The US dollar has closed the year 2024 on a high note. Whether 2025 will follow suit remains to be seen in the coming months. On the very first trading day of 2025, the dollar index rallied, reaching its highest level since November 2022, near 109.50.
If the US Fed leaders decide to pause rather than cut interest rates or completely shift their current monetary policy direction, the dollar’s uptrend may continue.
Inflation indicators, the government bond yield, the interest rate ratio, and the real interest rate level of national currencies are of great importance, as well as crucial macro statistics, such as PMIs, national labor market indicators, and GDP data.
Currently, the US is displaying more encouraging economic indicators, which bolsters the US dollar’s reputation as a safe haven asset. Should there be a rise in economic or geopolitical uncertainty, or if military conflicts escalate or new ones arise, demand for the dollar will likely increase.
From Monday, January 6, market volumes will gradually recover, and traders will resume their activity.
In the upcoming week, 06.01.2025 – 12.01.2025, market participants will focus on the publication of important macro statistics on China, Germany, the eurozone, the US, Australia, and Canada. The primary interest will be the release of US labor market December data on Friday, January 10.
Note: During the coming week, new events may be added to the calendar, and/or some scheduled events may be canceled. GMT time
The article covers the following subjects:
Major Takeaways
- Monday: German CPI.
- Tuesday: eurozone CPI, US services PMI by ISM.
- Wednesday: US ADP report on private sector employment, FOMC December meeting minutes.
- Thursday: eurozone retail sales.
- Friday: Canadian and US labor market December data.
- The key event of the week: US Department of Labor report with December figures.
Monday, January 6
Some countries in Europe celebrate the Catholic holiday of Epiphany. Banks in these countries will be closed, affecting trading volumes, which will be lower than usual.
01:45 – CNY: Caixin China General Services PMI
The Caixin Purchasing Managers’ Index (PMI) is a leading indicator of China’s services sector. Since China’s economy is the second largest in the world, the release of its significant macroeconomic indicators can profoundly influence the overall financial market.
Previous values: 51,5, 52.0, 50.3, 51.6, 52.1, 51.2, 54.0, 52.5, 52.7, 52.5, 52.7 in January 2024, 52.9, 51.5, 50.4, 50.2, 51.8, 54.1, 53.9, 57.1, 56.4, 57.8, 55.0, 52.9 in January 2023.
Although an index value above 50 indicates growth, a relative decline in the indicator may adversely affect the yuan. Since China is the most important trade and economic partner of Australia and New Zealand, a deterioration in Chinese macro data may negatively impact the Australian and New Zealand dollars. Conversely, an increase in Chinese macro figures is usually positive for these currencies.
13:00 – EUR: German Harmonized Index of Consumer Prices (Preliminary Estimate)
The Harmonized Index of Consumer Prices (HICP) is published by the European Statistics and is calculated using a methodology agreed upon by all EU countries. The HICP is an indicator for measuring inflation and is used by the European Central Bank to assess price stability. A positive index result strengthens the euro, while a negative one weakens it.
Previous values YoY: +2.4%, +2.4%, +1.8%, +2.0%, +2.6%, +2.5%, +2.8%, +2.4%, +2.3%, +2.7%, +3.1% in January 2024, +3.8% in December, +2.3% in November, +3.0% in October, +4.3% in September, +6.4% in August, +6.5% in July, +6.8% in June, +6.3% in May, +7.6% in April, +7.8% in March, +9.3% in February, +9,2% in January, +9.6% in December, +11.3% in November, +11.6% in October, +10.9% in September, +8.8% in August, +8.5% in July, +8.2% in June, +8.7% in May, +7.8% in April, +7.6% in March, +5.5% in February, +5.1% in January 2022.
The data suggests that German inflation continues to decelerate, albeit at a slower pace than expected. This situation is putting pressure on the European Central Bank to ease its monetary policy. Figures lower than the previous reading will likely affect the euro negatively. Conversely, the resumption of inflation growth may provoke the appreciation of the euro. The growth of the indicator values is a positive factor for the currency.
If the December data turns out to be better than previous values, the euro may strengthen in the short term.
Tuesday, January 7
07:30 – CHF: Consumer Price Index
The Consumer Price Index (CPI) reflects the retail price trends for a group of goods and services comprising the consumer basket. The CPI is a key gauge of inflation. Additionally, the index has a significant impact on the value of the Swiss franc.
