TRADERS AND INVESTORS PREPARE FOR THE FIRST TRADING WEEK OF 2022

Market focus

During the first full trading week of 2022 financial markets are set for a busy start to the new year, with the United States economic data headlining the top-tier macroeconomic releases this week.

Traders and investors await PMI and ISM manufacturing data from the United States and the Private Sector and Non-farm Payrolls jobs report. Markets also await the latest news on the US Build Back Better bill. 

The eurozone economy releases key Consumer Price Inflation, Manufacturing and Retail Sales this week, while the Canadian economy monthly jobs report that will also be closely observed by traders.

Monday 3rd January, EU Manufacturing PMI

The EU Manufacturing Purchasing Managers Index is released by Markit Economics and measures the activity level of purchasing managers in the manufacturing sector. The manufacturing PMI is an important indicator of business conditions and the overall economic condition in the eurozone because the manufacturing sector represents nearly a quarter of the total GDP. A reading above 50 indicates expansion in the sector, and below 50 indicates contraction.

  • The EURUSD pair is only bearish while trading below the 1.1350 level, key support is found at the 1.1270 and 1.1200 levels
  • If the EURUSD pair trades above the 1.1350 level, buyers will likely test towards the 1.1420 and 1.1460 level.

Tuesday 4th January, ISM Manufacturing Survey

The Institute for Supply Management (ISM) Manufacturing shows business conditions in the United States manufacturing sector. The ISM Manufacturing survey is a significant indicator of the overall economic condition in US. A monthly ISM figure above 50 is seen as positive for the US dollar currency, whereas a below 50 reading is seen as negative for the US dollar currency.

  • If the USDJPY pair trades above the 114.00 level, buyers are likely to test the 115.50 and 116.00 resistance levels
  • The USDJPY pair is only bearish while trading below the 114.00 level, further losses towards the 112.90 and 112.50 levels remains possible.
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Wednesday 5th January, ADP Private Sector Report

The ADP private-sector jobs report is released by Automatic Data Processing Inc and measures the change in the number of employed people in the private sector of the United States economy. A rise in this figure stimulates economic growth and is usually seen as being bullish for the US dollar currency. A weaker-than-expected number may cause traders to sell the US dollar currency.

  • The GBPUSD pair is only bullish while trading above the 1.3400 level, key resistance is found at the 1.3580 and 1.3630 levels
  • If the GBPUSD pair trades below the 1.3400 level, sellers may test towards the 1.3340 and 1.3260 levels.

Thursday 6th January, US Initial Jobless Claims

The US Initial Jobless Claims released by the US Department of Labor is a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labour market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. Generally speaking, a decreasing number should be taken as positive or bullish for the US dollar currency.

  • The USDCAD pair is bullish while trading above the 1.2800 level, key resistance is found at the 1.2845 and 1.2900 levels
  •  If the USDCAD pair moves below the 1.2800 level, sellers may test towards the 1.2700 and 1.2640 levels.

Friday 7th January, US Nonfarm Payrolls Job Report

The NFP job report shows the monthly change in employment in the American economy, excluding the farming sector. The Non-farm payrolls job report is the most carefully observed indicator in the employment situation inside the United States. It is considered the most inclusive calculation of job creation, which causes the Nonfarm Payrolls Job report to become highly significant to market participants, due to the great importance of labour in the United States economy.

  • The AUDUSD pair is only bearish while trading below the 0.7100 level, further losses towards the 0.7050 and 0.7000 levels remains possible
  • If the AUDUSD pair trades above the 0.7100 level, buyers are likely to test the 0.7250 and 0.7300 resistance levels

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