The US dollar will end this week on a bullish track, as the global stock market remains depressed due to multiple negative concerns, which have boosted the safe-haven demand for the US currency. Meanwhile, the gains in the US dollar could also be associated with the economic data from the US, which wasn’t as bad as feared. However, the concerns about a short squeeze in terms of hedge funds, worries about corporate earnings and delays in coronavirus vaccinations have stopped the bullish rally in global equities, which could continue to lift the dollar in the short term.

On the international front, the long-lasting Sino-American tussle has also been playing a major role in supporting the safe-haven US dollar. Another factor that might also be hurting the market sentiment could be the fears of a global economic recession, even though coronavirus vaccinations are on the way. This could be attributed to the fears of the slow rate of immunization and a lack of remedies that tackle both virus variants, namely the UK and South African mutations.

Looking ahead into the coming week, the Manufacturing PMI and Unemployment Rate figures, along with Monetary Policy Statements and RBA Gov Lowe’s speech, could drive plenty of headlines to keep the markets on the move. The geopolitical tensions and developments concerning US President Joe Biden’s $ 1.9 trillion stimulus package will also be closely followed across the ocean. All of these factors could play a key role in determining risk levels in the market.

Top Economic Events to Watch This Week

1. – ISM Manufacturing PMI – Monday – 10:00 GMT

This data is typically released by the Institute for Supply Management. It reflects the business conditions in the US manufacturing sector. It is a key indicator of the overall economic situation in the US. Results above 50 are seen as bullish for the USD, while readings below 50 are considered negative or bearish for the greenback.

Previous Release
ACTUAL: 60.7
DEV: 2.60
CONS: 56.6
DATE: 01/05/2021 23:00

2. – RBA Interest Rate Decision – Monday – 22:30 GMT

This decision is announced by the Reserve Bank of Australia. If the sentiment of the RBA is hawkish regarding the economic outlook in Australia, and increases the interest rates as a result, it is considered a bullish or positive sign for the AUD. Alternatively, if the RBA has a dovish outlook on the Australian economy, and keeps the ongoing interest rate or cuts it, it is understood as bearish for the Aussie.

Previous Release
ACTUAL: 0.1 %
DEV: 0.00
CONS: 0.1 %
DATE: 12/01/2020 11:30

3. – NZD Employment Change – Tuesday – 16:45 GMT

This data is typically released by Statistics New Zealand. It measures any changes in the number of employed people in New Zealand. In simple words, a hike in this indicator leaves a positive impact on consumer spending, which in turn stimulates economic growth. Thus, a high reading is understood as bullish for the NZ dollar; conversely, a low reading is considered bearish.

Previous Release
ACTUAL: -0.8 %
DEV: 0.00
CONS: -0.8 %
DATE: 11/04/2020 05:45

ii) – Unemployment Rate:

This data is also typically released by Statistics New Zealand. It measures the number of unemployed workers divided by the total civilian labor force. A hike in the rate indicates a lack of expansion within the New Zealand labor market. Therefore, a rise leads to weakening of the New Zealand economy. Thus, low readings are understood as bullish for the NZ dollar; on the other hand, high readings are considered bearish.

Previous Release
ACTUAL: 5.3 %
DEV: -0.15
CONS: 5.4 %
DATE: 11/04/2020 05:45

4. – RBA Gov Lowe’s Speech – Tuesday – 20:30 GMT

Philip Lowe has replaced Glenn Stevens as governor of Australia’s central bank. Previously, Lowe was the Deputy Governor of Australia’s Reserve Bank, a position he held from February 2012. Being head of the central bank, which controls short term interest rates, he now has more control over the value of the AUD than any other person. A dovish tone surrounding the Australian economic outlook is understood as bearish for the AUD. To the contrary, a hawkish tone is considered a bullish or positive factor.

5. – ADP Employment Change – Wednesday – 8:15 GMT

This data is normally released by Automatic Data Processing Inc. It provides a measure of the change in the number of employed people in America. Put simply, an increase in this indicator leaves a positive impact on consumer spending, which stimulates US economic growth. Therefore, high figures are seen as positive or bullish for the US currency; conversely, low figures are seen as negative or bearish for the US currency.

