Week Ahead for FX, Bonds : U.S. Jobs Data in Focus as Investors Gauge Rate Outlook
By Dow Jones Newswires staff
Below are the most important global events likely to affect FX and bond markets in the week ending Jan. 9.
U.S. jobs data for December and ISM data on U.S. manufacturing and services-sector activity will be the key focus in the coming week as investors gauge the health of the economy and the likely timing of the next interest-rate cut by the Federal Reserve.
In Asia, inflation readings from China, Australia and several Southeast Asian economies are likely to shape interest-rate expectations in 2026, while diplomatic developments could influence regional trade and investment sentiment. In Europe, eurozone inflation data will be watched.
U.S.
U.S. jobs and activity data could provide key insights into when the Federal Reserve will cut interest rates again after three consecutive reductions at the end of 2025.
The minutes to the Fed’s December meeting revealed some policymakers were cautious about cutting rates further in the near term. Since that meeting, U.S. third-quarter gross domestic product figures came in well above expectations too and, as a result, money markets price in an 85% chance that rates will be left on hold at the next Fed decision on Jan. 28.
Markets aren’t fully pricing in another 25 basis-point rate reduction until June, with one more anticipated later in the year. However, any signs that the recent slowdown in the jobs market is continuing could bring rate-cut expectations forward.
Focus will center particularly on Friday’s release of U.S. nonfarm payrolls data for December. This will mark a return to normality after many major data releases were delayed or not published due to last year’s lengthy government shutdown.
“Risks are balanced toward weaker labor market outcomes that would have Fed officials cutting rates more significantly below 3%,” Citi analysts said in a note. The Fed Funds rate is currently in a range between 3.5% and 3.75%,
Ahead of Friday’s figures, investors will watch ADP private payrolls figures for December on Wednesday, followed by weekly jobless claims numbers Thursday.
ISM data on manufacturing activity on Monday and on services activity on Wednesday will be closely monitored for signs of how well the economy is currently performing and for indications on inflation trends. The University of Michigan’s preliminary consumer survey for January is also released on Friday.
Other U.S. data during the week include October trade and preliminary productivity and costs data for the third quarter on Thursday.
Canada
Canadian jobs data for December are due on Friday and will be scrutinized for signs of how the jobs market is holding up.
The figures come after recent data showed GDP fell by 0.3% during October, the biggest step down for the economy since the end of 2022. The advance estimate for November is for 0.1% growth.
Canadian money markets price in 17 basis points of rate increases–or a 68% change that rates will rise–during 2026, LSEG data show. Weak data could reduce this prospect.
Canada’s trade data for October will be released Thursday.
Latin America
Mexico releases full-month inflation data for December on Thursday.
Banxico, Mexico’s central bank, cut interest rates by 25 basis points to 7.0% in December, although it also raised its inflation outlook significantly at the same time as forecasting weak economic growth.
Rabobank expects at least two more 25 basis-point rate cuts this year, starting in February. The outlook isn’t certain as the central bank will have to navigate “competing stagflationary pressures” though the risk is for more rather than fewer rate cuts, Rabobank’s strategists say in a note.
Eurozone
Some of the last economic data for 2025 are up for release in the coming week, including flash estimate inflation figures for December.
French and German flash inflation data are due on Tuesday, followed by those of Italy and the eurozone as a whole on Wednesday.
“Preliminary December eurozone inflation is likely to rise sequentially, driven by higher travel-related service costs, but lower energy costs will likely offset some of the rise,” HSBC economists said in a note.
The data are unlikely to change the European Central Bank’s assessment that it is “in a good place” and expectations that interest rates will stay on hold in the coming months.
On Tuesday, purchasing managers’ indexes for services activity in December are due for Spain, Italy, France, Germany and the eurozone.
On Wednesday, France will publish a consumer confidence survey for December. The European Central Bank’s consumer expectations survey is due on Thursday, alongside eurozone business and consumer surveys for December.
Unemployment data are due from Spain on Monday, from Italy and Germany on Wednesday, all for December. Eurozone unemployment figures for November are due Thursday.
