UPDATE: Major economic data releases are set to impact currency markets this week, with critical reports on manufacturing, employment, and inflation expected from January 5-9, 2024. Investors are closely monitoring the ISM manufacturing PMI in the U.S. on Monday, as the economic landscape shifts.
Tuesday will see the release of the services PMI data from the Eurozone, the U.K., and the U.S., which could further influence market sentiment. On Wednesday, inflation data from Australia and the Eurozone will be key, alongside the U.S. ADP nonfarm employment change and ISM services PMI.
Thursday brings important inflation data from Switzerland, including the consumer price index (CPI), while the U.S. will publish weekly unemployment claims. Friday is packed with labor market data, including Canada’s employment change and unemployment rate, along with significant U.S. reports on average hourly earnings, nonfarm payrolls, and the unemployment rate.
Analysts anticipate average hourly earnings to rise by 0.3% month-over-month, compared to 0.1% previously, while nonfarm payrolls are projected to grow by 57,000, down from 64,000. The unemployment rate is expected to slightly decrease from 4.6% to 4.5%.
In Australia, the consensus for CPI is set at 0.1% month-over-month, with the annual rate expected to hold steady at 3.7%, down from 3.8%. Westpac analysts highlight a significant 16% surge in electricity prices as a major contributor to this month’s anticipated results.
In Switzerland, CPI is forecasted at 0.0% month-over-month, compared to a prior reading of -0.2%. The Swiss National Bank (SNB) maintains a target inflation range of 0-2%, with Chairman Schlegel indicating that lower inflation does not necessarily imply a return to negative interest rates.
The upcoming jobs data from Canada will be closely watched ahead of the Bank of Canada’s policy meeting in January. Following robust labor market results in the fall, December’s figures are expected to reveal a modest decline in employment, reversing part of November’s significant gains. Analysts at RBC suggest this correction is not indicative of a broader deterioration in labor conditions.
In the U.S., hiring trends have been sluggish, with a notable increase in the unemployment rate above the Fed’s neutral level. Recent payroll growth has stagnated, and while December’s jobs report is expected to provide clarity as standard data collection resumes, analysts remain cautious. Wells Fargo analysts do not foresee further deterioration in the labor market, but wage growth is anticipated to remain subdued, helping to mitigate labor-driven inflation pressures.
As the week unfolds, these key economic indicators will shape market expectations and influence trading strategies. Stay tuned for the latest updates as this story develops.
