This week, the broad-based US dollar hit its biggest weekly gain in three months. This could be attributed to the growing optimism over economic recovery in the US, which was witnessed after the annual growth of 6.8% in Unit Labor Costs in the US nonfarm business sector during the 4th quarter. Apart from this, the US dollar got some additional support from a rise in longer-term US Treasury yields, which came when traders positioned themselves for a massive fiscal spending package. Conversely, the continued ultra-easy monetary policy of the Federal Reserve was seen as one of the key factors that capped any further gains in the US dollar. Meanwhile, the upbeat market sentiment, lifted by the optimism over Biden’s $ 1.9 trillion COVID-19 relief package and coronavirus (COVID-19) vaccines, also played a key role in capping the gains in the US dollar.

Looking ahead into the coming week, the series of Trade Balance and Unemployment Rate figures, along with Fed Chair Powell and BOE Gov Bailey’s speeches, could drive plenty of headlines to keep the markets on the move. Besides this, the geopolitical tensions and developments concerning US President Joe Biden’s $ 1.9 trillion stimulus will also be closely followed, as they could play a key role in determining risk levels in the market.

Top Economic Events to Watch This Week

1 – CNY – Trade Balance – Monday – Tentative

This data is released by the General Administration of Customs of the People’s Republic of China. It is a measure between exports and imports of total goods and services. A positive value shows a trade surplus; on the flip side, a negative value indicates a trade deficit. It is worth noting that this event can generate some volatility for the CNY, which would have an impact on the Forex market, as the Chinese economy influences the global economy. In simple words, high figures are understood as positive (or bullish) for the CNY; conversely, low figures are seen as negative (or bearish) for the Chinese currency.

Previous Release

ACTUAL: 516.81 B

DEV: —

CONS: —

DATE: 01/14/2021 02:00

2 – German Trade Balance – Tuesday – 2:00 GMT

This data is typically released by the Statistisches Bundesamt Deutschland. It provides a measure of exports and imports of total goods and services. Positive values represent a trade surplus, whereas negative values point towards a trade deficit. This event can generate volatility for the Euro, which in turn would affect the Forex market, as the European economy has an impact on the global economy. If a steady demand in exchange is seen in German exports, this will turn into positive growth in the trade balance, which should be bullish for the EUR. Conversely, low figures are considered negative (or bearish) for the EUR.

Previous Release

ACTUAL: € 16.4 B

DEV: -0.69

CONS: € 18 B

DATE: 01/08/2021 07:00

3 – Consumer Price Index (YoY) – Tuesday – 20:30 GMT

This data is released by the National Bureau of Statistics of China. It indicates retail price variations within a representative basket of goods and services. The result is a complete review of the results extracted from the rural consumer price index and the urban consumer price index. As we know, the purchasing power of the CNY is dragged down by inflation. The CPI is seen as a critical indicator to measure inflation and changes in purchasing trends. A substantial increase in the consumer price index would indicate that inflation has become a destabilizing factor in the Chinese economy, potentially prompting The People’s Bank of China to tighten monetary policy and fiscal policy risk. Put simply, an upward reading is considered positive (or bullish) for the CNY and a downward reading is seen as negative (or bearish) for the CNY.

Previous Release

ACTUAL: 0.2 %

DEV: 0.46

CONS: 0.1 %

DATE: 01/11/2021 01:30

4 – Producer Price Index (YoY)

This data is normally released by the National Bureau of Statistics of China. It provides a measure of the rate of inflation from the point of view of the producers. It records the average changes in prices received by Chinese domestic producers of commodities at all processing stages (crude materials, intermediate materials and finished goods). Changes in the PPI are broadly understood as a key indicator of commodity inflation. If the increase in the producer price index is excessive, it indicates that inflation has become a destabilizing factor in the Chinese economy; the People’s Bank of China would then tighten the monetary policy and the fiscal policy risk. Basically, a higher reading is considered positive (or bullish) for the CNY, while a downward reading is understood as negative (or bearish) for the Chinese currency.

Previous Release

ACTUAL: -0.4 %

DEV: 2.00

CONS: -0.8 %

DATE: 01/11/2021 01:30

5 – Consumer Price Index (MoM) – Wednesday – 8:30 GMT

This data is released by the US Bureau of Labor Statistics. It gauges price movements by comparing the retail prices of a representative shopping basket of goods and services. As we know, the purchasing power of the greenback is influenced by the inflation rate. Therefore, the CPI is understood as a key measure of inflation and changes in purchasing trends. Thus, an upward trend is seen as positive (or bullish) for the greenback; conversely, lower figures are seen as negative (or bearish) for the US dollar.

Previous Release

ACTUAL: 0.4 %

DEV: 0.00

CONS: 0.4 %

DATE: 01/13/2021 13:30

6 – BoE’s Governor Bailey’s speech – Wednesday – 12:00 GMT

Andrew Bailey is the current governor of the Bank of England. He took office on March 16, 2020, at the end of Mark Carney’s session. Before his appointment, Governor Bailey worked as the Chief Executive of the Financial Conduct Authority.

This British central banker was also the Deputy Governor of the Bank of England from April 2013 to July 2016 and the Bank of England’s Chief Cashier from January 2004 until April 2011. As governor of the central bank, he controls short-term interest rates. As a result, he has more influence over the value of the nation’s currency than any other person. 

Traders closely observe his public engagements, as they are usually used to leave detailed clues regarding future monetary policy. A hawkish tone is seen as bullish for the GBP; on the other hand, a dovish tone is considered bearish for the British Pound.

7 – Unemployment Rate – Thursday – 8:30 GMT

This data is typically released by the US Department of Labor. It measures the number of unemployed workers divided by the total civilian labor force. Rate hikes indicate a lack of expansion within the US labor market; this, in turn, tends to weaken the US economy. Therefore, a low reading is seen as positive or bullish for the USD, whereas a high figure is seen as negative (or bearish) for the greenback.

Previous Release

ACTUAL: 812 K

DEV: -0.32

CONS: 875 K

DATE: 01/28/2021 13:30

8 – Gross Domestic Product (QoQ) – Friday – 2:00 GMT

The Office for National Statistics releases this data, which provides a measure of the total value of all goods and services produced in the United Kingdom. The GDP is seen as a key measure of economic activity in the UK. In simple words, a rising trend has a bullish impact on the GBP; conversely, a low reading is seen as bearish for the Pound Sterling.

Previous Release

ACTUAL: 16 %

DEV: 1.38

CONS: 15.5 %

DATE: 12/22/2020 07:00

9 – Goods Trade Balance:

This data is also released by the Office for National Statistics. It measures the balance between exports and imports of goods. Positive values reflect a trade surplus, while negative values indicate a trade deficit. This data is seen as a key factor that can generate some volatility for the GBP. If a steady demand in exchange is seen for UK exports, it will result in bullish growth in the trade balance, which is seen as positive for the British Pound; conversely, low figures are seen as negative (or bearish) for the British currency.

Previous Release

ACTUAL: £ -16.012 B

DEV: -5.77

CONS: £ -10.175 B

DATE: 01/15/2021 07:00