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
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