Economic Events to Watch Out For
Over the next week, forex traders should keep a close eye on a concentration of high‑impact releases from the global financial centres that could decisively shape currency movements. While many of the events listed are low‑impact or holiday notices, the few that carry higher stakes deserve extra scrutiny. Below is a concise, data‑driven briefing of the must‑watch announcements.
- 12‑23, 12:14 pm – U.S. Pre‑liminary GDP Q/Q (High) – Preliminary data: 3.2 % (forecast) vs. 3.8 % (previous). A larger than expected decline might ease the dollar, especially if investors interpret the figure as a signal of slowing growth.
- 12‑23, 12:14 pm – U.S. GDP m/m (High) – Canada’s revised data shows a 0.2 % rise in a month‑to‑month comparison, but the forecast of –0.3 % could prove disruptive. Canadian traders will be watching the trend against the push for higher U.S. rates.
- 12‑23, 1:20 pm – U.S. ADP Weekly Employment (Medium) – The next ADP reading remains a key proxy for the labour market. A stronger than expected surge lends weight to a tighter U.S. policy stance which can buoy the dollar against most peers.
- 12‑23, 4:59 am – BOJ Gov Ueda Speaks (High) – Any changes in the Bank of Japan’s rhetoric—especially around maintaining ultra‑easy policy—can have a pronounced effect on the yen and other emerging‑market currencies. Sentiment is as important as the words themselves.
- 12‑24, 1:30 pm – U.S. Unemployment Claims (High) – The week‑on‑week change in initial claims will help gauge the resilience of the labour market. A drop could strengthen the dollar; an uptick might relieve upward pressure.
Market Trends and Analysis
Historically, the United States has played the dominant role in setting the mood for the global currency market, especially during periods of divergent monetary policy. A contraction in U.S. GDP growth edged the dollar higher in the early part of December, while the Canadian dollar remained relatively stubborn as the Bank of Canada staged its own rate hike.
With the Asia‑Pacific region poised for a quiet weekend—Japan’s BOJ has not yet moved, and most of the region’s major data releases fall outside of trading hours—trading action will likely pivot around the U.S. data. The yen, although a defensive currency, still lags when the market perceives a firm hawkish stance from the Fed.
The current chart (not displayed here) illustrates the USD/JPY pair rising 0.4 % in the days leading up to the BOJ Governor’s speech, after the dollar gained on early U.S. retail sales data. Should Ueda signal a continuation of the policy status quo, the pair could retreat. Conversely, any hint of a policy shift—such as a minor rate increase—would likely boost the yen while fretting on the dollar.
In the Canadian segment, the Purchasing Managers’ Index (PMI) held at 48.0 in December, signalling contraction, while a higher-than‑forecast GDP revision injects a degree of uncertainty. The USD/CAD pair has been tight around 1.3600–1.3650, and a double‑digit delta in Canadian economic data can serve as a lever to tilt the range.
Trading Opportunities
USD/JPY
• Timing: Target a pullback around 1.2600–1.2650 if Ueda indicates a subtle shift toward policy normalisation. The current level sits above the 12‑week simple moving average, suggesting a potential short‑term trend reversal sooner than historically.
• Indicators: Use the Relative Strength Index (RSI) set to 14 periods; a reading below 30 points to oversold conditions, while an upward RSI swing after the BOJ speech could confirm a bullish breakout. Pair this with a Bollinger Band breakout above the upper band to confirm momentum.
EUR/USD
• With German import prices falling to 0.1 % vs. the market‑expecting 0.2 %, market sentiment toward the euro is likely to weaken. A prudent strategy is to short between 1.0550 and 1.0600 if the euro follows the euro’s downward bias.
• Risk‑Reward: Use a stop‑loss just below 1.0675 to protect against a surprise euro rally. Profit targets can be set at 1.0450 as a 1:2 reward‑to‑risk ratio.
USD/CA$
• The Canadian GDP surprise may create volatility in the mid‑week. An entry near 1.3650 to 1.3680 can be targeted after the Canada data releases if the market shows a moderate pullback. Confirm with a MACD cross‑above for a bullish signal.
• Set a stop‑loss at 1.3730 and a target at 1.3800, aligning with the 12‑week moving average served as a dynamic resistance level.
While these setups are crafted with educated assumptions, please remember that forex markets are multifactorial—geopolitical events, central bank minutes, and market sentiment can all override fundamental catalysts. It’s advisable to use a structured risk‑management approach and to monitor the market through the hour of each scheduled release.
Conclusion
As the week progresses, the British pound enjoys a lull due to bank holidays, and other currencies such as the Japanese yen and Japanese “minor” data releases are likely to show muted movements. The real battles, however, will be fought around the U.S. and Canadian data. Traders should keep tight stops on dollar‑heavy positions while the economy remains uneven.
To convert the market movements into actionable trades, use a combination of moving average crossovers, RSI divergence, and volatility filters such as the ATR. Keep trading in line with your personal risk tolerance and account size, and remain unfazed by any short‑term volatility spikes. Those that stay disciplined often find the most value during uncertain times.
Risk Disclaimer
The content in this article is for educational purposes only. It does not constitute financial advice, and you should not rely solely on this information for trading decisions. Forex trading carries high risk of loss and is unsuitable for all investors. Consult your financial advisor before making any investment decisions.
