With the start of the new week, the holiday season is coming to an end. Ahead lies the first full trading week, except for a one-time event (market closed) in the US on Thursday (January 9) due to mourning for the death of former President J. Carter. In the coming week, investors will finally receive a solid batch of new macroeconomic data, including reports from the US and Canadian labor markets as well as a set of reports from Germany. For this reason, it will be worthwhile to keep an eye on the USDCAD, US500, and DAX quotes.
US500
The US labor market data will be the first significant publication of the year for Wall Street. From the FOMC's perspective, these are the most important data alongside inflation reports. As such, any surprises may result in increased volatility, both in the currency and equity markets. Recent data suggest that the US labor market remains competitive, and analysts' expectations for December's reports confirm this trend. A stronger-than-expected report could lead to declines in the stock market and an appreciation of the US dollar. Conversely, a weaker-than-expected report may trigger the opposite reaction. It will also be worth watching statements from FOMC members next week, as they may provide more insights into the Federal Reserve's current stance.
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The situation on the USDCAD pair could be particularly interesting due to catalysts on both sides. USD value may be significantly influenced by the aforementioned US labor market data. Meanwhile, CAD value will be impacted by equally important data from the Canadian labor market. Currently, the market is pricing in over an 83% probability of a 25 basis point rate cut at the Bank of Canada's next meeting on January 29, 2025.
DAX
Next week, a series of important data for Germany will be released, including CPI inflation, industrial orders, trade balance, and industrial production. The domestic economy is not in the best shape, and each new macroeconomic report brings hope for slight improvement. Despite this, DAX's reliance on the global economy has pushed its quotes close to historical highs. Nevertheless, it will be important to watch this index during the release of the aforementioned macro reports in case of any surprises.
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