In November, consumer inflation gained +0.7% YoY but declined -0.1% MoM after -0.1% (+0.6% YoY) in October, -0.3% (+0.8% YoY) in September, 0% (+1.1% YoY) in August, -0.2% (+1.3% YoY) in July, 0% (+1.3% YoY) in June, +0.3% (+1.4% YoY) in May, +0.3% (+1.4% YoY) in April, 0% (+1.2% YoY) in February, +0.2% (+1.3% YoY) January 2024, +1.7% in December 2023, +1.4% in November, and +1.7% YoY in October.
An index reading below the forecasted or previous value may weaken the Swiss franc, as low inflation will force the Swiss Central Bank to ease its monetary policy. Conversely, a high reading would be positive for the Swiss franc.
10:00 – EUR: Consumer Price Index. Core Consumer Price Index (Preliminary Release)
The Consumer Price Index (CPI), published by Eurostat, measures the price change of a selected basket of goods and services over a given period. The CPI is a key indicator for evaluating inflation and consumer preferences. A positive indicator result strengthens the euro, while a negative one weakens it.
Previous values YOY: +2.2%, +2.0%, +1.7%, +2.2%, +2.6%, +2.5%, +2.6%, +2.4%, +2.4%, +2.6%, +2.8% in January 2024, +2.9%, +2.4%, +2.9%, +4.3%, +5.2%, +5.3%, +5.5%, +6.1%, +6.1%, +7.0%, +6.9%, +8,5%, +8.6% in January 2023, +9.2%, +10.1%, +10.6%, +9.9%, +9.1%, +8.9%, +8.6%, +8.1%, +7.4%, +7.4%, +5.9%, +5.1% in January 2022.
If the data is worse than the forecasted value, the euro may face a short-term but sharp decline. Conversely, if the data surpasses the forecast and/or the previous value, it could strengthen the euro in the short term. The ECB’s consumer inflation target is just below 2.0%, and the reading suggests that inflation in the eurozone is still high, although the pace of increase is slowing down.
According to an accompanying statement following the ECB’s October meeting, when its leaders decided to cut the benchmark interest rate by 25 basis points, the regulator stated that the disinflation process is underway.
The Core Consumer Price Index (Core CPI) determines the price change of a selected basket of goods and services over a given period and is a key indicator for assessing inflation and consumer preference. Food and energy are excluded from this indicator in order to provide a more accurate assessment. A high result strengthens the euro, while a low one weakens it.
Previous values YOY: +2.7%, +2.7%, +2.7%, +2.8%, +2.9%, +2.9%, +2.9%, +2.7%, +2.9%, +3.1%, +3.3% in January 2024, +3.4%, +3.6% +4.2%, +4.5%, +5.3%, +5.5%, +5.5%, +5.3%, +5.3%, +5.6%, +5.7%, +5.6%, +5.3%, +5.2%, +5.0%, +5.0%, +4.8%, +4.3%, +4.0%, +3.7%, +3.8%, +3.5%, +3.0%, +2.7%, +2.3% in January 2022.
If the December 2024 index figures are weaker than the previous or forecasted value, the euro may be negatively affected. If the data turns out to be better than the forecasted or previous value, the currency will likely grow.
According to recently reported data, the eurozone’s core inflation rate is still high, above the ECB’s target of 2.0%. As a result, the ECB is inclined to maintain high interest rates, which is favorable for the euro in normal economic conditions.
15:00 – USD: US ISM Services Purchasing Managers’ Index
The PMI assesses the state of the US services sector, accounting for about 80% of US GDP. The share of final goods production is about 20% of GDP, including 1% for agriculture and 18% for industrial production. Therefore, the publication of the services sector data significantly impacts the US dollar. An indicator reading above 50 is positive for the currency.
Previous values: 52.1 in November, 56.0 in October, 54.9 in September, 51.5 in August, 51.4 in July, 48.8 in June, 53.8 in May, 49.4 in April, 51.4 in March, 52.6 in February, 53.4 in January 2024, 50.5 in December, 52.5 in November, 51.9 in October, 53.4 in September, 54.5 in August, 52.7 in July, 53.9 in June, 50.3 in May, 51, 9 in April, 51.2 in March, 55.1 in February, 55.2 in January 2023, 49.6 in December, 56.5 in November, 54.4 in October, 56.9 in August, 56.7 in July, 55.3 in June, 55.9 in May, 57.1 in April, 58.3 in March, 56.5 in February, 59.9 in January 2022.
