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Top Forex Events of January 2016
2016 is expected to be a challenging year for the forex market, as diverging monetary policies, weak commodity prices and uneven global growth dictate the performance of many global currencies. However, with great challenges come great opportunities. With the right strategies in play, forex traders can achieve great success over the next 12 months. To help you start the year on solid footing, we provide a brief recap of the top forex events of January. Circle these dates because they are expected to have a significant impact on global currencies.
January 3: China manufacturing PMI (Dec)
Forex traders can expect to see two important Chinese manufacturing reports on January 3. Both have significant implications on global currency flows because they provide a detailed snapshot of the Chinese manufacturing sector, which contracted sharply in the latter half of 2015.
January 5: Eurozone CPI inflation (Dec)
One month after the European Central Bank (ECB) expanded its stimulus program, forex traders will be looking to see whether the new measures have had any impact on inflation. Although it will probably be too early to tell, the December inflation report could dictate whether the ECB decides to ease monetary policy further in the short term.
January 8: US nonfarm payrolls (Dec)
The US government will release one of the biggest economic reports of the month on January 8. Nonfarm payrolls is a closely followed indicator of the US economy. Another solid month of job creation in December could push the US dollar higher across the board. That’s because the performance of the US labour market is closely tied to expectations about monetary policy.
January 10: China CPI and PPI inflation (Dec)
Chinese data take centre stage again in the second week of January. Another deterioration in both producer and consumer prices will raise the specter of another rate cut by the People’s Bank of China, which has already slashed interest rates five times since November 2014.
January 19: China 2014 Q4 GDP
The Chinese government will release an advance estimate of fourth quarter and full-year GDP. With China’s annual growth rate expected to fall below 7%, forex traders can expect highly active sessions in Asia, Europe and North America. Almost every major currency could see movement on the 19th, given China’s central role in the global economy.
January 20: US CPI inflation (Dec)
Like employment data, inflation figures are intricately tied to expectations about US monetary policy. Although the Federal Reserve is expected to raise interest rates in spite of below-target inflation, a lack of improvement in the CPI rates will likely cause traders to push back expectations for additional rate tightening.
January 21: ECB interest rate decision and press conference
The ECB caught the markets by surprise in December by using only the bare minimum to expand monetary policy. This helped strengthen the euro against virtually all of its major competitors. However, it also left traders wondering how soon the ECB will expand its stimulus program again. ECB bearishness could push the euro back down to pre-December levels.
January 28: UK 2015 Q4 GDP, Germany CPI inflation (Jan), US durable goods orders (Dec), Japan CPI inflation (Dec)
January 28 will likely be one of the busiest days of the month, as traders contend with a deluge of high-profile economic data from around the world. Expect the US dollar, euro, yen and British pound to experience significant movement on this day.
January 29: Eurozone CPI inflation (Jan), US Q3 2015 GDP
The European Commission will release an advance estimate of Eurozone CPI just one day after the German print. Given that the ECB closely monitors inflation, the January 21 interest rate decision may provide clues about the health of euro area inflation in January. Traders should closely monitor the ECB rate decision to predict the outcome of the January CPI report.
In addition to the euro area inflation report, the US government will also release an advance estimate of Q4 and full-year GDP. The Q4 figures are expected to improve considerably over the third quarter growth rate, which might see traders go long on the US dollar.
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