Currency markets are impacted by economic and geo-political events both planned and unexpected. For those who are exposed to currency risk, for example being mid-property purchase overseas, forewarned is forearmed. So here are some of the key events to watch out for.
Gross domestic product (GDP) data
With GDP providing one of the key indications of a country’s economic health, investors and market-watchers are generally keen to keep an eye out for its results and impact – especially within the currency markets.
GDP data is divided into a preliminary (‘flash’) and final data each month. The prelimary result tends to be more influential on the markets, although a final release that’s markedly different will have an effect. The UK’s most recent GDP release was on 13 April, the next is 11 May and the following is 14 June.
Over in the eurozone, Germany and France will release their GDP data on the 28 April, and then the euro area together on 16 May.
Read more about the effects of GDP on your exchange rate here.
Rising prices affects monetary policy, which is interest rates, which affects exchange rates… it’s a complicated relationship! While inflation is bad for most of us, the currency markets tend to favour it. Hence above average inflation like we have now can support your currency.
The UK will release its latest inflation rate early on Wednesday 19 April, then on 24 May.
In the eurozone they have a lot of countries with different inflation rates to consider, but the biggest economies are Germany and France, with an over-sized impact on exchange rates. Their data comes out on 28 April and the euro area as a whole on the 2 May.
In the US, markets will be looking to the Bureau of Labor Statistics on 10 May for core inflation, yearly inflation and monthly inflation.
As well as the personal and social element of a healthy jobs market, low unemployment is a great indicator of the health of an economy.
UK unemployment data is released by the Office for National Statistics on 18 April, then on 16 May.
In Germany it will be on 28 April and in the eurozone on 3 May.
In the US, the job openings and labor turnover survey (JOLTs) data is watched closely by economists as it provides important clues on how the country’s labour market is performing. The next JOLTs data will be released on the 2 May and then 6 June.
Also of interest is ‘non-farm payrolls’, which shows the net number of new jobs that have been created in the past month. This comes out on the first Friday of the month, so on 5 May and 2 June.
Central Bank decisions
The Bank of England (BoE), European Central Bank (ECB) and the US Federal Reserve (Fed) will all be deciding on interest rates in the month of May. The Fed will decide first on 3 May, followed by the ECB on the 4 May and then the Bank of England on 11 May.
Currency markets are volatile and as we point out, there are several events which could trigger additional volatility. This is why we advocate a safety-first approach. Please get in touch with one of our team on 020 7898 0541 to discuss your options. We’d be delighted to help.