The growth of index values will favorably affect the US dollar. However, a relative decline in the index values and readings below 50 may negatively affect the US dollar in the short term.
Forecast for December: 53.5.
Wednesday, January 8
00:30 – AUD: Consumer Price Index
The Consumer Price Inflation Index, published by the Reserve Bank of Australia and the Australian Bureau of Statistics, gauges retail prices of goods and services in Australia. The CPI is the most significant indicator of inflation and changes in consumer preferences. A high indicator reading is positive for the Australian dollar, while a low reading is negative. Previous indicator values: +2.1% in October and September, +2.7% in August and +1.0% (+3.8% YoY) in Q2 2024, +1.0% (+3.6% YoY) in Q1 2024, +0.6% (+3.4% YoY) in Q4 2023, +1.2% (+5.4% YoY) in Q3, +0.8% (+6.0% YoY) in Q2, +1.4% (+7.0% YoY) in Q1 2023, +1.9% (+7.8% YoY) in Q4 2022, +1.8% (+7.3% YoY) in Q3, +1.8% (+6.1% YoY) in Q2 2022, +2.1% (+5.1% YoY) in Q1 2022, +1.3% (+3.5% YoY) in Q4, +0.8% (+3.0% YoY) in Q3, +0.8% (+3.8% YoY) in Q2, +0.6% (+1.1% YoY) in Q1 2021.
e Australian central bank’s CPI inflation target ranges between 2% and 3%. According to the minutes of a recent RBA Board meeting, the bank may need to increase interest rates over time to bring inflation back to the target range and take further measures in the coming months to stabilize monetary conditions in Australia.
Now, the RBA, like most of the world’s other major central banks, is facing persistently high inflation.
The expected positive CPI reading will likely strengthen the Australian dollar. If the indicator readings are worse than the forecast or the previous value, the Australian dollar will face short-term negative effects.
07:00 – EUR: German Retail Sales
Retail sales is the main indicator of consumer spending in Germany. A high indicator reading boosts the euro, while a low one weakens the currency.
Previous values: -1,5% (+1,0% YoY), +1.2% (+3.8% YoY), +1.6 (+2.1% YoY), -1.2% (-0.6% YoY), +2.6% (-1.9% YoY), -1.5% (+2.2% YoY), -0.3% (-1.2% YoY) in January 2024.
The data suggests that the German economy’s recovery has been uneven, with some months experiencing a slowdown. Indicator readings higher than forecasted and/or previous values are likely positive for the euro in the short term.
13:15 – USD: ADP Private Sector Employment Report
The ADP report on private sector employment significantly impacts the market and the US dollar. An increase in this indicator value positively affects the greenback. The number of workers in the US private sector is expected to increase again in November after rising by 146k in November, 184k in October, 159k in September, 103k in August, 111k in July, 155k in June, 157k in May, 188k in April, 208k in March, 155k in February, 111k in January 2024, 158k in December, 104k in November, 111k in October, 137k in September, 135k in August, 307k in July, 543k in June, 206k in May, 293k in April, 103k in March, 275k in February, 131k in January 2023.
The growth of the index values may positively affect the US dollar while law index readings adversely. A negative market reaction and a potential decline in the dollar may occur if the data turns out to be worse than forecasted.
The ADP report is not directly correlated with the official data of the US Department of Labor, which is due on Friday. However, the ADP report often serves as a forerunner of the department’s data and significantly influences the market.
19:00 – USD:Federal Open Market Committee Meeting Minutes
The FOMC minutes release is extremely important for determining the course of the Fed’s current policy and the prospects for US interest rate hikes. Volatility in financial markets usually increases during the minutes’ publication, as they often reveal changes or provide clarifications from the latest FOMC meeting.
Following the December 18, 2024 meeting central bank governors decided to reduce the federal funds rate by 0.25% to 4.50% and indicated a leaning towards further monetary policy easing to bolster the labor market.
However, Fed Chair Jerome Powell stated that a pause in rate cuts is also possible. He emphasized that the US Fed officials remain confident that inflation is on track to reach the 2.0% target and that there is no need to rush to reduce rates given continued economic growth and a robust labor market.
Market participants assume the Fed will maintain the interest rate at 4.50% in January 2025. Moreover, long-term forecasts suggest there may be a gradual reduction to 3.9% by the end of 2025, indicating fewer adjustments than previously anticipated.
The dovish tone of the minutes will positively impact stock indices and negatively affect the US dollar. The hawkish Fed’s rhetoric on the monetary policy may boost the US dollar.
