The first week of the month is always busy, however, perhaps this one is more so than usual. The calendar is packed wall-to-wall with tier one data. There are three major central banks to keep traders on their toes, in addition to the usual batch of PMI surveys. The week then rounds off with another crucial US jobs report. 

Watch for: 

  • North America – Canadian GDP, US ISM data, and Nonfarm Payrolls
  • Europe & Asia – PMIs, Eurozone inflation and central bank policy decisions for the RBA, BoE, and ECB 
  • LatAm – Brazilian central bank rates decision

North American data: 

  • Canadian GDP (Tuesday 1st February, 1330GMT) Monthly GDP is expected to be +0.3% in November (+0.8% in October)
  • ISM Manufacturing (Tuesday 1st February, 1500GMT) Consensus estimates are looking for a slight decrease to 58.3 (from 58.7 in December)
  • US ADP Employment (Wednesday 2nd February, 1315GMT) The employment change for the private payrolls company is expected to be 250,000 in January (after 807,000)
  • US Factory Orders (Thursday 3rd February, 1500GMT) 
  • ISM Services (Thursday 3rd February, 1500GMT) 
  • Nonfarm Payrolls (Friday 4th February, 1330GMT). Headline payrolls are expected to improve slightly to 238,000 in January (up from 199,000 in December).
  • Canadian unemployment (Friday 4th February, 1330GMT) is expected to increase slightly to 6.0% (from 5.9% in December)

The PMIs are always important as they are the most current snapshot of a country’s growth outlook. The ISM data is the version of the US data that the market sits up and takes the most notice of. The ISM Manufacturing is expected to reflect the sector still growing strongly in the high 50s (albeit slightly lower at 58.3 in January). This is also expected to be the case with the ISM Services which covers a much larger segment of the economy and is expected to remain in the low 60s. If so, despite slipping back for what would be the last couple of months, the US economic outlook would remain strong in January.


The end of the week is all about US jobs. The ADP Employment is expected to have moderated back to 250,000 in January. After the huge bum-steer from ADP last month (which was massive at 807,000 versus the Nonfarm Payrolls of 199,000), the two are expected to be much closer this month. Official Nonfarm Payrolls are expected to be 238,000. With the participation rate still at least 1% below pre-pandemic levels, the continued restriction on labor supply is resulting in the growth of fewer jobs. However with unemployment at 3.9%, this may now be the new normal and still reflect increased tightness in the labor market. Wage growth (Average Hourly Earnings) is forecast to pick up to 5.1% and would also reflect this tightness and the pricing pressures as a result.

Market Reaction: 

  • USD to strengthen on any positive surprises in ISM data. For payrolls, better than expected jobs and wage growth all put more pressure on the Fed to tighten. This would drive USD higher
  • CAD to react to GDP and unemployment, with better than expected data driving CAD gains.

Europe & Asia: 

  • Eurozone GDP (Monday 31st January, 1000GMT) Flash Q4 GDP is expected to be +0.6% QoQ (after +2.2% in Q3).
  • Reserve Bank of Australia monetary policy (Tuesday 1st February, 0330GMT) The RBA is expected to hold rates at +0.10%.
  • Eurozone Manufacturing PMI - final (Tuesday 1st February, 0900GMT) Consensus forecasts for the final PMI are expected to be unrevised at 59.0.
  • UK Manufacturing PMI - final (Tuesday 1st February, 0930GMT) The final PMI is expected to be revised higher to 57.6 (from the prelim of 56.9)
  • Eurozone flash inflation (Wednesday 2nd February, 1000GMT) Headline inflation is expected to remain at +5.0% in January, with core inflation increasing slightly to 2.7% (from 2.6% in December).
  • Eurozone Services PMI - final (Thursday 3rd February, 0900GMT) 
  • UK Services PMI - final (Thursday 3rd February, 0930GMT) 
  • Bank of England monetary policy (Thursday 3rd February, 1200GMT) 
  • European Central Bank monetary policy (Thursday 3rd February, 1200GMT) 

Eurozone inflation is expected to remain steady on the headline and just move marginally higher on a core basis on Wednesday. This will be hot on the minds of the ECB on Thursday too. Watch for a potential steer from German inflation on Monday, being the Eurozone’s largest economy.

Eurozone Inflation

Three major central banks update on monetary policy this week. All come with the potential for driving volatility in the coming days. The Reserve Bank of Australia (RBA) is first up and after recent strong employment and higher than expected inflation, there could be a change in tack (or at least the hint of one) from Governor Lowe. No tightening is expected yet, but the language could certainly be more leading towards action. Lowe said in November that only persistent inflation would bring forward the first rate hike from 2024 and that one in 2022 was not warranted. Any change to this would be AUD supportive.

The Bank of England is expected to hike by +25 basis points (to 0.50%) on Thursday. If so, traders will be watching for how unanimous this decision is. Furthermore, inflation and growth projections are updated, which could add fuel to any upside that GBP sees off a rate hike. GBP would suffer if the expected hike were not seen.

We also get the European Central Bank on Thursday too. Whilst no policy changes are expected, how the Governing Council deals with communication surrounding increasing inflation levels will be important. Markets are starting to price for tighter policy over the coming 12 months. 

Market Reaction: 

  • AUD with room for upside if the RBA changes its dovish position.
  • GBP will be volatile from the BoE, with the potential for a move higher on a hike.
  • EUR to see elevated volatility from the ECB.

Latin America: 

  • Colombian unemployment (Monday 31st January, 1500GMT) 
  • Brazilian Manufacturing PMI (Tuesday 1st February, 1300GMT) 
  • Brazilian central bank monetary policy (Wednesday 2nd February) a +150bps rate hike to 10.75% is expected (up from 9.25% previously)
  • Mexican Consumer Confidence (Thursday 3rd February, 1200GMT) 

The Brazilian Central Bank is expected to announce another big hike in rates this week. With inflation remaining above 10% (following the mid-month inflation data last week), the bank is expected to continue to deploy its exceptionally hawkish response to the pricing pressures. Despite the negative impact of such eye-wateringly high-interest rates, the Brazilian real has performed well in recent weeks. Latterly that performance has also come in the face of a strengthening US dollar. It may struggle to continue this performance if such aggressive tightening continues to be necessary.


Market Reaction

  • BRL may struggle if the Brazilian central bank continues to signal the need for further hikes.