January 3, 2022

Week Ahead in FX (Jan. 3 – 7): Watch Out for FOMC Minutes & The NFP!

 It’s shaping up to be an exciting first week of the new year since we’ve got a couple of top-tier jobs reports and the FOMC minutes lined up.


Here’s what’s expected from these economic events.


Major Economic Events:

OPEC meetings (starting Jan. 3) – The Black Crack Mafia are off to a running start this year, as they have a pow-wow scheduled early in the week.


No major changes are expected for now, though, as the oil cartel might simply maintain its production increase of 400,000 bpd until next month.


As in their earlier meetings, the OPEC could suggest that demand could be dampened by Omicron concerns but that supply remains limited due to the energy crunch in some countries.

FOMC meeting minutes (Jan. 5, 7:00 pm GMT) – The December Fed announcement turned out a bit more hawkish than expected, as policymakers showed scope for more rate hikes this year.


The transcript of their meeting could reiterate this optimistic view, possibly even shedding more light on their tightening plans and when the first hike might take place.


Canadian jobs report (Jan. 7, 1:30 pm GMT) – A slower increase in hiring at 24.5K is eyed for December, following the impressive 153.7K jump in employment for November.


This should be enough to keep the jobless rate steady at 6.0% for the month, but a smaller than expected jobs gain could mean some downside for the Loonie.


U.S. non-farm payrolls report (Jan. 7, 1:30 pm GMT) – After the underwhelming 210K increase in hiring for November, the U.S. jobs market could make a bit of a comeback with a 410K gain in December.


This could bring the unemployment rate a notch lower from 4.2% to 4.1%, and an uptick in the average hourly earnings figure from 0.3% to 0.4% could bring bullish dollar vibes.

Leading jobs indicators such as the JOLTS job openings, ISM PMI surveys, and the ADP non-farm employment report are due throughout the week. Better keep tabs on these for clues if you’re trading the NFP!


Forex Setup of the Week: GBP/USD

I’m starting this year off with this neat trend play on the daily chart of Cable!



The pair looks ready to test the falling trend line connecting the highs since March last year, and I’m seeing confluence right at that resistance zone, too!

Not only does the trend line coincide with the 61.8% Fibonacci retracement level, but it’s right smack in line with the 100 SMA dynamic resistance also.


The 100 SMA is below the 200 SMA to confirm that the downtrend is more likely to resume than to reverse, possibly taking GBP/USD back down to the swing low at 1.3160 soon.


At the same time, Stochastic is reflecting exhaustion among buyers, so turning lower would mean that sellers are taking over.


I’d stay on the lookout for hawkish FOMC minutes and an upside NFP surprise when trading this one!