Gulf of Mexico. Sixty percent of oil production in the region has already been shut, but oil has yet to benefit from the expected supply shock as rising Covid-19 contagion worldwide (and especially in Europe), are playing as a strong counter-factor for now. Finally, concerns around geopolitical turmoil are being fuelled by more demonstrations in Belarus, as markets weigh the risk of direct intervention by Russia. Amid such an abundance of potentially market-moving events, data will play second-fiddle today, with the calendar looking quiet in the G10 space. Moving ahead in the week, risk-sentiment will depend on the ability of policymakers to keep the recovery hopes alive, and will culminate with the Jackson Hole Symposium starting on Thursday.
EUR: Is the correction gaining momentum? The EUR/USD rally is showing increasing signs of fragility, the latest triggered by some disappointing eurozone PMIs on Friday, with the services gauge pouring cold water on the recent data excitement. Tomorrow’s Ifo indicator in Germany may be pivotal for the euro to avert another leg lower, with positive signals from manufacturing possibly offsetting the slump in services. While there is a chance of the correction gaining momentum and pushing the pair briefly below 1.1700 this week, the factors that drove the recent EUR/USD strength still look in place and we maintain our one-month target at 1.20.
GBP: Hoping for some negative-rates clarity The collapse of Brexit negotiations has triggered a relatively contained correction in sterling, and focus this week will turn to Bank of England speakers that may shed some light around a possible move into negative rates.
NZD: Rising contagion fueling RBNZ cuts speculation The Kiwi dollar is facing pressure as New Zealand Prime Minister Jacinda Ardern continues to adopt a firm approach to the resurgence of virus cases in the country after Auckland’s (which by itself accounts for a large chunk of the country’s GDP) lockdown has been extended by four extra days. The inevitable economic backlash is likely fuelling speculation that the Reserve Bank of New Zealand will step in with more cuts soon, something which has been a key driver of NZD’s recent underperformance.
EUR/USD is trading around 1.1750, marginally higher. The safe-haven dollar is under pressure amid an upbeat market mood. The German ZEW figures were mixed. Coronavirus figures are falling in the US and rising in Europe.
Trading on key Forex news: we are expecting the publication of important macro statistics from the US, Australia, New Zealand, Eurozone, Japan, Canada, as well as the results of the meetings of the RBA and Bank of England.
The dollar continued to decline last week. The DXY dollar index updated June 2018 lows, falling to 92.52.
European stock indices also ended last week in the negative territory, while American indices rose.
Last Wednesday, the leaders of the American central bank confirmed their readiness to keep rates near zero and buy Treasury bonds and a number of other securities, doing everything possible to support the economy in the context of the crisis caused by the Covid-19 epidemic. “The trajectory of the economy will be highly dependent on the trajectory of the virus,” said Fed Chairman Jerome Powell, adding that “this is very fundamental.”
Amid pessimistic investor sentiment and soft policies from the Fed and other major global central banks, the gold price hit record highs last week, rising to $1,983.00 an ounce.
The focus of investors next week will be on the publication of data from the US labor market, as well as the results of the meetings of the central banks of the UK and Australia.
Investors focused on the deteriorating epidemiological situation in the United States, weakening demand and high unemployment.
Investors will also pay attention to the publication of several important macro data on the US, Australia, New Zealand, Eurozone, Japan, and Canada.
Traders should pay attention to the following significant macroeconomic data expected next week:
* during the coming week new events may be added to the calendar and scheduled events may be canceled
** GMT time
Monday, August 3
14:00 USD ISM Manufacturing Employment Index. ISM Manufacturing PMI
Employment Index, an important indicator of US economic conditions, is published by the Institute for Supply Management (ISM) and reflects business conditions in the US manufacturing sector, taking into account expectations of future output, new orders, stocks, employment, and supply. The ISM Manufacturing Employment Index is considered an important leading indicator in the US Department of Labor’s employment report. A high index value strengthens the USD, while a low value weakens it. In May, the value of the indicator was 32.1, in June 42.1. Forecast for July: 34.4.
The growth of the index is a positive factor for the USD. However, the index is significantly lower than the average annual values, and in the current conditions of the coronavirus pandemic and continuing quarantine, another decrease in the index is possible, which will negatively affect the dollar.