Thursday, January 9
00:30 – AUD: Retail Sales. Balance of Trade
The Retail Sales Index, published monthly by the Australian Bureau of Statistics, measures the total retail sales volume. The index is often considered an indicator of consumer confidence and spending, reflecting also the near-term state of the retail sector. In advanced economies, domestic consumption plays a significant role in driving GDP growth.
Therefore, deterioration of the indicator values may reveal problems with the country’s GDP growth in the future. This is a negative factor for the national currency, as the economic slowdown may force the national central bank to ease monetary policy for businesses by lowering interest rates in particular.
A surge in the index readings is usually positive for the Australian dollar.
October index value: +0.6% (after +0.1%, +0.7%, 0%, +0.5%, +0.6%, +0.1%, -0.4%, +0.2% +1.1%, -2.7%, +2.0%, -0.4%, +0.9%, +0.3%, +0.5%, -0.8%, +0.8%, 0%, +0.4%, +0.2%, +1.9%, -3.9%, +1.7%, +0.4%, +0.6%, +0.6%, +1.3%, +0.2% in previous months). If the data is weaker than the previous figures, the Australian dollar may experience a short-term decline. Conversely, if the data surpasses the previous values, the currency will likely strengthen.
Balance of Trade is an indicator that measures the ratio between exports and imports. An increase in Australian exports leads to a larger trade surplus, positively affecting the Australian dollar. Previous values (in billion Australian dollars): 5.953 in October, 4,609 in September, 5.644 in August, 5.636 in July, 5.425 in June, 5.052 in May, 6.678 in April, 4.841 in March, 6.707 in February, and 9.873 in January 2024.
A decrease in the trade surplus could negatively affect the Australian dollar, while an increase in the indicator figure may bolster the currency.
10:00 – EUR: Eurozone Retail Sales
Retail sales data is the main measure of consumer spending, indicating the change in the sales volume. A high indicator result strengthens the euro, while a low one weakens it.
Previous values: -0.5% (+1.9% YoY), +0.5% (+2.9% YoY), +0.2% (+0.8% YoY), +0.1% (-0.1% YoY), -0.3% (-0.3% YoY), +0.1% (+0.3% YoY), -0.5% (0% YoY), +0.8% (+0.7% YoY), -0.5% (-0.7% YoY), +0.1% (-1.0% YoY) in January 2024, -1.1% (-0.8% YoY) in December, -0.3% (-1.1% YoY) in November, +0.1% (-1.2% YoY) in October, -0.3% (-2.9% YoY) in Sept, 1.2% (-2.1% YoY) in August, -0.2% (-1.0% YoY) in July, -0.3% (-1.4% YoY) in June, 0% (-2.4% YoY) in May, -1.2% (-2.9% YoY) in April, -0.8% (-3.3% YoY) in March, +0.3% (-2.4% YoY) in February, -2.7% (-1.8% YoY) in January, +0.8% (-2.8% YoY) in December 2022.
The data suggests that retail sales have not returned to pre-pandemic levels after a severe drop in March–April 2020, when Europe was under strict quarantine measures, and are periodically declining again. Nevertheless, values exceeding the forecast will strengthen the euro.
Friday, January 10
01:30 – CNY: Consumer Price Index (CPI)
The National Bureau of Statistics of China will release its fresh monthly data on consumer prices. The growth of consumer prices may trigger the acceleration of inflation, prompting the People’s Bank of China to implement tighter fiscal policy. Higher consumer inflation may cause yuan appreciation, while a low result may exert pressure on the currency.
Since China is the world’s second-largest economy, the publication of its significant macroeconomic data has a notable impact on the global financial markets. This influence extends particularly to the yuan, other Asian currencies, the US dollar, and commodity currencies. Moreover, China serves as the largest buyer of raw materials and supplier of a wide range of finished goods to the global commodity market.
In November 2024, the consumer inflation index value stood at -0.6% (+0.2% YoY) after -0.3% (+0.3% YoY) after 0% (+0.4% YoY) in September, +0.5% (+0.5% YoY) in July 2024, -0.2% (+0.2% YoY) in June, -0.1% (+0.3% YoY) in May, +0.1% (+0.3% YoY) in April, +0.1% (-2.7% YoY) in December 2023, -0.5% (-0.5% YoY) in November, +0.2% (0% YoY) in September, +0.3% (+0.1% YoY) in July, -0.2% (0% YoY) in June, -0.2% (0% YoY) in May, -0.2% (+0.2% YoY).
