Influential Events For The Upcoming Week

Spotlight on FOMC Minutes and December Jobs Report

In a New Year holiday shortened week and amid thin year-end liquidity conditions, the US Dollar performance remain mixed against other major currencies. The overall US Dollar Index (I.USDX), however, inched higher, primarily lead by its strong gains against EUR, to erase most of its previous week’s loss.

Heading into the first full week of 2014, investors will now be keenly watching the key US monthly jobs report and minutes from the US Fed Reserve’s most recent meeting, when it decided to taper the pace of its massive monetary stimulus of $85 billion monthly bond-purchase program by $10 billion.

US monthly jobs report, popularly known as NFP, has always been the most keenly watched economic announcement from the US especially when the Fed has tied its monetary stimulus decision on the incoming economic data and labor market conditions. Investors are keen to see whether the recent strength in the US labor market continued in December and hence, December US payrolls report, scheduled for release on Friday, remains the spotlight of this week’s economic events from US. The US Labor Department’s monthly jobs report for the month of December is expected to show an addition of 194K new jobs in December, down from 203K jobs in November, while the unemployment rate could possibly rise from its current rate of 7.0%.

Meanwhile, the FOMC minutes from the Federal Reserve’s last meeting in December, scheduled for release on Wednesday, could throw some light over the factors that drove the central bank’s decision to taper its stimulus program and provide further clues about the Fed’s future plan to end bond purchases.

Preceding the official monthly jobs report, ADP report, that provides an estimated change in the number of people employed in private-sector and is viewed as a guidance to the official monthly jobs report, is scheduled for release on Wednesday. The ADP report is expected to show an addition of 199K private-sector jobs in December, down from a surprisingly higher-than-expected 215K jobs added in November.

A healthy employment figure in December could spur expectation of the Fed considering to trim the pace of bond purchases for a second time at its first meeting of 2014, on Jan. 28-29, triggering another leg of renewed strength for the US Dollar.

Other important economic reports, including the ISM non-manufacturing PMI data, scheduled for release on Monday, along with the trade balance data on Tuesday are likely to support the optimistic view of the ongoing US economic recovery. Check-out the Forex Calendar for comprehensive list of economic events

Focus on ECB and BoE

In addition to the US jobs report, economic events that will be on investors watch-list and might guide the Forex market this week includes the announcement of monetary policy decision by the European Central Bank (ECB) and the Bank of England (BoE).

Just ahead of the announcement of ECB’s monetary policy decision on Thursday, a weaker Euro-zone inflation figure for December, scheduled for release on Tuesday, might prompt ECB to announce further accommodative measure in the near-future. However, market participants are not expecting any policy action from the week’s ECB meeting on Thursday. However, markets’ main focus will be on the ECB President, Mario Draghi’s press conference, schedule later on Thursday after the rate decision announcement, where Draghi’s comments on the state of the economy usually drives the Euro significantly. Any hints to further ease the monetary policy stance is likely act as an additional drag for the Euro.

Also on Thursday, BoE is expected to keep its key interest rates and asset purchase program, that currently stands at 375 billion pounds, unchanged. Meanwhile, important economic release that concludes this week’s UK economic calendar features the release of Manufacturing and Industrial production data, scheduled on Friday. A status-quo monetary policy by the BoE might be supportive for GBPUSD. However, any disappointment from economic data front is likely to restrict any major up-move for the pair. Technical studies suggest that the pair could possibly extend last week’s corrective pull-back towards 1.6200 level.

READ: Technical Update – EURUSD, GBPUSD, USDCHF

Meanwhile, notable economic release from Australian economic calendar, that could have a material impact on the Australian Dollar, includes Trade Balance data on Tuesday and the release of Retail Sales and Building Approvals data, scheduled on Thursday. Weaker-than-expected readings would weigh on AUDUSD, that registered its first weekly gains since mid-Oct.