The Institute for Supply Management (ISM) Manufacturing PMI is an important indicator of the health of the American economy as a whole. A result above 50 is seen as positive and strengthens the USD, one below 50 as negative for the US dollar. Forecast: 48.4.0 in July (against 52.6 in June, 43.1 in May, 41.5 in April, 49.1 in March, 50.1 in February). The relative decline in the index may negatively affect the dollar, while the value of the index itself is still below 50, which may also negatively affect the dollar. Data below 50 indicates a slowdown in activity, which negatively affects the quotes of the national currency. If the indicator grows above the forecast and the value of 50, the dollar will receive more tangible support and is likely to strengthen.
Tuesday, August 4
00:30 AUD Retail Sales Index
The Retail Sales Index is published monthly by the Australian Bureau of Statistics and measures total retail sales. The index is often considered an indicator of consumer confidence and reflects the health of the retail sector in the near term. Index growth is usually positive for the AUD; a decrease in the indicator will negatively affect the AUD. The previous value of the index (in May) was +16.9% after falling by -17.7% in April. If the June data turn out to be weaker than the previous value, the AUD may sharply decline in the short term. Forecast: +2.4%.
This indicator measures the ratio between Australia’s export and import volumes. Growth in exports from Australia leads to an increase in the trade surplus, which has a positive impact on the AUD. Forecast for June: A$8.763 billion (previous A$8.025 billion). The growing trade surplus is likely to have a positive impact on the Australian dollar.
04:30 AUD Interest rate decision. Accompanying statement of the RBA
In March, the RBA made 2 rate cuts, bringing it to the current level of 0.25%, and launched a quantitative easing program. At the same time, for 3-year government bonds of Australia, the target yield level is set at 0.25%. The RBA has launched a program of lending to the banking system in the amount of at least A$90 billion and intends to buy bonds for A$5 billion.
The negative forecasts of economists suggest that the Australian economy will contract by 6% in 2020, which will be the sharpest annual GDP contraction since the Great Depression of the 1920s. The unemployment rate is likely to rise to around 8.5%.
Some economists have talked about Australia entering its first recession in nearly 30 years, which could turn into a depression.
“We live in extraordinary and difficult times,” said central bank governor Philip Lowe. In his opinion, “further stimulation is needed.” He stated this during a press conference on March 19, when the RBA lowered the interest rate during its unscheduled meeting.
Philip Lowe had repeatedly stated earlier that the central bank is ready to lower the rate again if necessary, although the likelihood of introducing negative rates, in his opinion, is “extremely small”.
The main negative factors for the Australian economy are weak wage growth, a weak labor market and a slowdown in growth. Annual inflation has remained below the RBA’s target range of 2-3% for almost four years.
Unemployment in the country remains above the 5% level for many years, unwilling to decline. Now the coronavirus pandemic has been added to the above negative factors, which has already hit the tourism and transport sectors hard. The RBA also expresses concerns that unemployment may rise to 8 or even 10%.
In this regard, it cannot be ruled out that on Tuesday, August 4, the RBA may again cut the rate. However, most economists believe that the bank will leave the key rate unchanged at this meeting, at 0.25%, while expressing concerns about the outlook for the global economy due to the ongoing coronavirus epidemic.
In an accompanying statement, the RBA executives will explain the reasons for the rate decision. If the RBA signals the possibility of further easing of monetary policy in the near future, the risks of a fall in the Australian dollar will increase.
22:45 NZD Change in employment levels. Unemployment rate (data for the 2nd quarter)
The employment rate reflects the quarterly change in the number of employed New Zealand citizens. The growth of the indicator has a positive effect on consumer spending, which stimulates economic growth. A high value is positive for the NZD, while a low reading is negative. Outlook: New Zealand employment increased in Q2, while employment rose 0.3% (against zero in Q4 2019 and +0.7% growth in Q1 2020).
At the same time, the Bureau of Statistics of New Zealand publishes a report on the unemployment rate – an indicator that estimates 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 NZD. Outlook: unemployment in New Zealand in the 2nd quarter fell to 3.8% from 4.2% in the 1st quarter of 2020.
Other indicators from the Bureau of Statistics of NZ report are also expected to come out with a slight improvement, which is likely to have a positive impact on the NZD. Poorly forecast data will have a negative impact on the NZD.
