The broad-based US dollar will end this week on the bullish track, as the hopes of larger government borrowing pushed the benchmark 10-year US Treasury yields higher, which eased the bearish pressure surrounding the US dollar. Apart from this, the upticks in the US dollar could also be associated with the upbeat US economic data, which showed better performance of the US economy over the last few weeks. Conversely, the gains in the US dollar could be short-lived or temporary, as the prevalent upbeat mood tends to undermine the safe-haven assets, like the US dollar. However, the upbeat mood came after Wall Street hit record highs on the previous day, while bond prices dropped as markets bet on the new Democratic-controlled US government leading to heavy spending and borrowing, to support the country’s economic recovery.

Looking ahead into the coming week, the series of Consumer Price Index and Unemployment Claims, along with the BOC Business Outlook Survey and the speech by MPC Member Broadbent, could drive plenty of headlines to keep the markets on the move. The geopolitical tensions and the coronavirus (COVID-19) headlines will also be closely followed across the ocean, as they could play a key role in determining risk levels in the market.

Top Economic Events to Watch This Week

1): BOC Business Outlook Survey – Monday – 14:30 GMT

This Survey is released by the Bank of Canada. It reflects the business conditions in Canada. Business Confidence allows analysis of the economic situation in the short term, through interviews with 100 business officials. Positive views expressed by these executive are considered bullish for the CAD; conversely, a gloomy outlook is seen as negative or bearish for the CAD.

2): CNY – Consumer Price Index – Monday – 1:30 GMT

This data is released by the National Bureau of Statistics of China. It is a measure of retail price variations within a representative basket of goods and services. The result is a complete summary of the results obtained from the rural and urban consumer price indices. As we know, the purchasing power of the CNY is dragged down by inflation. So, the CPI is an important indicator to measure inflation and changes in purchasing trends. A rise in the consumer price index would indicate that inflation has become a destabilizing factor in the economy, which would urge the People’s Bank of China to tighten their monetary policy and fiscal policy risk. High readings are considered as bullish for the CNY, while low readings are seen as Bearish for the CNY.

Previous Release
ACTUAL: -0.5 %
DEV: -3.69
CONS: 0 %
DATE: 12/09/2020 01:30

ii): Producer Price Index (YoY):

This data is typically released by the National Bureau of Statistics of China. It shows the rate of inflation encountered by producers and captures the average changes in prices received by Chinese domestic producers of commodities in all processing stages (crude materials, intermediate materials, and finished goods). Changes in the PPI are seen as a leading indicator of commodity inflation.

If the Producer Price Index increases too much, it indicates that inflation has become a destabilizing factor in the Chinese economy, which would, in turn, urge the People’s Bank of China to tighten their monetary policy and fiscal policy risk. High figures are seen as bullish for the CNY; on the flip side, low figures are seen as Bearish for the CNY.

Previous Release
ACTUAL: -1.5 %
DEV: 1.74
CONS: -1.8 %
DATE: 12/09/2020 01:30

3): MPC Member Broadbent Speaks – Tuesday – 10:00 GMT

Dr. Ben Broadbent joined the Monetary Policy Committee of the Bank of England in 2011. He was previously an Economic Adviser at the HM Treasury and Assistant Professor of Economics at Columbia University from 1997-2000. For the decade before his appointment to the MPC, Dr. Broadbent was Senior European Economist at Goldman Sachs, during which time he researched and wrote widely on the UK economy and monetary policy. Therefore, more hawkish than expected will be good for the GBP currency.

4): Consumer Price Index (MoM) – Wednesday – 13:30 GMT

This data is released by the US Bureau of Labor Statistics. It is a measure of price movements, by comparing the retail prices of a representative shopping basket of goods and services. The purchasing power of the US Dollar is dragged down by inflation. The CPI is a leading indicator to measure inflation and changes in purchasing trends. In simple words, high figures are considered as positive for the USD, whereas low figures are seen as bearish for the currency.

Previous Release
ACTUAL: 0.2 %
DEV: 0.00
CONS: 0.2 %
DATE: 12/10/2020 13:30

ii): – Consumer Price Index ex Food & Energy (MoM):

This data is normally released by the US Department of Labor Statistics. It is a measure of price movements, by comparing the retail prices of a representative shopping basket of goods and services. Volatile products, such as food and energy, are excluded, in order to capture an accurate calculation. In simple words, high figures are considered as positive for the USD while low figures are seen as bearish for the currency.

Previous Release
ACTUAL: 0.2 %
DEV: 0.50
CONS: 0.1 %
DATE: 12/10/2020 13:30

5): US Unemployment Claims – Thursday – 13:30 GMT

Initial Jobless Claims:

This data is normally released by the US Department of Labor. It is a measure of the number of people filing first-time claims for state unemployment insurance. A larger-than-expected number shows weakness in this US labor market, which leaves a negative impact on the strength and direction of the US economy. Conversely, a low reading is seen as positive or bullish for the greenback.

Previous Release
ACTUAL: 787 K
DEV: -0.15
CONS: 800 K
DATE: 01/07/2021 13:30

6): Trade Balance CNY – Thursday – Tentative

This data is released by the General Administration of Customs of the People’s Republic of China. It shows the balance between exports and imports of total goods and services. Positive values show a trade surplus, and negative values indicate a trade deficit. This data is seen as the key factor that creates some volatility for the CNY. Since the Chinese economy influences the global economy, this economic indicator impacts the whole Forex market. High figures are seen as positive for the CNY, whereas low figures are considered negative or bearish for the CNY.

Previous Release
ACTUAL: 507.1 B
DEV: —
CONS: —
DATE: 12/07/2020 02:00

7): Fed Chair Powell Speaks – Thursday – 17:30 GMT

Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term, which expires in February 2022. His term as a member of the Board of Governors will expire on January 31, 2028. Powell previously served as an assistant secretary and as undersecretary of the Treasury under President George W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group. As leader of the central bank, which controls short-term interest rates, he has more control over the country’s currency value than any other person. If his speech is more hawkish than expected, it is seen as positive or bullish for the USD currency; conversely, a dovish tone is considered as bearish for the USD currency.

8): UK Gross Domestic Product (MoM) – Friday – 7:00 GMT

This data is normally released by National Statistics. It is a measure of the total value of all goods and services rendered by Britain. The GDP is seen as a key measure of UK economic activity. In simple words, high figures are a positive signal for the British Pound, and low readings are considered negative or bearish for the GBP.

Previous Release
ACTUAL: 0.4 %
DEV: 0.00
CONS: 0.4 %
DATE: 12/10/2020 07:00

9): Goods Trade Balance – Friday – 7:00 GMT

This data is released by National Statistics, which is a balance between exports and imports of goods. Positive numbers indicate a trade surplus; conversely, negative values suggest a trade deficit. This data is seen as a key factor that creates some volatility for the GBP. If a steady demand is seen in the exchange for UK exports, that would turn into a positive growth in the trade balance, which would be seen as positive or bullish for the GBP. Conversely, low figures are considered as negative or bearish for the GBP.

Previous Release
ACTUAL: £-12 B
DEV: -0.98
CONS: £-9.6 B
DATE: 12/10/2020 07:00