The weekly trading session is ending today with a few major economic data, the most important economic event being the GDP Growth Rate of Canada. There is also the US Michigan Consumer Sentiment Index, and in the European Session the Retail Sales in Germany, the GDP Growth Rate of Italy , the Unemployment Change in Spain and the Construction PMI in UK. As there are no major economic events in the Asian and the Pacific Session, the price action today will be during the European and the American Session, with expected moderate to high volatility expected for the USD/CAD currency pair.
These are the main economic events in the forex market today to focus on:
European Session
- Germany Retail Sales, Spain Unemployment Change, Italy GDP Growth Rate
Time: 07:00 GMT, 08:00 GMT, 09:00 GMT
The Retail Sales figure is an important indicator of domestic demand. High or rising Retail Sales may increase German consumption, translating into higher economic growth, being positive and supportive for the Euro. Consumption and consumer spending are one of the key measurements of GDP Growth, which is the most significant indicator of the overall economic performance. As seen from the chart, German retail sales declined by 1.9 percent month-on-month in December 2017, and they have a volatile undefined trend with significant increases and declines. Retail Sales in Germany being the largest economy in the Eurozone are monitored as they have a large weight on the Eurozone total GDP growth, in addition to the local GDP Growth Rate.
The forecasts are for an increase both on a monthly and a yearly basis with figures of 0.9% and 3.8% accordingly, higher than the previous reading of -1.9% on a monthly basis and -1.9% on a yearly basis. The Euro could also find support from a rising or higher than expected GDP Growth Rate in Italy and a decline in Unemployment Change in Spain. A lower value of unemployment change indicates a strong labor market, adding to consumer spending, economic growth and the possibility of a rate hike by central banks.
The forecast for the Unemployment Change in Spain is for a reading of -7.2K, lower than the previous reading of 63.7K, which is positive for the economy in Spain and the Euro as well. The GDP Growth Rate in Italy is expected to decline on a quarterly and a yearly basis, with figures of 0.3% and 1.6% accordingly, marginal lower than the relevant figures of 0.4% and 1.7%.
- UK Construction PMI
Time: 09:30 GMT
In the UK, the Markit / Chartered Institute of Purchasing and Supply Purchasing Managers Index measures the performance of the construction sector and is derived from a survey of 170 construction companies. A value above 50.0 indicates industry expansion and below indicates contraction. Higher than expected or rising figures are positive for the British Pound reflecting increased economic and business conditions. The forecast is for an increase and a reading of 50.7, higher than the previous reading of 50.2.
American Session
- Canada GDP Growth Rate, US Michigan Consumer Sentiment Index
Time: 13:30 GMT, 15:00 GMT
As seen from the chart the GDP Growth Rate in Canada in real terms, is expected to decline in 2018 compared to 2017, but increase marginally up to 2002.
In 2016, Canada’s real GDP growth was around 1.47 percent compared to the previous year. GDP is the total market value of all final goods and services that have been produced within a country within a given period of time, usually a year. Real GDP figures serve as an even more reliable tool in determining the direction in which a country’s economy may be swaying, as they are adjusted for inflation and reflect real price changes.
Higher than expected or rising figures for the GDP Growth Rate will be positive and supportive for the Canadian Dollar, reflecting a robust economy which is both growing and expanding. The forecasts for the GDP Growth Rate on a quarterly basis and on an annualized basis are for increases with readings of 0.5% and 2.3% accordingly, higher than the previous readings of 0.4% and 1.7% accordingly. The only important economic event for the US Dollar is the University of Michigan Consumer Sentiment Index, which rates the relative level of current and future economic conditions.
A higher than expected reading should be taken as positive for the US Dollar, while a lower than expected reading should be taken as negative for the US Dollar. The forecast is for a figure of 99.9, an increase compared to the previous figure of 95.7.
