Week Ahead – Focus on Georgia Senate races and COVID holiday surge


The week ahead is all about COVID, the Georgia Senate runoff races, and possibly a negative nonfarm payroll reading.  The US is already setting daily COVID-19 records ahead of the holiday surge and concerns are high the new COVID-19 strain believed to be more contagious is spreading across the country.  The January 5th Georgia Senate will closely be watched to see if the Democrats can pull off the upset and win both races, which would give them control of the Senate.  Before Election Day in November, financial markets priced in for a ‘blue wave’, but that was completely reversed after the strong performance by Republicans.  A Biden administration with Congress on his side would allow for sweeping reform that includes higher taxes, a strong push for more regulation, and clean energy initiatives.

The main economic data event of the week will be the December nonfarm payroll report.  The winter wave of COVID is impacting employment and there’s a chance that we could see a negative print. Economists have a wide range of expectations from -175K to +200K.

US Politics

The Georgia Senate runoff races are here.  There was not a lot of polling but the recent surveys give Republicans an edge that is within the margin of error.  Immediately after the Election Day results, it seemed Democrats had a 10% chance of winning both seats, but now that has improved to an almost one in three chance. The latest polls show Republican Sen. David Perdue trailing 47.5% to 48.5% against  Democrat Jon Ossoff, with Republican Sen. Kelly Loeffler down 47.3% to 49.2% to Democrat Raphael Warnock.  The polling sample is too small and runoff races deeply depend on how motivated each base can turn out the vote.

Both races are too close to call and within the margin of error.  No one can be confident on what turnout to expect but early voting so far has been greater than what happened for the November 3rd election.  The base case is still that Republicans will win one of the Senate races and secure control of the Senate but that is no longer a foregone conclusion.


Pan-European Manufacturing and Services PMI’s released Monday and Wednesday. Both have been surprisingly resilient in the face of a resurgent Covid-19 pandemic. Both are expected to show improvements, notably service this week. Disappointing data will likely weigh on European equities rather than the Euro as the currency is a US Dollar story, and not a Europe story.

On that note, Georgia Senate runoff on Tuesday is a major risk point. A democrat win of both seats may provoke a sharp reversal into defensive US Dollars and lead to a large fall in the Euro due to extended long positioning.


A Brexit deal was concluded on Christmas Eve and is moving rapidly through the approval process from both sides for the official start of the UK outside of Europe on Jan 1st. UK equities have been cautiously positive with Sterling also rallying. Sterling’s rally has been muted due to extended long positioning in the market ahead of the deal.

THe start of Brexit is a key risk point for UK equity markets and Sterling. If massive queues of trucks get caught on both sides of the English Channel due to slow paperwork and Brexit mechanics, markets are likely to take fright and exiti UK equities and long Sterling positions.


Manufacturing and Services PMI’s expected to recover strongly but any gains will be more than offset by more of England entering tier-4 lockdowns. The approval of the Astra-Zeneca vaccine this week though, with inoculations to start on Jan 4th, is a game-changer for Britain. The vaccine approval should put a floor under any Covid-19 uncertainty regarding UK financial markets.

Brexit, as outlined above, is the major risk point for UK markets next week.


Another two per cent hike in interest rates to 17% has boosted sentiment towards Turkish markets, notably the currency. The USD?TRY has fallen to 3.3800 this week, and is set to test its 200-day moving average at 7.3100 next week, assuming the US Dollar remains weak internationally.

The aggressive actions by the central bank on interest rates has put a floor on Turkish risk now, supporting the currency and allowing a rebuilding of forex reserves. Risks going forward are purely political over the next few weeks.


Caixin PMI’s and Balance of Trade are expected to show China’s economy continuing to fire on all cylinders. A surprise downside print (unlikely in China) would be a negative for China equities.

The White House is attempting to tighten the noose on US companies investing in Chinese equities associated with the military. Greater risk comes from the ongoing escalation of investigations into Ant Financial and Alibaba, as well as China big tech in general. The government will be happy to sacrifice short term pain on the stock market to get its way.