Previous Release
ACTUAL: -123 K
DEV: -0.43
CONS: 88 K
DATE: 01/06/2021 21:15

ii) – ISM Services PMI:

This data is typically released by the Institute for Supply Management (ISM). It indicates business conditions in the US non-manufacturing sector. It is worth mentioning that the non-manufacturing sector does not influence the GDP, either positively or negatively, as much as the ISM Manufacturing does. Results above 50 are understood as bullish for the USD, whereas readings below 50 are taken as negative or bearish for the greenback.

Previous Release
ACTUAL: 57.2
DEV: 1.82
CONS: 54.6
DATE: 01/07/2021 23:00

6. – Bank of England Monetary Policy Report – Thursday – 7:00 GMT

i) – The Bank of England typically releases this report after the end of every quarter. It provides a complete economic analysis and the inflation projections on which the Bank’s Monetary Policy Committee bases its interest rate decisions, and presents an assessment of the possibilities for UK inflation over the following two years. Therefore high figures are seen as positive or bullish for the GBP and conversely, low figures are negative for the GBP currency.
ii) – BoE Interest Rate Decision:
This decision is released by the Bank of England. If the BoE’s attitude is hawkish regarding the economic outlook in the UK, and it therefore raises the interest rates, this is considered as positive or bullish for the GBP. Conversely, a dovish outlook and continuation of the ongoing interest rate or cuts in the interest rate, are understood as negative or bearish.Previous Release
ACTUAL: 0.1 %
DEV: 0.00
CONS: 0.1 %
DATE: 12/17/2020 20:00

7. – CAD Employment Change – Friday – 8:30 GMT

This data is typically released by Statistics Canada. It is a measure of the change in the number of employed people in Canada. An increase in this indicator has positive implications for consumer spending, which stimulates economic growth. Hence, a high reading is seen as positive or bullish for the CAD; conversely, low readings are seen as negative.

Previous Release
ACTUAL: -62.6 K
DEV: -0.39
CONS: -27.5 K
DATE: 01/08/2021 21:30

ii) – CAD Unemployment Rate:

This data is typically released by Statistics Canada. It measures the number of unemployed workers divided by the total civilian labor force. Rate hikes indicate a lack of expansion within the Canadian labor market, which is a leading indicator of the Canadian economy. Thus, a rise in the figures tends to weaken the Canadian economy. In simple words, a low reading is seen as positive or bullish for the CAD, whereas a high figure is seen as negative or bearish.

Previous Release
ACTUAL: 8.6 %
DEV: 0.00
CONS: 8.6 %
DATE: 01/08/2021 21:30

8. – Non-Farm Employment Change – Friday – 8:30 GMT

This data is normally released by the US Bureau of Labor Statistics. It shows the number of new jobs created during the previous month in all non-agricultural businesses. Any change in the monthly payrolls can be extremely volatile, due to the close relationship with US economic policy decisions made by the Central Bank. Therefore, a high reading is seen as positive or bullish for the USD and a low reading is seen as negative
Previous Release
ACTUAL: -140 K
DEV: -1.47
CONS: 71 K
DATE: 01/08/2021 21:309. – ECB Monetary Policy Statement and Press Conference – Thursday – 13:30 GMT

After the ECB’s economic policy decision, the ECB President holds a press conference about monetary policy. His comments usually affect the volatility of the Euro and determine a short-term positive or negative bias. Thus, a hawkish outlook is seen as positive or bullish for the Euro; conversely, a dovish view is seen as negative or bearish.

10. – German Flash Manufacturing PMI – Friday – 8:30 GMT

This data is typically released by Markit economics. It examines business conditions in the European manufacturing sector. The manufacturing PMI is seen as the critical indicator of business conditions and the overall economic conditions in Germany, as the manufacturing sector dominates a large part of the total GDP. Thus, a high reading, above 50, is seen as bullish for the EUR, whereas a low reading, below 50, is seen as bearish.

Previous Release
ACTUAL: 58.3
DEV: -0.26
CONS: 58.6
DATE: 01/04/2021 08:55ii) French Flash Services PMI:

This data is typically released by Markit Economics, based on many private sector manufacturing and services companies. The data is normally released on the 3rd working day of each month. Each result is weighted according to the size of the company and its contribution to the total manufacturing or services output accounted for by the sub-sector to which that company belongs. The results are presented according to the questions asked, showing the percentage of respondents reporting an improvement, a deterioration or no change since the previous month. A figure above 50.0 indicates industry development; conversely, a figure below 50.0 shows industry contraction.

Previous Release
ACTUAL: 49.1
DEV: -0.43
CONS: 49.8
DATE: 01/06/2021 09:00