Economic Analysis

The first week of 2020 is marked by very important events, from inflation in the European region to non-farm payrolls in America. Where will the currencies go this week? Here are the most important events for this week.

In 2020, the U.S. dollar started to recover - which reduced losses it suffered in late 2019 due to year-end flows. The United States and China are set to sign the trade deal on January 15, while China has announced more incentives by lowering reserve requirement ratios. Fears that Britain will not leave the European Union also remain valid until it ends in peace. Tensions escalated in the Middle East after the killing of the United States, Qalasim Soleimani, who is the second person in the Iranian regime. Oil prices rose and demand for safe haven assets increased. What will be Iran's response? The atmosphere is burning, and perhaps the beginning of 2020 heralds more tensions during the year.

Eurozone inflation: Tuesday 01:00 pm. The November CPI numbers were very encouraging. The core CPI held steady at 1% annually while the core CPI accelerated to 1.3%, its highest level since 2019, which was the highest since 2013. The initial release for December 2019 is expected to show that core inflation remained at 1.3% While the main index may rise to 1.3%. The European Central Bank is monitoring these numbers with great interest.

Non-Manufacturing PMI: Tuesday, 06:00 pm. The U.S. services sector expanded satisfactorily throughout 2019, reaching 53.9 points in November - above the 50-point threshold that separates expansion from deflation. It is expected to increase to 54.5 points for the month of December. Aside from providing a sneak peek into the sector, the post is a hint towards Friday's job report.

Non-farm payroll: Wednesday, 04:15 pm. The largest US payroll software provider reported a slight rise of 67,000 jobs in November - below expectations. However, there was some uncertainty about that statistic, due to General Motors' strike. December's report will likely relate better to official employment data. Even if both numbers remain unconnected, markets are expected to interact with them.

European Central Bank meeting minutes: Thursday, 4:30 pm. The European Central Bank is to release details from the December meeting, under the supervision of Christine Lagarde for the first time. The document may reveal trends in the bank under its new management, and may provide hints for the following moves. Moreover, when Lagarde announced the start of a strategic review, it would be interesting to know whether the Frankfurt-based institution tends toward a more pessimistic goal of monetary policy or towards a more hawkish goal.

Non Farm Jobs in the United States: Friday, 4:30 pm. November's job reports were a big hit - as at least 266,000 jobs were acquired in the world's largest economy. Besides the upward revisions of previous months and the increase in annual health wages by 3.1%, the dollar rose well. December report forecasts more cautious. Economists expect an increase of 172,000 jobs, while average hourly wages are expected to reach 3.1%. The data feeds into the upcoming Federal Reserve decision, so it is important to pay attention to that data.

Canadian Jobs Report: Friday, 4:30 pm. After several positive job market figures in mid-2019, the latest statistics from Canada were below expectations. Canada lost 71,200 jobs in November, bringing the unemployment rate down to 5.9%. Markets expect a rise of 20,000 in December, with the unemployment rate down to 5.8%.

*All times are KSA.