Wendesday, August 5
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 June: +19.1% (-6.6% in annual terms) against +17.8% and -5.1% (in annual terms) in May. It is difficult to predict the euro’s reaction to the publication of these values, since the data suggests that while retail sales declined in June on an annualized basis, they rose significantly compared to previous months, when Europe was under strict quarantine measures.
14:00 USD ISM Employment Index in the services sector. ISM Services PMI in the US economy
Published by the Institute for Supply Management (ISM), this is an important indicator of US economic conditions and reflects business conditions in the US services sector, taking into account expectations of new orders, stocks, employment, and supply. The ISM Services Sector Employment Index is considered an important leading indicator in the US Department of Labor’s employment report. A high index value strengthens the USD, while a low value weakens it. In May this indicator came out with a value of 31.8, and in June – with a value of 43.1. Despite the relative growth, the result below 50 is seen as negative for the USD. A relative decline in the index can also negatively affect the dollar in the short term. Forecast for July: 51.1, which is likely to have a positive impact on the USD.
Services PMI measures the health of the services sector in the US economy. The services sectors (as opposed to the manufacturing sector) have virtually no impact on the country’s GDP. The growth of the indicator and the result above 50 are considered as a positive factor for the USD. At the same time, a relative decline in the indicator or data worse than forecast may have a short-term negative impact on the dollar.
Forecast for July: 51.8 (versus 57.1 in June, 45.4 in May, 41.8 in April). A result above 50 is seen as positive for the USD, which is likely to support the USD in the short term.
23:50 JPY Japan’s GDP for Q2 2020 (Final Estimate)
GDP is considered an indicator of the general state of a country’s economy that estimates the rate of its growth or decline. The report on gross domestic product published by the Cabinet of Ministers of Japan expresses in monetary terms the aggregate value of all final goods and services produced by Japan over a certain period of time. An upward trend in the GDP indicator is considered a positive factor for the national currency (yen), while a low result is considered negative (or bearish).
In the previous 1st quarter of 2020, the country’s GDP contracted by -0.6% (-2.2% yoy) after falling by -1.8% (-7.1% yoy) in the 4th quarter 2019.
The data point to a quite noticeable slowdown in the Japanese economy since the end of 2019, and this is a negative factor for the yen and the Japanese stock market.
If the data turns out to be even weaker, the yen may decline significantly in the short term. Better-than-forecast data may strengthen the yen.
However, it should also be noted that in recent weeks, participants in financial markets pay little attention to news and weak macro statistics, abandoning defensive assets, including the yen, in favor of riskier and more profitable stock market assets.
Thursday, August 6
06:00 GBP Bank of England’s decision on interest rate. Bank of England’s meeting minutes. Planned volume of asset purchases by the Bank of England. Monetary Policy Report
In March (11 March and 19 March), during its extraordinary meetings, the Bank of England cut its interest rate twice, bringing it to the level of 0.1%, and announced its intention to purchase UK government bonds in the amount of 200 billion British pounds, in an attempt to counteract economic damage from the coronavirus pandemic. The central bank announced that it would increase its bond portfolio to £645bn, then to £745bn from £445bn at the time. “The current situation is completely unprecedented,” the new Governor of the Bank of England Andrew Bailey said at a press conference following the March 19 emergency meeting. Bailey said he expects a sharp economic contraction due to the coronavirus and the Bank of England is ready to take further stimulus measures if necessary. “No, we are not done yet,” he said. Based on these statements by Andrew Bailey, it is fair to expect further actions from the Bank of England towards easing its monetary policy. It is not unlikely that at this meeting on August 6, the Bank of England will again undertake them, increasing the volume of purchases of bonds or lowering the interest rate. Although, most economists believe that the Bank of England will refrain from changes in the current monetary policy for now.
Also at this time, the minutes of the Monetary Policy Committee (MPC) of the Bank of England are published with the distribution of votes “for” and “against” raising / lowering the interest rate. The main risks for the UK after Brexit are associated with expectations of a slowdown in the country’s economic growth, as well as with a large current account deficit in the UK balance of payments.
The intrigue about further actions of the Bank of England remains. And in trading the pound and the FTSE100 index, a lot of trading opportunities will be there during the period of publication of the bank’s decision on rates.
