Ahead are important events and economic statistics, which should determine the dynamics of markets in the first days of the new year. The first thing to look out for is the release of the December US jobs report, followed by the minutes of the Fed's latest monetary policy meeting. There will also be other indicators coming out from the US and Europe, but they will not be as influencing as the two.
But why is the Fed minutes so important? This is because after the meeting, the statements of Fed Chairman Jerome Powell stirred the markets. Investors want to see the details of the meeting so as to understand the plans of the central bank. If the minutes show that some members disagree with the continuation of rate hike, markets will expect a pause after a brief rate increase, which may encourage investors to actively buy risky assets.
Another important data coming out is the US non-farm payrolls, which should show just how much unemployment is gripping the US economy. A report on the manufacturing sector will also be released, which should exhibit further declines.
Most likely, risk appetite will surge if the aggregate economic data indicate a continued slowdown in production figures. The same thing will happen if the Fed minutes show the willingness of some members to pause the rate hikes.
Forecasts for today:
EUR/USD
The pair is trading above the level of 1.0640. If the inflation data from Germany shows a decline, the pair will dip to 1.0580.
XAU/USD
The pair is testing the level of 1850.00. If the Fed minutes hint at a potential pause on rate hikes, the price will rise to 1868.00.
