Review of the main events of the Forex economic calendar for the next trading week (02.01.2023 – 08.01.2023)
Next week is the last week of the month and year, which means there will be little activity (Monday is Boxing Day in the Catholic countries of Europe and the US), and the world will prepare for the New Year 2023. There will also be few releases of macro statistics.
2022 is over. This Sunday, January 1, the new year 2023 begins. December brought surprises: for example, the traditional pre-New Year’s rally (or the so-called Santa Claus rally) did not take place. The US stock indexes and stock market participants ended this year on a negative note. The winner, however, was the dollar. By the end of the year, it gained 8%, judging by the chart of the DXY index.
Next year, as many economists expect, will not be as successful for the dollar. As expected, the Fed will complete the cycle of tightening its policy in the first months of 2023. If the Fed officials move from raising the interest rate to lowering it, this will be a turning point in the uptrend of the dollar.
Next week, the first week of the new year 2023, may provide new information and food for thought: on Wednesday, the minutes of the December Fed meeting will be published, and on Friday – the monthly report of the US Department of Labor.
Market participants might also want to pay attention to the publication of important macro statistics from Germany, Canada, the US, and the Eurozone.
We should also note that very often in the first days of the new year, new trends emerge on the market. It could happen this time as well.
* during the coming week, new events may be added to the calendar and / or some scheduled events may be cancelled.
** GMT time
Monday, January 2
No important macro statistics scheduled to be released.
Tuesday, January 3
13:00 EUR Germany Harmonized Index of Consumer Prices (HICP) (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 result weakens it.
Previous indicator values: +11.3% in November, +11.6% in October, +10.9% in September, +8.8% in August, +8.5% in July, +8.2% in June, +8.7% in May, +7.8% in April, +7.6% in March, +5.5% in February, +5.1% in January 2022 (annualized). If the December data turn out to be better than the previous values, the euro may strengthen in the short term. The growth of the indicator is a positive factor for the euro. The data suggests mounting inflationary pressures in Germany, which in turn is putting pressure on the ECB to tighten its monetary policy. Data worse than the previous value will have a negative impact on the euro. Forecast: +11.8% in December.
Wednesday, January 4
15:00 USD US Manufacturing PMI (from ISM)
The US Manufacturing PMI published by the Institute for Supply Management (ISM) is an important indicator of the state of the US economy as a whole. A result above 50 is considered positive and strengthens the USD, while one below 50 is considered negative for the US dollar. Forecast: 49.6 in December (against 49.0 in November, 50.2 in October, 50.9 in September, 52.8 in August, 53.0 in June, 56.1 in May, 55.4 in April , 57.1 in March, 58.6 in February, 57.6 in January). The index is above the level of 50 and, despite the relative decline, has a relatively high value, which is likely to support the dollar. Data above the value of 50 indicates an acceleration of activity, which has a positive effect on the quotes of the national currency. If the indicator falls below the forecast and, especially, below the value of 50, the dollar may sharply weaken in the short term.
19:00 USD Minutes of the Federal Open Market Committee meeting
The publication of the minutes is extremely important for determining the course of the current policy of the Fed and the prospects for raising interest rates in the US. The volatility of trading in financial markets during the publication of the protocol usually increases, since the text of the protocol often contains either changes or clarifying details regarding the results of the last FOMC meeting of the Fed.
As a result of the meeting that ended in December, the leaders of the central bank raised the interest rate by 0.50% (up to 4.50%), but not by 0.75%, as in June, July, September, November, and announced their intention to continue to resist rising inflation by tightening monetary policy.
A soft tone of the minutes will have a positive impact on stock indices and negatively on the US dollar. Tough rhetoric of the Fed’s leaders regarding the prospects for monetary policy will push the dollar to further growth.
Thursday, January 5
13:15 USD ADP National Employment Report
Usually, the ADP report on the level of employment in the private sector has a strong impact on the market and dollar quotes. An increase in the value of this indicator has a positive effect on the dollar. The number of employees in the US private sector is expected to increase by 134,000 in December (against March, 375,000 in February, 372,000 in January 2022, by 807,000 in December, 534,000 in November, 571,000 in October, 568,000 in September, 374,000 in August, 330,000 in July, 692,000 in June, 978,000 in May, 742,000 in April, 517,000 in March, 117,000 in February, 174,000 in January 2021). The relative growth of the indicator may have a positive impact on the dollar quotes, and the relative decline of the indicator can influence it negatively. The market reaction may be negative, and the dollar may decline if the data also turns out to be worse than the forecast.
Millions of Americans have previously been laid off due to the coronavirus pandemic and related quarantine measures. Most of the layoffs were concentrated in the tourism and retail sectors. Other important sectors of the economy also suffered. The ADP previously reported that the most significant drop in employment was recently noted in the construction sector and the financial services sector.
Although the ADP report does not have a direct correlation with the US Department of Labor official data on the labor market, which will be published on Friday, the ADP report is often its harbinger, having a noticeable impact on the market.
Friday, January 6
07:00 EUR Retail Sales in Germany
Retail sales is the main indicator of consumer spending in Germany showing the change in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. Previous values: -2.8% (-5.0% yoy), +0.9% (-0.9% yoy), -1.3% (-4.3% yoy) , +1.9% (-2.6% YoY), -1.5% (-9.6% YoY), +1.2% (+1.1% YoY), – 5.4% (-0.4% YoY), +0.9% (-1.7% YoY), +0.2% (+6.9% YoY), -0.2% (+10.1% YoY) in January 2022.
The data speaks of the instability of the recovery of this sector of the German economy. Data better than the forecast and / or the previous value is likely to have a positive impact on the euro, but only in the short term. Forecast for November: +0.3% (-2.5% in annual terms).