Also at the same time, the Bank of England’s monetary policy report will be published, containing an assessment of the economic outlook. At this time, the volatility in the pound quotes may rise sharply. Apart from GDP, one of the main benchmarks for the Bank of England regarding the prospects for monetary policy in the UK is inflation. If the tone of the report is soft, the British stock market will get support and the pound will decline. Conversely, the tough rhetoric of the report on containing inflation, which implies an increase in the interest rate in the UK, will lead to the strengthening of the pound.
11:30 GBP Speech by the head of the Bank of England Andrew Bailey
Financial market participants expect him to clarify the situation regarding the further policy of the UK central bank in the context of the coronavirus and the slowdown in the British economy. Volatility during his speech could rise sharply in the pound and the London Stock Exchange FTSE if Andrew Bailey gives any hints of tightening or easing of monetary policy. He will probably also touch on the Brexit issue. As previously stated by the previous head of the Bank of England Mark Carney, Britain’s exit from the EU without an agreement would be “a real economic shock.”
Friday, August 7
01:30 AUD RBA’s Comments on Monetary Policy
Annual inflation has remained below the RBA’s target range of 2-3% over the past several years. Weak inflation indicators are driven by slow wage growth and persistent weakness in the Australian labor market.
Given that rates are already at record lows, the markets are discussing the likelihood of the RBA taking additional alternative measures against the backdrop of the economic slowdown due to the coronavirus and restrictive measures.
If the RBA’s comments on monetary policy contain unexpected information, volatility in AUD trading will increase. Soft rhetoric regarding further monetary policy plans will be bearish for the AUD.
12:30 USD Average hourly wages. Non-Farm Payrolls. Unemployment rate
These are the most important indicators of the state of the labor market in the United States for July. Forecast: -0.5% (against -1.2% in June, -1.0% in May, + 4.7% in April) / +2.26 million (against +4.8 million in June, + 2.509 million in May and -20.687 million in April) / 10.5% (against 11.1% in June, 13.3% in May and 14.7% in April), respectively.
In general, the figures can be described as disappointing but quite understandable due to mass layoffs in American companies and the closure of offices and shops due to the coronavirus. At the same time, the data indicate a gradual improvement in the US labor market after its collapse in previous months at the beginning of the year. Prior to the coronavirus, the US labor market remained strong, signaling the stability of the American economy and supporting the dollar.
It is often difficult to predict the market reaction to the publication of indicators. Many indicators for previous periods are subject to revision. Now it will be even more difficult to do this, because the economic situation in many other large economies is no better. In any case, when data from the US labor market is published, a surge in volatility is expected in trading not only in USD, but throughout the financial market. The most cautious investors might choose to stay out of the market during this time.
12:30 CAD Unemployment rate in Canada
Statistics Canada is to publish data on the country’s labor market for July.
Unemployment has risen in Canada in recent months, including amid massive business closures due to coronavirus and layoffs. Unemployment rose from the usual 5.6-5.7% to 7.8% in March and already to 13.7% in May. If unemployment continues to rise, the Canadian dollar will decline. If the data is better than the previous value, then the Canadian dollar will strengthen. A decrease in the unemployment rate is a positive factor for the CAD, an increase in unemployment is a negative factor. The unemployment rate is expected to be at 12.8% in July.
Economic calendar for the week 27.07.2020 – 02.08.2020
Overview of the main events of the Forex economic calendar for the next trading week 27.07.2020 – 02.08.2020
Trading on key Forex news: we are expecting the publication of important macro statistics from the US, Australia, Germany, China, the Eurozone, as well as the results of the Fed meeting and its decision on the interest rate.
The dollar continued to decline last week. The DXY dollar index updated October 2018 lows by falling below 94.47.
American and European stock indices also closed the week in negative territory. Investors focused on the worsening coronavirus situation in the United States, lower demand and continued high unemployment rates with millions of unemployed Americans. The next increase in the number of claims for unemployment benefits provoked new fears about the possibility of a slowdown in the economic recovery due to an increase in cases of coronavirus infection.
Economists are also looking at data pointing to a downturn in the mobility of consumers who prefer to stay at home to protect themselves from the coronavirus. In their opinion, this presents “obvious downside risks for economic growth and for the labor market.”
