Forex News – Week ahead – US nonfarm payrolls will be key driver for dollar, ECB and BoE in focus
January 6, 2014 10:43 am
It will be a busy week as the first full trading week of 2014 kicks off with several key risk events.
Monday began with releases of Euro zone services PMI data. The Markit services PMI final reading for December was unchanged at 51.0 and in line with expectations while the composite PMI was also unchanged at 52.1. On a country-by-country basis, German, French and Spanish PMI all rose, except Italian PMI, which unexpectedly fell.
On Tuesday, the major event of the day will be the US Senate vote to pass or reject the nomination of Janet Yellen as Federal Reserve Chairperson for a term, from Feb 2014 – January 2018. Yellen has been nominated to replace outgoing Chairman Ben Bernanke.
On Wednesday, Euro zone December retail sales data are due, with forecasts for an increase by 0.2% month-over-month from a previous decline of 0.2%.
During the US session, the FOMC minutes are scheduled to be released. All eyes will be on any further insight into the Fed’s tapering program, after its decision to begin scaling back its $85 billion-a month- bond buying program at its last meeting in December. This event will be a key driver for the US dollar, which has been bolstered recently on the back of this shift in monetary policy by the Fed.
Prior to this, the US ADP jobs data will be watched, as it is usually seen as a precursor to the all-important nonfarm payrolls report due on Friday.
On Thursday, markets will focus on the European Central Bank interest rate decision, especially on Draghi’s press conference that follows. Rates are expected to remain on hold, due to the fact that in late December, Draghi said he saw no immediate need to cut rates. This has helped support the euro from any sharp declines. The main interest rate is currently at 0.25%.
The Bank of England is also scheduled to release its interest rate decision on Thursday. While there is growing speculation that the BoE will begin to raise rates in the near future, there are no expectations for a rate change at this meeting, neither a change to the asset purchase program. The main interest rate is at 0.25% while the asset purchase program is at 375 billion pounds.
In the US session, weekly US jobless claims data will be watched. Forecasts are generally for a drop to 337,000 from 339,000.
On Friday, the all-important US nonfarm payrolls report will be released. This will be a key driver for the US dollar as the Federal Reserve closely watches developments in the US labour market in order to decide on tapering its stimulus program. The US economy is forecast to have added between 194,000 and 197,000 jobs in December based on various estimates, compared to 203,000 in November.
It will be a busy week as the first full trading week of 2014 kicks off with several key risk events.
Monday began with releases of Euro zone services PMI data. The Markit services PMI final reading for December was unchanged at 51.0 and in line with expectations while the composite PMI was also unchanged at 52.1. On a country-by-country basis, German, French and Spanish PMI all rose, except Italian PMI, which unexpectedly fell.
On Tuesday, the major event of the day will be the US Senate vote to pass or reject the nomination of Janet Yellen as Federal Reserve Chairperson for a term, from Feb 2014 – January 2018. Yellen has been nominated to replace outgoing Chairman Ben Bernanke.
On Wednesday, Euro zone December retail sales data are due, with forecasts for an increase by 0.2% month-over-month from a previous decline of 0.2%.
During the US session, the FOMC minutes are scheduled to be released. All eyes will be on any further insight into the Fed’s tapering program, after its decision to begin scaling back its $85 billion-a month- bond buying program at its last meeting in December. This event will be a key driver for the US dollar, which has been bolstered recently on the back of this shift in monetary policy by the Fed.
Prior to this, the US ADP jobs data will be watched, as it is usually seen as a precursor to the all-important nonfarm payrolls report due on Friday.
On Thursday, markets will focus on the European Central Bank interest rate decision, especially on Draghi’s press conference that follows. Rates are expected to remain on hold, due to the fact that in late December, Draghi said he saw no immediate need to cut rates. This has helped support the euro from any sharp declines. The main interest rate is currently at 0.25%.
The Bank of England is also scheduled to release its interest rate decision on Thursday. While there is growing speculation that the BoE will begin to raise rates in the near future, there are no expectations for a rate change at this meeting, neither a change to the asset purchase program. The main interest rate is at 0.25% while the asset purchase program is at 375 billion pounds.
In the US session, weekly US jobless claims data will be watched. Forecasts are generally for a drop to 337,000 from 339,000.
On Friday, the all-important US nonfarm payrolls report will be released. This will be a key driver for the US dollar as the Federal Reserve closely watches developments in the US labour market in order to decide on tapering its stimulus program. The US economy is forecast to have added between 194,000 and 197,000 jobs in December based on various estimates, compared to 203,000 in November.
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