In the week ahead, Forex traders can anticipate a series of critical economic events that warrant meticulous attention. Let’s overview the most important market events of the week, along with insightful forecasts to guide their trading strategies.
Market events of the week: July 27 – August 2
Thursday, July 27
15:15 (GMT +3) — European Interest Rate Decision
Held by the esteemed European Central Bank (ECB), it is a crucial event that decides the fate of the benchmark interest rate for the Eurozone. Picture this: a gathering of financial minds, meticulously analyzing economic indicators, examining inflation patterns, and dissecting employment data.
Traders closely monitor the changes in the interest rate as it is a primary factor in currency evaluation and it affects various sectors of the economy.
What it affects: EUR and currency pairs with EUR (EUR/USD, EUR/GBP, EUR/JPY, etc)
What’s the forecast?
⬆️ An increase in the number may be a sign of a bullish trend for EUR
⬇️ A decrease in the number may be a sign of a bearish trend for EUR
The current forecast is 4.25% (previous result 4.00%), signaling a bullish trend for EUR.
15:30 (GMT +3) — U.S. Gross Domestic Product (GDP) QoQ
The U.S. Gross Domestic Product (GDP) Quarter on Quarter (QoQ) is a key economic indicator that offers crucial insights into the country’s economic performance over successive three-month periods. Considered the bedrock of national economic measurement, GDP quantifies the total value of all goods and services produced within U.S. borders.
What it affects: USD and currency pairs with USD (EUR/USD, USD/JPY, GBP/USD)
⬆️ A result higher than the forecast may be a sign of a bullish trend for USD
⬇️ A lower result may be a sign of a bearish trend for USD
The current forecast is 1.7% (previous result 2.0%), signaling a bearish trend for USD.
Friday, July 28
09:00 (GMT +3) — Bank of Japan Press Conference
The Bank of Japan (BOJ) press conference serves as a strategic lens, dissecting the elements that influenced the latest interest rate verdict, the comprehensive economic horizon, inflationary cues, and offers invaluable insights into forthcoming monetary policy determinations.
What it affects: JPY and currency pairs with JPY (AUD/JPY, USD/JPY, GBP/JPY)
15:30 (GMT +3) —U.S. Core PCE Price Index YoY
One of the most important market events of the week, the Core PCE price index is a less volatile metric compared to the overall PCE price index as it excludes the influence of erratic and seasonal food and energy prices. Its effect on the currency can take two directions: first, an inflation increase might prompt higher interest rates and subsequently strengthen the local currency; secondly, during a recession, elevated inflation may exacerbate the downturn, leading to a depreciation of the local currency.
What it affects: USD and currency pairs with USD (EUR/USD, USD/JPY, GBP/USD)
Monday, July 31
12:00 (GMT +3) — Eurozone Consumer Price Index (CPI) YoY
The Consumer Price Index (CPI) assesses the variation in the prices of goods and services as perceived by consumers. It serves as a crucial method to track shifts in purchasing behaviors and inflation rates. By monitoring changes in the cost of essential items, the CPI provides valuable insights into purchasing trends and the overall impact on consumers’ ability to afford goods and services. Consequently, it stands as a fundamental tool for gauging inflation and informing economic decisions by policymakers and businesses alike.
What it affects: EUR and currency pairs with EUR (EUR/USD, EUR/GBP, EUR/JPY, etc)
What’s the forecast?
⬆️ An increase in the number may be a sign of a bullish trend for EUR
⬇️ A decrease in the number may be a sign of a bearish trend for EUR
Tuesday, August 1
11:30 (GMT +3) — U.K. Manufacturing Purchasing Managers Index (PMI)
The Manufacturing Purchasing Managers’ Index (PMI) evaluates the level of activity among purchasing managers in the manufacturing sector. When the PMI reading surpasses 50, it signifies expansion in the sector, while a reading below 50 indicates contraction. Traders closely monitor these surveys because purchasing managers typically possess early access to company performance data, which can serve as a leading indicator of the overall economic performance.
What it affects: GBP and currency pairs with GBP (GBP/USD, EUR/GBP. GBP/JPY)
What’s the forecast?
⬆️ An increase in the number may be a sign of a bullish trend for GBP
⬇️ A decrease in the number may be a sign of a bearish trend for GBP
17:00 (GMT +3) — U.S. JOLTs Job Openings
The US Bureau of Labor Statistics conducts a survey known as the Job Openings and Labor Turnover Survey (JOLTS), aimed at assessing job vacancies in the labor market. This survey gathers data from employers, delving into various aspects of their businesses’ employment, including job openings, recruitment, hiring, and separations.
What it affects: USD and currency pairs with USD (EUR/USD, USD/JPY, GBP/USD)
What’s the forecast?
⬆️ A result higher than the forecast may be a sign of a bullish trend for USD
⬇️ A lower result may be a sign of a bearish trend for USD
Wednesday, August 2
15:15 (GMT +3) — U.S. ADP Nonfarm Employment Change
The ADP National Employment Report gauges the monthly fluctuations in non-farm, private employment by analyzing payroll data from around 400,000 U.S. business clients. Being released two days prior to the government’s official non-farm payroll report, it serves as a reliable predictor of the latter. However, it’s important to note that this indicator’s changes can be highly variable, exhibiting significant volatility over time.
What it affects: USD and currency pairs with USD (EUR/USD, USD/JPY, GBP/USD)
What’s the forecast?
⬆️ A better than expected result may be a sign of a bullish trend for USD
⬇️ A lower than expected result may be a sign of a bearish trend for USD
Are there any market events of the week that you will be monitoring closely? Let us know in the comments below!
