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4 economic events to move the FX market in the first week of January 2023

By:
on Dec 29, 2022
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  • FOMC Minutes on Wednesday is set to move the FX market
  • Traders should pay attention to the ISM Manufacturing and Services data
  • Volatility to rise during the NFP release on Friday

This trading week is slow, given the end-of-the-year holidays and the lack of liquidity in the markets. But things are about to change drastically as soon as next week, as it is full of important economic events capable of triggering intense volatility.

Here are four events to mark in your calendar:

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  • FOMC Meeting minutes
  • ISM Manufacturing and Services PMI
  • Euro area Core CPI Flash Estimate
  • Non-Farm Payrolls

FOMC Meeting Minutes

The next trading week really starts on Wednesday. Before Wednesday, most banks are closed, so it is only fair to assume that not much will happen in financial markets.

But starting with Wednesday, traders get busy. One of the main events of the next trading week is the FOMC Meeting Minutes.

The minutes reveal what the FOMC (Federal Open Market Committee) members discussed at the last FOMC meeting. More precisely, traders will find out more details regarding the Fed’s last hike in December.

The point in focus on Wednesday – what is the terminal rate that the FOMC members see for 2023?

ISM Manufacturing and Services PMI

The first week of any trading month has the ISM data from the United States. Both manufacturing and services PMIs are due, one on Wednesday, ahead of the FOMC Minutes, and one on Friday.

This time around, the PMIs are very important as they offer a clue about the state of the US economy. As explained in this article, most economists expect the US economy to enter a recession in the first half of the year, and the PMIs will tell investors if it has already begun.

Euro Area Core CPI Flash Estimate

Next Friday, euro traders are on guard. The Core CPI Flash Estimate y/y is due during the European session.

Given the previous print of 5% and the increasingly hawkish ECB, it is time to see if inflation has peaked in Europe or not.

Non-Farm Payrolls

Every first Friday of the month, the Non-Farm Payrolls data is released in the United States. It is one of the most critical pieces of economic data due to the ton of information that comes with it, such as the unemployment rate or the average hourly earnings.

To sum up, in only three days, the next trading week is poised to start with aggressive moves. As a result, FX traders should prepare for increased volatility.