India added to the US watchlist over forex interventions. That may force the central bank to allow more INR strength harming exports and causing bond market outflows. Government continues to grapple with Covid-19 and farmer protests, and stagflation,hampering economic recovery.

India releases Manufacturing PMI and Balance of Trade on Monday. PMI recovery expected to increase, while BoT may disappoint. Unlikely to upset international investor flows into India bonds and equities as a recovery play.

New Zealand

Holiday shortened week with no significant data New Zealand Dollar significantly outperforms over holiday period, but Covid-19 situation in Sydney could bring it and NZ equites back to earth as Q1 2021 travel corridor hopes fade..


Holiday shortened week. Heavy data release schedule with PMI’s, Balance of Trade, ANZ Jobs Ads and Westpac Consumer Confidence. All are expected to be strong, reinforcing Australia’s rapid recovery.

Australian markets will be at the mercy of the evolution of the Covid-19 situation in Sydney. Escalation and/or wider lockdowns will exert a heavy price on Australian equities, but probably not the currency.


Japan releases PMI’s, Leading Economic Index, Consumer Confidence and Household Spending. Likely to show a continuation of manufacturing/industrial recovery but very weak consumer spending. With the Nikkei flying high at the year end, it could take the wind out of its sails.

Otherwise, equities and currency otherwise at the mercy of US fiscal progress in US Congress, and the fallout, if any, from the Georgia Senate runoff on Tuesday which is likely to be the macro influencer of the week.




Crude prices are declining as global lockdowns will complicate OPEC+ deliberations to increase output again in January.  The virus situation in the US will likely produce more lockdowns and that could continue to weigh on the short-term demand outlook for crude.


Gold’s outlook for next year is still very bullish as a gloomy global first quarter will keep all the major central banks and governments providing more support.  Gold could get a boost from the Fed’s Minutes or a wrath of Fed speak that will signal they are closer to providing more support for the economy.


Bitcoin’s wild ride continues but might be losing momentum unless more institutional interest joins the cryptoverse.  Regulatory concerns are percolating and that provide some massive pullbacks.


Key Economic Events

Sunday, January 3rd

  • New Zealand celebrates day after New Year’s Day
  • Australia Final Manufacturing Index
  • Japan Final Manufacturing PMI
  • China Caixin Manufacturing PMI

Monday, January 4th

Economic Releases:

  • Manufacturing PMI Readings: US, Canada, UK, Mexico, India, Eurozone, Germany
  • UK Mortgage Approvals
  • Japan Monetary Base Levels
  • Australia ANZ Job Advertisements m/m
  • OPEC+ meeting to discuss February levels

Tuesday, January 5th

Economic Releases:

  • Georgia Senate Runoff Races
  • US Dec ISM Manufacturing: 56.5 estimate v 57.5 prior
  • German Retail Sales and Unemployment Change
  • CPI: Switzerland, French
  • Canada Prices (Industrial and Raw)
  • China Caixin Services PMI

Wednesday, January 6th

-A wrath of U.S. economic indicators could show the economy is heading in the wrong direction.

Economic Releases:

  • FOMC Meeting Minutes, US Factory Orders, and Final Services PMI
  • Services PMI: Spain, Italy, Germany, Eurozone, and the US
  • Spain CPI
  • EIA crude oil inventory report
  • Australian Trade Data

Thursday, January 7th

Economic Releases:

  • US Initial Jobless Claims, ISM Services Index
  • Germany Factory Orders
  • Switzerland Retail Sales, Unemployment Rate
  • UK Construction PMI
  • Eurozone Preliminary CPI readings and confidence data, retail sales

Friday, January 8th

Economic Releases:

  • US Dec Change in Nonfarm Payrolls: 85K estimate v 245K prior, Unemployment Rate: 6.8% estimate v 6.7% prior, Average Hourly Earnings, Wholesale Trade data, and Consumer Credit
  • Canada Net Change in Employment: No est v 62.1K prior
  • German Nov Industrial Production M/M: 0.7% estimate v 3.2% prior
  • France Industrial Production
  • Eurozone Industrial Production

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya