The 1st Week Ahead of 2021: 4th – 8th January 2021

Overview for the Week Ahead

Asia

Asian shares resumed their ascent on Monday as investors pinned their hope on vaccines to eventually deliver a global economic upturn, even as a possible tightening in virus rules for Tokyo pulled Japanese stocks off 30-year highs.

Japan’s Nikkei shed early gains, falling 0.4% after Prime Minister Yoshihide Suga confirmed the government was considering a state of emergency for Tokyo and three surrounding prefectures.

U.S.

It’s a relatively busy week ahead on the economic data front.

December ISM Manufacturing and Service PMI figures for December are due out on Tuesday and Thursday.

While we expect sensitivity to the manufacturing numbers, the Services PMI will be the key driver.

Expect initial jobless claims figures on Thursday to also draw attention ahead of December NFP numbers on Friday.

With labour market numbers in focus, expect nonfarm payroll figures and the unemployment rate to have the greatest impact.

Other stats include ADP nonfarm employment change, finalized Markit private sector PMI numbers, and factory orders.

The Dollar Spot Index ended the week down by 0.32% to 89.937.

Europe

December manufacturing PMI figures for Spain and Italy are due out at the start of the week.

Expect Italy’s manufacturing PMI to draw the greatest interest. With finalised manufacturing from France, Germany, and the Eurozone also due out, any revisions will also provide direction.

On Tuesday, the focus shifts to retail sales and unemployment figures from Germany.

With consumption key to economic recovery, both will provide the EUR with direction.

On Wednesday, Service sector PMIs for Italy and Spain are due out along. Barring dire numbers, however, the focus will be on finalized numbers from France, Germany, and the Eurozone.

Through the 2nd half of the week, the German economy remains in the spotlight.

November factory orders, industrial production, and trade data are due out on Thursday and Friday.

On Friday, French consumer spending figures for November will also draw attention.

The EUR ended the week up by 0.18% to $1.2215.

U.K.

Economists expect the UK economic recovery in 2021 to be slower than in peer countries, because of a lower starting point, a larger services sector, low business investment and the impact of Brexit.

More restrictions are likely in the U.K. as the virus variant spreads in England. Prime Minister Boris Johnson says curfews, school closings could be part of tougher restrictions.

The Pound ended the week up by 0.83% to $1.3672.

COVID-19

COVID-19 continues to disrupt around the world. It looks like stricter measures will be rolled out in the coming days. The long-term impact of COVID-19 pandemic is yet to be determined however it is fair to say that the pandemic has had a detrimental impact on trade flows, financial markets and the worldwide economy in general.

All these events and more have the potential to influence the markets which means there is plenty of trading opportunities.

Today’s High Impact Events

The times below are GMT+2.

Monday 4^th January

All-Day OPEC-JMMC Meetings

Tuesday 5^th January

17.00 – U.S. ISM Manufacturing PMI & Manufacturing Prices

Potential instruments to Trade: USD Crosses. 

Wednesday 6^th January

15.15 – U.S. ADP Non-Farm Employment Change

Potential instruments to Trade: USD Crosses. 

16.00 – U.K. BOE Gov. Bailey Speaks

Potential instruments to Trade: GBP Crosses. 

21.00 – U.S. FOMC Meeting Minutes

Potential instruments to Trade: USD Crosses. 

Thursday 7^th January

15.30 – U.S. Unemployment Claims & Trade Balance

Potential instruments to Trade: USD Crosses. 

17.00 – Canada Ivey PMI & PMI Services

Potential instruments to Trade: CAD Crosses. 

Friday 8^th January

15.30 – Canada Employment Change & Unemployment Rate

Potential instruments to Trade: CAD Crosses. 

17.00 – U.S. Average Hourly Earnings m/m, Non-Farm Employment Change & Unemployment Rate

Potential instruments to Trade: USD Crosses. 

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