An exciting beginning of the 2024 trading year is ahead. Next week, economic reports include the US and Canada Job Reports and inflation figures from the Eurozone. The FOMC will release the minutes of its latest meeting.
Here is what you need to know for next week:
The beginning of 2024 brings key economic reports that will influence monetary policy expectations from the Federal Reserve (Fed) and the European Central Bank (ECB). The action will commence on Tuesday as market functions return to normal after the holidays.
The focus regarding US data will be on the labor market, with the JOLTS Job Openings on Wednesday, followed by the ADP Employment Report and Jobless Claims on Thursday, and Nonfarm Payrolls on Friday. Additionally, the ISM Manufacturing and ISM Services reports are scheduled for release on Wednesday and Friday, respectively. Market participants will also closely scrutinize the FOMC minutes of the December meeting, which will be released on Wednesday.
Analysts at TD Securities on the Fed
A rapidly improving inflation outlook and the specter of rising real rates have led the Fed to start considering the case for policy easing in 2024. Powell alluded to this possibility at the Dec FOMC, but Fed officials since then have pushed back on the idea of imminent easing. We expect the minutes to unveil that the FOMC is not entertaining the case for rate cuts just yet.
After Santa's rally, a new challenge emerges on Wall Street. Stocks finished the year 2023 with solid gains, reaching record highs. The question is whether this momentum can hold next week or if it is time for a correction.
US Dollar price this week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Swiss Franc.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.36% | -0.30% | -0.46% | -0.54% | -1.13% | -0.72% | -1.96% | |
| EUR | 0.46% | 0.09% | 0.02% | -0.11% | -0.74% | -0.26% | -1.49% | |
| GBP | 0.43% | -0.14% | 0.11% | -0.22% | -0.86% | -0.24% | -1.79% | |
| CAD | 0.46% | -0.22% | 0.10% | -0.34% | -0.67% | -0.09% | -1.64% | |
| AUD | 0.54% | 0.13% | 0.19% | 0.08% | -0.65% | -0.16% | -1.63% | |
| JPY | 1.12% | 0.80% | 0.65% | 0.95% | 0.62% | 0.62% | -0.96% | |
| NZD | 0.71% | 0.30% | 0.43% | 0.25% | 0.14% | -0.49% | -1.17% | |
| CHF | 2.11% | 1.46% | 1.47% | 1.62% | 1.63% | 0.96% | 1.25% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
The US Dollar Index (DXY) posted its third consecutive weekly loss as market participants continued to anticipate Fed rate cuts in the coming year. It managed to end far from the bottom, around 101.20, after a rebound on Thursday and Friday led by a modest rebound in US yields. The DXY maintains a bearish bias and is likely to test the 100.00 level. However, t positive US data could potentially trigger a sharp rebound.
EUR/USD hit a fresh monthly highs above 1.1100, but then pulled back towards 1.1050. It posted its third consecutive week of gains, but the upward movement is losing momentum. On Wednesday, the final Manufacturing PMI will be released, and on Thursday, the final Service PMI. The crucial data for the week will be on Friday, with Eurostat releasing the Eurozone preliminary December Consumer Price Index (CPI). The preliminary figures from Spain are a good omen. Spain's Consumer Price Index slowed to 3.1% in December from a year ago, which was below the market consensus of 3.4%. The core rate also eased to 3.8%, the lowest since March 2022.
USD/JPY posted the lowest weekly close since July and suffered the biggest monthly loss in a year. The pair dropped towards 140.00 on expectations that the Fed will cut rates next year while the Bank of Japan (BoJ) is expected to exit its negative interest rate policy.
GBP/USD failed to hold above 1.2800 and retraced. Gains appear limited while trading below that level. EUR/GBP briefly surpassed 0.8700 before pulling back towards 0.8650.
The Chinese PMI data next week could be important for risk appetite and the Australian and New Zealand currencies. AUD/USD recorded its sixth weekly gain out of the last seven weeks and is holding above the 100-week Simple Moving Average (SMA). The pair closed the week around 0.6830.
USD/CAD fell below the 100-week SMA and is testing strong support around 1.3100. Canada will release the employment report on Friday.
And the currency of the year is…
The Mexican Peso and the Colombian Peso were the best performers in 2023. On the other hand, the Argentine Peso, the Turkish Lira, and the Russian Ruble fared the worst.
Among G10 currencies, the Swiss Franc performed the best. USD/CHF had its worst year in a decade. Despite seeing a recovery during the fourth quarter, the Japanese Yen suffered the main losses. USD/JPY rose for the third consecutive year but respected the 152.00 barrier. The outlook for the Yen appears to have improved compared to 12 months ago.
This is the last Forex Today for 2023. Wishing you a Happy New Year and a prosperous year ahead. Thank you!
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Next upside target comes at 0.6550
AUD/USD managed well to shrug off the marked advance in the Greenback as well as geopolitical tensions, regaining the area above the 0.6500 hurdle ahead of preliminary PMIs in Australia.
EUR/USD: Further losses now look at 1.0450
Further strength in the US Dollar kept the price action in the risk-associated assets depressed, sending EUR/USD back to the 1.0460 region for the first time since early October 2023 prior to key releases in the real economy.
Gold faces extra upside near term
Gold extends its bullish momentum further above $2,660 on Thursday. XAU/USD rises for the fourth straight day, sponsored by geopolitical risks stemming from the worsening Russia-Ukraine war. Markets await comments from Fed policymakers.
Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally
Ethereum (ETH) is trading near $3,350, experiencing an 10% increase on Thursday. This price surge is attributed to strong bullish sentiment among derivatives traders, driving its open interest above $20 billion for the first time.
A new horizon: The economic outlook in a new leadership and policy era
The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.