Against the backdrop of pessimistic sentiments of investors, gold quotes climbed last Friday above the mark of 1900.00 dollars per ounce. The growth in gold prices is facilitated by both the soft policy of world central banks and the uncertainty about the strength of the upward trend in stock indices amid the ongoing trade conflict between the United States and China, as well as the further spread of the coronavirus.
At the same time, the euro, after receiving support from the decision of the leaders of the European Union to approve a package of expenses for the recovery of the bloc’s economy in the amount of 1.8 trillion euros, strengthened significantly last week, against the dollar as well.
The regional authorities are providing strong fiscal support to the European economy, which is likely to have a positive effect on the euro. The rise in the supply of highly rated euro-denominated government and intergovernmental bonds will strengthen the euro’s international role, making it an alternative to the dollar as a defensive asset, economists say.
Next week will not be full of important macro statistics. Investors will focus on the data on the GDP of the Eurozone and the US for the 2nd quarter and the Fed meeting, which will end next Wednesday with the publication of the decision on the interest rate. Investors will also pay attention to the release of several important macro data for the US, Australia, Germany, and China.
Traders should pay attention to the following significant macroeconomic data expected next week:
* during the coming week new events may be added to the calendar and scheduled events may be canceled
12:30 USD Durable goods orders. Capital goods orders (ex defense and aviation)
This indicator reflects the value of orders received by manufacturers of durable goods and capital goods (capital goods are durable commodities used to produce durable goods and services), involving large investments. Goods manufactured in the defense and aviation sectors of the US economy are not included in this indicator. A strong result strengthens the USD. Previous values of the indicator “orders for durable goods”: +15.7% in May, -18.3% in April, -16.7% (in March), +2.0% (in February), -0.2% (in January).
Previous values of the indicator “orders for capital goods excluding defense and aviation”: +1.6% in May, -6.6% in April, -1.3% (in March), -0.6% (in February) , +0.9% (in January).
In theory, the relative growth of the indicator has a positive effect on the dollar. However, the market’s reaction to its negative value may be negative for the dollar in the short term. Data worse than the previous value will also have a negative impact on dollar quotes. Forecast for June: +6.5% (orders for durable goods), +1.5% (orders for capital goods excluding defense and aviation).
After falling sharply in March and April, these are still weak values reflecting the still uncertain economic recovery after falling earlier this year.
Tuesday, July 28
No important macro statistics planned to be released.
Wednesday, July 29
01:30 AUD RBA core inflation index using the trimmed mean method (for the 2nd quarter). Consumer Price Index (Q2)
This indicator is published by the RBA and the Australian Bureau of Statistics. It reflects the dynamics of retail prices of goods and services included in the consumer basket. The simple trimmed mean method takes into account the weighted average kernel, the central 70% of the index components. Previous index values: +0.5% (+1.8% in annual terms) in the 1st quarter of 2020, +0.4% (+1.6% in annual terms) in the 4th, 3rd and in the 2nd quarters of 2019. According to the forecast, it is expected that the value of the indicator for the 2nd quarter of 2020 will be +0.1% (+1.4% in annual terms). If the value of the indicator coincides with the forecast or turns out to be worse than it, it is likely to negatively affect the AUD. The data indicate low inflationary pressures in the country. The growth of the indicator should have a positive effect on the AUD in the short term.
The Consumer Price Inflation Index (CPI) published by the RBA and the Australian Bureau of Statistics measures the dynamics of retail prices for goods and services in Australia. CPI is the most significant indicator of inflation and changes in consumer preferences. A high reading is positive for the AUD, while a low reading is negative. Previous values of the indicator: +0.3% (+2.2% in annual terms) in the 1st quarter of 2020, +0.7% (+1.8% in annual terms) in the 4th quarter, +0.5% (+1.7% in annual terms) in Q3 2019. According to the forecast, it is expected that the value of the indicator for the 2nd quarter of 2020 will be 2.0% (-0.4% in annual terms). The relative decline in the indicator is likely to negatively affect the AUD in the short term. If the value of the indicator turns out to be worse than the forecast, it will even more negatively affect the AUD.
