Forecasting the upcoming week: US CPI and Fedspeak should rule the sentiment

The US Dollar (USD) maintained the optimism seen at the start of the year, rising for the second week in a row, as markets assessed the mixed US labour market report in December and prepared for the publication of vital US inflation data next week.

The US Dollar Index (DXY) advanced for the second consecutive week, surpassing the 99.00 barrier and its critical 200-day SMA, opening the door to the continuation of the ongoing recovery in the short-term horizon. The Inflation Rate will take centre stage on January 13, seconded in relevance by the NFIB Business Optimism Index, the ADP Employment Change Weekly, New Home Sales and the API’s weekly report on US crude oil inventories. The usual weekly MBA Mortgage Applications come on January 14 along with Producer Prices, Retail Sales, Business Inventories and Existing Home Sales, all ahead of the EIA’s weekly report on US crude oil stockpiles and the Fed Beige Book. The usual weekly Initial Jobless Claims will be released on January 15, alongside the NY Empire State Manufacturing Index, Export and Import Prices, the Philly Fed Manufacturing Index and TIC Flows. Industrial Production will wrap up the docket on January 16, followed by Manufacturing Production, Capacity Utilisation and the NAHB Housing Market index.

In quite a dreadful start to the year, EUR/USD lost ground for the second straight week, flirting with five-week troughs near the 1.1600 support at the same time. Germany´s Current Account results are due on January 12 followed by the Sentix Investor Confidence index in the euro area. The German Full Year GDP Growth will be published on January 15 seconded by Industrial Production and the Balance of Trade in the broader Euroland. The final Inflation Rate in Germany is due on January 16.

GBP/USD mirrored the poor performance of its risk-related peers, receding for the second week in a row and coming closer to its key 200-day SMA near 1.3380. The BRC Retail Sales Monitor will kickstart the docket on January 12. On January 15 comes the RICS House Price Balance, seconded by GDP figures, Balance of Trade results, Industrial and Manufacturing Production, Construction Output, and the NIESR Monthly GDP Tracker.

USD/JPY rose markedly this week, breaking above the 158.00 barrier for the first time since January 2025. The Current Account results are due on January 13 alongside Bank Lending data and the Eco Watchers Survey. Japan’s Machine Tool Orders are expected on January 14, while the weekly Foreign Bond Investment figures, Producer Prices and the Reuters Tankan Index will all be released on January 15.

Another poor performance saw AUD/USD adding to the previous week’s losses following an unsuccessful attempt to extend its recent rally beyond 0.6760 earlier in the week. Household Spending data are due on January 12. On January 13 will come the Westpac Consumer Confidence Index, while Building Permits and Private House Approvals are expected on January 14. Lastly, Consumer Inflation Expectations come out on January 15.

Anticipating economic perspectives: Voices on the horizon

• The Fed’s Bostic and Barkin speak on January 12, followed by the ECB’s De Guindos.
• The Fed’s Williams, Musalem and Barkin will speak on January 13.
• The Fed’s Paulson, Miran, Bostic, Kashkari and Williams speak on January 14 along with the ECB’s De Guindos and the BoE’s Taylor and Ramsden.
• The Fed’s Bostic, Barr and Barkin will speak on January 15.
• The Fed’s Jefferson and Bowman are due to speak on January 16.

Central banks: Upcoming meetings/releases to shape monetary policies

• The NBP will meet on January 14 (4.00% act vs. 4.25% exp).
• The BoK meets on January 15 (2.50% act vs. 2.50% exp), and the ECB releases its Accounts.