The so-called Father Christmas rally, which in theory should have lasted from the final five sessions of December to the two early sessions of January, was not observed in the financial markets this year. The main S&P 500 index fell by 2 per cent during this period, while the Nasdaq 100 technology index lost 2.7 per cent. As a result, the new year began in an atmosphere of pessimism in the markets. Similar weakness can be seen in the market for European currencies. The EUR/USD exchange rate fell below the 1.03 level and continues its downward trend, which translates into a weakening of the Polish zloty. The USD/PLN exchange rate rose above 4.15, reaching its highest level in more than a year. In the coming week, we will learn preliminary inflation readings from Germany and the euro area for December 2024. The key event, however, will be the US unemployment data, which, if they deviate significantly from forecasts, could set the direction for markets for the coming quarter.
Table of contents:
- German consumer price index (CPI) monthly (December)
- Eurozone consumer price index (CPI) monthly (December)
- US unemployment rate (December)
Monday, 6.01, 14:00 CET, German consumer price index (CPI) monthly (December)
Inflation in Germany rose to 2.2 per cent year-on-year in November 2024 from 2 per cent in October, reaching its highest level in four months. Services inflation remained at 4 per cent, while declines in energy prices slowed. Food prices rose by 1.8 per cent, up from 2.3 per cent earlier.
Analysts forecast a decline in German CPI inflation to 2 per cent year-on-year, the ECB's policy target.
Source: Tradingeconomics.com
A higher-than-expected reading could have a bullish impact on the EUR, while a lower-than-expected reading could be bearish for the EUR.
Impact: EUR/USD, EUR/GBP, EUR/PLN
Tuesday, 7.01, 11:00 CET, Eurozone consumer price index (CPI) monthly (December)
As with German inflation, Eurozone inflation rose to 2.2 per cent year-on-year in November 2024, up from 2 per cent in October, lower than the initial estimate of 2.3 per cent. The increase was mainly due to base effects, i.e. comparisons to prices a year ago, when declines in energy prices no longer affected the data. Declines were recorded in the prices of services and food, alcohol and tobacco.
Analysts forecast an increase in CPI inflation in the euro area to 2.4 per cent year-on-year.
Source: Tradingeconomics.com
A higher-than-expected reading could have a bullish impact on the EUR, while a lower-than-expected reading could be bearish for the EUR.
Impact: EUR/USD, EUR/GBP, EUR/PLN
Friday, 10.01, 14:30 CET, US unemployment rate (December)
The US unemployment rate in November 2024 was 4.2 per cent, not far from the rate recorded in the previous month. The number of unemployed rose to 7.1 million people, surpassing the figures from a year ago, when the rate was 3.7 per cent and the number of unemployed was 6.3 million. Interestingly, the U-6 unemployment rate, which is measured in the same way as in Europe, was already 7.8 per cent.
Analysts forecast the US unemployment rate to remain at 4.2 per cent.
Source: Tradingeconomics.com
A higher-than-expected reading could have a bearish impact on the USD, while a lower-than-expected reading could act bullishly for the USD.
Impact: EUR/USD, USD/PLN
Grzegorz Dróżdż, CIIA, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
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