Summary:

• Employment reports from the US and the Canadian economies seem to be in the spotlight during the first week of 2018
• US dollar awaits some other macroeconomic readings beyond the NFP report
• Final PMIs from the European economy and the CPI release are among key points for euro traders

2017 was a good year for global stock markets, EUR and CAD. On the other hand, the US dollar failed against all peers as the dollar index posted the first yearly loss since 2012. Perhaps, it marks a beginning of a new long-term trend. However, corrections are a natural thing for financial markets. Thus, upcoming macro data from the US, including payrolls, could help USD recover this week. Before employment reports are released let’s take a closer look at Tuesday’s data:

9:30 am BST – UK manufacturing PMI: The British pound had a successful year, however compared to the levels seen before the Brexit referendum the currency appears to have a lot to catch up. On the flip side, if the US dollar loses further its momentum, it cold help the pound as well and then a resistance above 1.38 might be at stake. Today’s PMI is expected to come in at 57.9 against 58.2 seen in November. Earlier final prints from other European economies will be published alike.

2:30 pm BST – Canadian manufacturing PMI: While the Canadian dollar is rarely susceptible to more chaotic moves following soft indicators from the domestic economy today’s reading seems to be worth keeping a closer eye as we are just three days before the payrolls report. Therefore volatility on the CAD could be higher than usually. Notice that the final manufacturing PMI from the US economy will be released 15 minutes later.

The USDCAD broke out of a consolidation during the past days and it could continue marching lower at least toward 1.2430 where a more notable support could be localized. Source: xStation5

What to watch beyond today’s data?

US macro data: ADP (Thursday, 1:15 pm BST), NFP (Friday, 1:30 pm BST), Services ISM (3:00 pm BST) – The start of 2018 will be full of macro data from the US economy which has been doing quite well so far. A subdued inflation pressure is the main concern for Fed. That’s why investors should focus on wage data this week as a higher pace of pay raises could imply better inflation figures. This could make a vision of three rate hikes in next 12 months more real. Moreover, a solid growth in employment would assure investors about the health of labour market and ISM may confirm an upbeat sentiment in the US economy. Affected markets: EURUSD, US500

Payrolls data in Canada (Friday, 1:30 pm BST) – The Canadian dollar had a very successful year behind. The decision of the Bank of Canada to hike interest rates twice in the third quarter came as a surprise boosting CAD. However, BoC has softened its stance of late cooling down the market expectations for further tightening in the near future. If the upcoming labour data continue to be solid, one may argue that the Canadian central bank will raise rates this year. USDCAD

Data from the eurozone: PMIs (Tuesday), CPIs (Friday, 10:00 am BST) – Europe’s economic recovery was one of the main topics in 2017. Better economic conditions and lower political risks pushed EUR and European stocks significantly higher. However, the ECB remains cautious as inflation is still below the its target. Therefore, CPI figures should be a key metric for traders in Europe. Affected markets: EURUSD, DE30