The increase in the consumer inflation index will positively affect the renminbi quotes, as well as commodity currencies. Conversely, if the data is worse than forecasted and there is a relative decline in the CPI, it may adversely affect the currencies, particularly the Australian dollar, given that China is Australia’s largest trade and economic partner.
13:30 – CAD: Canada Unemployment Rate
Statistics Canada will release the country’s November labor market data. Massive business closures due to the coronavirus and layoffs have also contributed to the unemployment rate, increasing from the usual 5.6%–5.7% to 7.8% in March and 13.7% in May 2020.
In November 2024, unemployment stood at 6.8% against 6.5% in October and September, 6.6% in August, 6.4% in July and June, 6.2% in May, 6.1% in April and March, 5.8% in February, 5.7% in January 2024, 5.8% in December and November 2023, 5.7% in October, 5.5% in September, August, and July, 5.4% in June, 5.2% in May, 5.0% in April, March, February, January, December, 5.1% in November, 5.2% in October and September, 5.4% in August, 4.9% in July and June, 5.1% in May, 5.2% in April, 5.3% in March, 5.5% in February, 6.5% in January 2022.
If the unemployment rate continues to rise, the Canadian dollar will depreciate. If the data exceeds the previous value, the Canadian dollar will strengthen. A decrease in the unemployment rate is a positive factor for the Canadian dollar, while an increase is a negative factor.
13:30 – USD: Average Hourly Earnings. Private Nonfarm Payrolls. Unemployment Rate
The most significant US labor market indicators for November. Previous values: +0.4% in November, October, September, and August, +0.2% in July, +0.3% in June, +0.4% in May, +0.2% in April, +0.3% in March, +0.1% in February, +0.6% in January 2024, +0.4% in December and November 2023, +0.2% in October, September, and August, +0.4% in July and June, +0.3% in May, +0.5% in April, +0.3% in March, +0.2% in February, +0.3% in January 2023 / 227k in November, 36k in October, +255k in September, +78k in August, +114k in July, +118k in June, 216k in May, +108k in April, +310k in March, +236k in February, +256k in January 2024, +290k in December 2023, +182k in November, +165k in October, +246k in September, +210k in August 2023, +210k in August 2023 / 4.2% in November, 4.1% in October and September, 4.2% in August, 4.3% in July, 4.1% in June, 4.0% in May, 3.9% in April, 3.8% in March, 3.9% in February, 3.7% in January 2024, December and November 2023, 3.9% in October, 3.8% in September and August, 3.5% in July, 3.6% in June, 3.7% in May, 3.4% in April, 3.5% in March, 3.6% in February, 3.4% in January 2023.
Overall, the values are positive. Nevertheless, it is often difficult to predict the market’s reaction to the data release, given that many previous figures can be revised. This task becomes even more challenging now due to the contradictory economic situation in the US and many other large economies with the looming risk of recession alongside persistently high inflation.
Regardless, the release of the US labor market data is anticipated to prompt increased volatility not just in the US dollar but also in the entire financial market. Most risk-averse investors will probably prefer to stay out of the market during this period.
15:00 – USD: University of Michigan Consumer Sentiment Index (Preliminary Release)
This indicator reflects American consumers’ confidence in the country’s economic development. A high reading indicates economic growth, while a low one points to stagnation. Previous indicator values: 74.0 in December, 71.8 in November, 70.5 in October, 70.1 in September, 67.9 in August, 66.4 in July, 68.2 in June, 69.1 in May, 77.2 in April, 79.4 in March, 76.9 in February, 79.0 in January 2024, 69.7 in December 2023, 61.3 in November, 63.8 in October, 68.1 in September, 69.5 in August, 71.6 in July, 64.4 in June, 59.2 in May, 63,5 in April, 62.0 in March, 67.0 in February, 64.9 in January 2023, 59.7 in December, 56.8 in November, 59.9 in October, 58.6 in September, 58.2 in August, 51.5 in July, 50.0 in June, 58.4 in May, 65.2 in April, 59.4 in March, 62.8 in February, 67.2 in January 2022. An increase in the indicator will strengthen the US dollar, while a decrease will weaken the currency. The data shows that the recovery of this indicator is uneven, which is unfavorable for the greenback. A decline below previous values will likely negatively impact the US dollar in the near term.
Price chart of EURUSD in real time mode
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