18:00 USD The Fed’s decision on the interest rate
Following two meetings in March, the Fed sharply cut interest rates (to 0.25% from 1.75% in February), and also announced the allocation of $700 billion for the purchase of US government bonds and mortgage-backed securities. Subsequently, the Fed has repeatedly announced additional measures to support the US economy and inject cheap liquidity into the financial system. Usually, with the easing of monetary policy, the national currency becomes cheaper and its quotations go down.
In the last 3 months, the dollar has been declining as investors are withdrawing funds from defensive assets, buying riskier and more profitable assets of the stock market, which continues 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 is also declining.
The rate is widely expected to remain at 0.25% at this meeting. At the end of May, US Federal Reserve Chairman Jerome Powell said that he was “satisfied with the current situation and the path we (at the Fed) are now heading.” “We are not close to any of our limits,” – said Powell, making it clear that the Fed intends to continue to support the economy. Other Fed leaders have also repeatedly stated in recent days that they are in favor of continuing the policy of supporting the American economy.
Nevertheless, during the period when the rate decision is published, volatility may sharply increase throughout the financial market, primarily in the US stock market and in dollar quotes, if the rate decision differs from the forecast.
18:30 USD FOMC Press Conference
The press conference of the US Federal Open Market Committee lasts about an hour. In the first part, the ruling is read, followed by a series of questions and answers that can increase market volatility.
Powell’s comments may affect both short-term and long-term USD trading. A more hawkish stance on the Fed’s monetary policy is seen as positive and strengthening the US dollar, while a more cautious position is seen as negative for the USD. Any hints by Powell about the possibility of a change in the current monetary policy will cause an increase in volatility in the dollar quotes and on the American stock market.
Thursday, July 30
06:00 EUR Germany’s GDP for the 2nd quarter (preliminary release)
GDP is considered the most important indicator of the overall health of the economy. The growing trend in the GDP indicator is considered positive for the national currency. The German economy is the locomotive of the entire European economy. A high value of GDP is considered a positive factor for the EUR, while a low one is considered negative.
The growth of the European and German economies slowed sharply in 2019, and in 2020 the European economy has already entered a recession in many ways. Domestic political risks have been added to the risk of no-deal Brexit and the coronavirus pandemic.
If the GDP data turns out to be weaker than the forecast, it will put even more downward pressure on the euro. Better-than-expected data may strengthen the euro in the short term.
Forecast: German GDP contracted by -9.0% in the second quarter (after falling by -2.2% in the first quarter).
12:00 EUR Harmonized Index of Consumer Prices (HICP) in Germany (preliminary release)
This index is published by the EU Statistics Office and is calculated on the basis of a statistical method 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 May, the HICP index (in annual terms) increased by +0.5%, in June by +0.8%. Preliminary forecast for July: +0.6%. The euro is unlikely to react strongly positively to the publication of this indicator. If the data turn out to be better than the forecast, 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 Initial jobless claims in the United States in the last week. US Annual GDP for Q2 (preliminary estimate)
The situation on the country’s labor market is still tense. Back in February, the indicator of primary claims for unemployment benefits was within its average values of 193-252 thousand. However, then the situation began to deteriorate sharply. During the week of March 22-28, 6.9 million claims were filed, then 6.606 million claims, shocking observers and market participants. The similar indicator published last Thursday (for the week of July 12-17) came out with a value of 1.416 million new claims.
Published in early May, the US Department of Labor data showed an increase in unemployment in the country to the level of 14.7%. In June, the US unemployment rate was 11.1%. Economists attribute this to the coronavirus, which has hit the US economy. Many American companies have announced layoffs, and the authorities have ordered non-vital companies to close their offices and stores due to the coronavirus epidemic. The current weekly filing growth rate is well above the previous record high of 695,000 reached in October 1982. Then the number of initial claims filed in four weeks was 2.7 million.
This indicator (the number of new claims for unemployment benefits) reflects the state of the labor market. The rise in value negatively affects consumption levels and economic growth. Under normal circumstances, a high score weakens the US dollar and a low score strengthens it. However, in the current environment (the coronavirus pandemic and a sharp economic slowdown), the reaction of market participants to the publication of this report of the US Department of Labor can be completely unpredictable.