10:00 EUR Consumer Price Index. Core Consumer Price Index (preliminary release). Retail sales in the Eurozone
Consumer Price Index (CPI) is published by Eurostat and measures the change in prices of a selected basket of goods and services over a given period. The index is a key indicator for assessing inflation and changing consumer preferences. A positive result strengthens the EUR, a negative result weakens it.
Previous values: +10.1% in November, +10.6% in October, +9.9% in September, +9.1% in August, +8.6% in June, +8.1% in May , +7.4% in April and March, +5.9% in February, +5.1% in January, +5.0% in December. If the data turns out to be worse than the forecast, the euro may sharply decline in the short term. Data better than the forecast and / or the previous value may strengthen the euro in the short term. The target level of consumer inflation of the ECB is slightly below 2.0%, and the data indicate an acceleration of inflation in the Eurozone.
Core Consumer Price Index (Core CPI) determines the change in prices of a selected basket of goods and services over a given period and is a key indicator for assessing inflation and changing consumer preferences. Food and energy are excluded from this indicator for a more accurate estimate. A high result strengthens the EUR, while a low result weakens it. In January, Core CPI grew by +2.3%, in February – by +2.7%, in March – by +2.9%, in April – by +3.5%, in May – by +3.8 %, in June – by +3.7%, in August – by +4.3%, in September – by +4.8%, in October – by +5.0%, in November – by +5.0 %. If the data for December 2022 turns out to be worse than the previous value or forecast, this may negatively affect the euro. If the data turns out to be better than the forecast or the previous value, the euro is likely to react with an increase in quotations. Core inflation in the Eurozone is accelerating, which is positive (under normal economic conditions) for the euro.
Retail sales is the main indicator of consumer spending showing the change in retail sales. A high result strengthens the euro, and vice versa, a low result weakens it. Forecast for December: +0.1% (+2.4% yoy), against -1.8% (-2.7% yoy) in November, +0.4% (-0.6% yoy) in September, -0.3% (-2.0% yoy) in August, +0.3% (-0.9% yoy) in July, -1.2% (-3, 7% YoY) in June, +0.2% (+0.2% YoY) in May, -1.3% (+3.9% YoY) in April, -0.4% (+0.8% YoY) in March, +0.3% (+5.0% YoY) in February, +0.2% (+7.8% YoY) in January. The data suggests that retail sales have not yet reached pre-coronavirus levels after a sharp drop in March-April 2020, when tight lockdown measures were in place in Europe. However, better-than-expected data is likely to have a positive impact on the euro.
13:30 USD Average hourly wages. Non-farm Payrolls. Unemployment rate
The most important indicators of the state of the labor market in the US in December. Forecast: +0.4% (against +0.6% in November, +0.4% in October, +0.3% in September and August, +0.5% in July, +0.3% in June , May and April, +0.4% in March, 0% in February, +0.7% in January 2022, +0.6% in December, +0.3% in November, +0.4% in October, +0.6% in September and August 2021) / +0.057 million (against +0.263 million in November, +0.261 million in October, +0.263 million in September, +0.315 in August, +0.528 million in July, + 0.372M in June, +0.390M in May, +0.428M in April, +0.431M, +0.678M in February, +0.467M in January 2022, +0.199M in December, +0.210M in November, +0.531M in October, +0.194 million in September, +0.235 million in August 2021) / 3.7% (against 3.7% in November and October, 3.5% in September, 3.7% in August, 3.5 % in July, 3.6% in June, May, April and March, 3.8% in February, 4.0% in January 2022, 3.9% in December, 4.2% in November, 4.6 % in October, 4.8% in September, 5.2% in August 2021), respectively.
In general, the indicators can be described as quite positive, if not encouraging, apart from the NFP section. Market participants can sharply react negatively to its weak value. Nevertheless, it is often difficult to predict the market reaction to the publication of indicators, because many indicators for previous periods are subject to revision. Now it will be even more difficult to do this, because the economic situation in the US and many other major economies remains controversial, with increased risks of recession and high inflation. In any case, when the 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. Cautious investors might prefer to stay out of the market during this period of time.
13:30 CAD Unemployment rate in Canada
Statistics Canada is to publish data on the country’s labor market for November. Unemployment has risen in Canada in recent months against the backdrop of massive business closures due to the coronavirus and layoffs among other things. Unemployment rose from the usual 5.6% – 5.7% to 7.8% in March and to 13.7% in May 2020. If unemployment continues to rise, the Canadian dollar will decline. If the data turns out to be better than the previous value, the Canadian dollar will strengthen. Decreasing unemployment rate is a positive factor for the CAD, rising unemployment is a negative factor. In November 2022, unemployment was at 5.1% (against 5.2% in October and September, 5.4% in August, 4.9% in July and June, 5.1% in May, 5.2% in April, 5.3% in March, 5.5% in February, 6.5% in January 2022). Forecast for December 2022: 5.1%.
15:00 USD US Services PMI (from ISM)
This indicator assesses the state of the services sector in the US economy. These services sectors (unlike the manufacturing sector) have virtually no impact on the country’s GDP.
A result above 50 is seen as positive for the USD. Forecast for December: 55.5 (against 56.5 in November, 54.4 in October, 56.9 in August, 56.7 in July, 55.3 in June, 55.9 in May, 57.1 in April , 58.3 in March, 56.5 in February, 59.9 in January, 62.0 in December), which is likely to have a generally positive impact on the USD. However, a relative decline in the index, and especially below 50, may have a short-term negative impact on the dollar.
Price chart of EURUSD in real time mode
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