The broad-based US dollar is on the back foot during holiday-thinned trading, and it will end this week on the bearish track, as optimism over the coronavirus vaccines and the US stimulus package have urged investors to put their money in riskier assets, rather than safe-havens. Apart from this, the losses in the US dollar could also be associated with doubts over US economic recovery from the COVID-19 pandemic. In addition to this, the developments surrounding the imminent Brexit deal have also played a major role in undermining the US dollar.

In the absence of any key data/events in the coming week, the market traders will keep their eyes on the CPI data series, along with the EIA Crude Oil stockpiles report and the US Unemployment Claims. In the meantime, the risk catalysts, like geopolitics and the virus woes, not to forget the Brexit, will not lose their importance, and could play a key role in determining risk levels in the market.

Top Economic Events to Watch This Week

1) European Retail Sales (YoY) – Monday – 08:00 GMT

DATE: 12/23/2020 15:305. Non-Manufacturing PMI – Thursday – 01:00 GMT

This data is released by the China Federation of Logistics and Purchasing (CFLP), based on a survey of approximately 1,200 companies, covering 27 industries, including transport, construction and telecommunications. It is the level of a diffusion index based on surveyed purchasing managers in the services industry. Figures above 50.0 indicate industry expansion, which is seen as positive or bullish for the CNY currency; conversely, readings below 50.0 indicate industry contraction, which is seen as negative or bearish for the CNY.

Previous Release
ACTUAL: 56.4
DEV: 0.97
CONS: 52.1
DATE: 11/30/2020 01:00

NBS Manufacturing PMI:

This data is normally released by the China Federation of Logistics and Purchasing (CFLP), which measures business conditions in the Chinese manufacturing sector. A reading above 50 indicates expansion; conversely, a reading below 50 indicates industry contraction. Since the Chinese economy dominates the global economy, this economic indicator would impact the Forex market.

Previous Release
ACTUAL: 52.1
DEV: 0.75
CONS: 51.5
DATE: 11/30/2020 01:00

6. Initial Jobless Claims – Thursday – 13:30 GMT

This data is released by the US Department of Labor, which records the number of people filing first-time claims for state unemployment insurance. It provides a measure of strength in the labor market. A larger-than-expected number indicates contraction in this US market, which influences the strength and direction. Low figures are seen as positive or bullish for the USD currency. Conversely, high figures are seen as negative or bearish for the USD currency.

Previous Release
ACTUAL: 803 K
DEV: -1.29
CONS: 885 K
DATE: 12/23/2020 13:30

7. Friday – Banks are closed due to New Year’s Day.

The global financial markets and banks will be closed in observance of New Year’s Day. Most Forex brokers remain open for every holiday except Christmas and New Year’s Day. Stock markets and banks have slightly different holiday schedules. Banks facilitate the majority of foreign exchange volume. When they are closed, the market is less liquid, and speculators become a more dominant market influence. This can lead to both abnormally low and abnormally high volatility.

Good luck, and enjoy your long weekend!