The US dollar has given up some ground after a strong rebound in early January. Covid continues to run rampant in the US and Europe, but there is optimism that the roll-out of Covid vaccines will bring about economic recovery later in the year. This week’s highlights include the Fed rate decision and GDP reports in the US, France and Canada. German CPI posted a respectable gain of 0.5% in December, confirming the initial estimate. However, Eurozone CPI came in at -0.3% for a fourth straight month. The ECB maintained its interest rate and bond-buying levels at this week’s policy meeting. ECB President Lagarde acknowledged that Eurozone GDP for Q4 would likely be negative but said that growth was expected to rebound in 2021. PMI reports showed that the manufacturing sector remains well in expansionary territory, but the services sector is in a state of decline, with readings below the 50-level, which separates contraction from expansion. In the UK, inflation improved to 0.6% in December, up from 0.3%. CBI Industrial Order Expectations and GfK Consumer Confidence remained deep in negative territory, with readings of -28 and -28, respectively. Retail Sales rebounded from a previous decline but just barely, with a reading of 0.3%. This was well shy of the estimate of 1.4%. The December PMIs highlighted a tale of two sectors, as manufacturing came in at 52.9, indicating expansion. Services, however, continues to contract and slowed to 38.8 points. The Bank of Canada didn’t make any moves at its policy meeting, but the Canadian dollar climbed sharply after the decision as BoC Governor Macklem made no hint at a ‘micro-cut’ in rates and investors were relieved. In the US, the Philly Fed Manufacturing Index climbed to 26.5 in January, up strongly from the previous reading of 11.1 and well above expectations. Unemployment claims dropped to 900 thousand down from 965 thousand and below the forecast of 930 thousand. The week wrapped up with the Manufacturing PMI, which rose to 59.1, up from 56.5. This was its highest level since May 2007 and points to strong expansion. UK Employment Report: Tuesday, 7:00. Wages have accelerated for four straight months, coming in at 2.7% in November. The upswing is expected to continue, with a forecast of 3.0%. Claimant Change jumped to 64.3 thousand, and the markets will be hoping for a lower reading. The unemployment rate has been creeping higher and is expected to climb to 5.1%. Fed Policy meeting: Wednesday, 7:00. The Fed has been in a dovish mood, and will now have the backing of the Treasury Department as President Biden is set to implement a massive stimulus package. We can expect the Fed to sound dovish in the upcoming meeting. US GDP: Thursday, 13:30. The first-estimate GDP for Q4 of 2020 is expected to be respectable, with a forecast of 4.2%. A higher reading would be bullish for the US dollar. German Prelim CPI: Thursday, All Day. Germany’s CPI rebounded in December to 0.5%, up from -0.8% a month earlier. The first-estimate for January stands at 0.4%. French Flash GDP: Friday, 6:30. France’s economy soared by 18.2% in Q3, but is expected to reverse directions in Q4, with an estimate of -4.1%. Canada GDP: Friday, 13:30. Canada releases GDP on a monthly basis. In November, the economy slowed to 0.4%, down from 0.8% beforehand. Will we see a rebound in GDP in December? Further reading: EUR/USD forecast – for everything related to the euro. USD/JPY forecast – projections for dollar/yen AUD/USD forecast – predictions for the Aussie dollar. USD/CAD forecast – Canadian dollar analysis Forex weekly forecast – Outlook for the major events of the week. Safe trading! Kenny Fisher Kenny Fisher Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer. Kenny's Google Profile View All Post By Kenny Fisher MajorsUS Dollar ForecastWeekly Forex Forecasts share Read Next AUD/USD: Bears flexing muscles around 0.7700 amid virus, stimulus concerns FX Street 1 year The US dollar has given up some ground after a strong rebound in early January. Covid continues to run rampant in the US and Europe, but there is optimism that the roll-out of Covid vaccines will bring about economic recovery later in the year. This week's highlights include the Fed rate decision and GDP reports in the US, France and Canada. German CPI posted a respectable gain of 0.5% in December, confirming the initial estimate. However, Eurozone CPI came in at -0.3% for a fourth straight month. 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