- The first week of the year will see increased market activity and higher volume.
- The biggest event will be the Senate election in Georgia that will take place on Tuesday.
- The Bureau of Labour Statistics will also publish the official nonfarm payroll numbers on Friday.
The financial market will see heightened volume this week as investor return from their long holiday. Also, participants will focus on several important economic data and political events during the week. Let us look at the key economic calendar events that traders will be watching this week.
Georgia Senate election
The biggest event this week will be the runoff Senatorial election in Georgia where the two Republican senators are trying to defend their seats. The eventual winner will determine a lot for the American economy.
If Democrats win the two seats, they will have flipped the control of the Senate. This will give Joe Biden everything he needs to implement his agenda, including higher taxes and more stimulus. Analysts believe that such a victory will be bad for the US dollar.
On the other hand, if Republicans maintain the Senate, it will lead to gridlock, which will be a positive thing for the market. That’s because it will leave Trump’s tax cuts and deregulation policies intact.
Nonfarm payroll data
Another highlight for the week will be the US nonfarm payroll numbers that will come out on Friday. Economists polled by Reuters expect the data to show that the American economy added just 100,000 jobs in December. That will be a smaller number than the 344,000 it added in the previous month.
At the same time, they see the unemployment rate rising from 6.7% to 6.8% while average hourly earnings rose by 4.4%. The sluggish expectation is probably because of the rising number of coronavirus cases and the eventual lockdowns that states implemented.
The forex market will also react to the December Canadian employment numbers that will come out on Friday.
The economic calendar will also have the vital manufacturing and services PMI numbers this week. The manufacturing PMIs will come in on Monday followed by services PMI data that will come out on Wednesday.
The key PMIs to watch will be from China, the European Union, the UK, and the United States. Economists expect the Chinese PMI will drop slightly to 54.8 while that from the EU and UK will remain at 55.5 and 57.3, respectively. Indeed, the latest flash PMIs showed that the manufacturing sector continued to flourish while the services sector remained under pressure.
Forex investors will also focus on the upcoming virtual meeting of OPEC and its allies, which will take place on Monday. The participants will possibly approve the plan to gradually increase production this month as the world economy rebounds. However, the biggest risk for OPEC+ members is that US producers have continued to boost production, which could have an impact on the future price. Some of the oil currencies to watch will be the Canadian dollar, Norwegian krone, and the Mexican peso.