Annual US GDP for the 2nd quarter (preliminary estimate). GDP data is one of the key indicators (along with data on the labor market and inflation) for the Fed in terms of its monetary policy. Strong result strengthens US dollar; weak GDP report negatively affects the US dollar. In the previous 1st quarter, GDP declined by -5.0% after growing by 2.1% in the 3rd and 4th quarters of 2019. The preliminary forecast for the 1st quarter of 2020 was -4.1%, but actually turned out to be at the level of -5.0%. The data already takes into account the impact of the coronavirus on the American economy. However, experts predict an even stronger slowdown in the 2nd quarter (by -6.2%). The publication of the data is likely to cause a short-term decline in the dollar. The data weaker than the forecast may even more negatively affect the dollar quotes.
Friday, July 31
01:00 CNY China Federation of Logistics & Purchasing (CFLP) Manufacturing PMI
This indicator is an important indicator of the state of the Chinese economy as a whole. A result above 50 is seen as positive and strengthens the CNY, one below 50 as negative for the yuan. Forecast: 48.6 in July (against 50.9 in June).
A relative decline in the index and 50 readings could negatively impact the CNY. Data below 50 indicates a slowdown in activity, which negatively affects the quotes of the national currency.
In the opposite case, and if the indicator grows above the forecast and the value of 50, the yuan will receive support and is likely to strengthen.
01:00 CNY China Federation of Logistics & Purchasing (CFLP) Services PMI
This indicator assesses the state of the service sector in the Chinese economy. A result above 50 is considered positive and strengthens the yuan. Forecast: 51.2 in July (against 54.4 in June).
Despite the relative decline, the indicator is still above 50, which is likely to have a positive impact on the yuan quotes.
06:00 EUR Retail sales
Retail sales are the main consumer spending indicator in Germany showing changes in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. Forecast: +11.0% (+ 1.4% in annual terms) against +13.9% and +3.8% (in annual terms) in May.
09:00 EUR Consumer Price Index. Core Consumer Price Index (preliminary release). Eurozone GDP for Q2 (preliminary release)
Consumer Price Index (CPI) is published by Eurostat and measures the price change of a selected basket of goods and services over a given period. The index is a key indicator for assessing inflation and changing purchasing habits. A positive result strengthens the EUR, a negative one weakens it. In January, the CPI index increased by 1.4% (in annual terms), in February – by +1.2%, in March – by +0.7%, in April – by +0.3%, in May – by +0.1%, and in June – by +0.3%, which indicates low inflationary pressure and even a slowdown in inflation. Forecast for July: +0.4% (annualized). If the data turn out to be worse than the forecast, the euro may fall sharply in the short term. The data better than the forecast and / or the previous value may strengthen the euro in the short-term, despite the low value (the target level of the ECB’s consumer inflation is just below 2.0%).
Core Consumer Price Index (Core 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 are excluded from this indicator to provide a more accurate estimate. A high result strengthens the EUR, while a low result weakens it. In January, Core CPI increased by 1.1% (in annual terms), in February – by +1.2%, in March – by +1.0%, in April and May – by +0.9%, and in June – by +0.8%. If the data for July turn out to be worse than the previous value or forecast, then this may negatively affect the euro. If the data turn out to be better than the forecast or the previous value, the euro is likely to respond with an increase, but only in the short term. Inflation in the Eurozone remains low, and this is a negative factor for the euro. Forecast for July: +0.9%.
GDP is considered an indicator of the overall health of the Eurozone economy. The growing trend in the GDP indicator is considered positive for the EUR; a low result weakens the EUR.
Recently, macro data from the Eurozone has been indicating a slowdown in the growth of the European economy. However, the decision made by the EU leaders last week to provide additional support to the economy (a package of spending on the economic recovery of the bloc of 1.8 trillion euros was approved) will help stabilize the economy of the Eurozone, which as a result of quarantine restrictions, restraint in spending by companies and consumers, as well as the export, is on the verge of the deepest economic downturn since World War II.
The euro reacted positively to this decision. Nevertheless, according to the forecast of economists, the GDP of the Eurozone is expected to decrease in the 2nd quarter by -4.7% (-4.3% in annual terms) after growth by +0.1% (+1.0% in annual terms) in Q4 2019 and a decline of -3.6% (-3.1% YoY) in Q1 2020.