Germany will release manufacturing orders data for November on Thursday, followed by output data on Friday. France and Spain will also release industrial production data for November on Friday.
Eurozone retail sales figures for November are due on Friday.
Government bond issuance will pick up as countries kick off their annual funding programs with a busy January, which is expected to see a high number of syndicated deals as well beside the auctions.
Germany will auction December 2027 Schatz bonds on Tuesday and will launch a new, February 2036-dated Bund on Wednesday. Spain and France hold their first bond auctions on Thursday.
U.K.
The week ahead is relatively quiet for U.K. data, with focus on consumer credit and mortgage lending data for November due on Monday.
These could shed light on the extent to which the housing market was impacted by concerns ahead of the Nov. 26 budget, Investec’s Sandra Horsfield said in a note.
Other data in the coming week include the final estimate of the December purchasing managers’ index on services-sector activity on Tuesday.
The U.K. Debt Management Office begins 2026 with an auction of the March 2031 gilt on Wednesday.
Switzerland
Switzerland releases inflation data for December on Thursday.
The data aren’t expected to alter expectations that the Swiss National Bank will likely keep its key interest rate at 0% in the months to come, especially given its reluctance to take interest rates into negative territory.
Scandinavia
Denmark and Norway will hold government bond auctions on Wednesday.
Japan
The Bank of Japan will hold its branch managers’ meeting and release its regional economic report on Thursday. The report compiles assessments from the central bank’s regional branches, based on data and information gathered ahead of the meeting of branch general managers.
The Bank of Japan is also scheduled to conduct outright purchases across four segments of the Japanese government bond market on Wednesday, including bonds with maturities of more than one year and up to three years, as well as those with maturities of more than 10 years and up to 25 years. The operations are expected to provide near-term support to the bond market.
Separately, the Ministry of Finance will auction about 2.6 trillion yen of 10-year Japanese government bonds on Tuesday and around 700 billion yen of 30-year sovereign debt on Thursday. Demand for the longer-dated bonds may be stronger, reflecting the higher yield likely offered by the new issue.
China
Investors are awaiting China inflation data, due Friday, for signals on the strength of domestic demand. Consumer inflation reached a 21-month high in November, supported by higher fresh vegetable prices, ING said. Food prices could continue to lift the consumer-price index in the near term, ING economists said in a research note.
Attention is also on activity data after China closed the year with a stronger-than-expected official manufacturing PMI for December. Investors are watching for the upcoming services PMI from RatingDog, due Jan. 5.
“Improving soft data makes us more confident with our long-held 2025 GDP forecast at 5%,” Citi analysts said.
Australia
In Australia, November consumer-price data due Wednesday will be closely watched for indications of the future direction of interest rates.
The Reserve Bank of Australia left its cash rate unchanged last month, extending a pause that began in August, while warning that inflation risks had tilted to the upside.
Although the RBA places greater emphasis on quarterly inflation data than on monthly figures, markets will look for any signals in November’s CPI that could influence expectations about the timing of potential rate increases, which some economists see beginning in 2026.
Data on building approvals and international goods trade for November are also due for release, likely offering additional insight into economic momentum. Australia’s economy grew 0.4% in the September quarter and 2.1% from a year earlier, according to the latest GDP release.
South Korea
South Korean President Lee Jae-myung is scheduled to meet Chinese President Xi Jinping in a bilateral summit on Jan. 5.
The talks are expected to cover economic cooperation, including supply-chain investment, the digital economy and efforts to further support tourism through initiatives such as cultural exchange programs. The meeting comes as both sides seek to stabilize relations strained since South Korea’s deployment of a U.S. missile defense system in 2017.
Indonesia
Indonesia is set to release its trade and consumer-price data on Jan. 5.
External trade momentum likely softened in the fourth quarter as the effects of front-loaded demand faded, RHB economist Wong Xian Yong said. While exports could see a modest near-term rebound amid improving U.S.-China relations, any recovery is expected to be more gradual than strong, he added.
Kenanga expects full-year inflation for 2025 to average about 1.9%, with price growth ending the year near the central bank’s target if current trends persist.
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01-04-26 1614ET
