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This week the US Dollar will look to recover from losses sustained on Friday due to mortgage market worries and new record high oil prices.

The Dollar was sold off because of concerns that losses at Fannie Mae and Freddie Mac may spiral out of control and see the lenders nationalized. The big winner from the news was the Australian Dollar, hitting fresh 25-year highs against the Greenback.

Oil was driven higher (above $147 a barrel) on speculation that Israel may attack Iran. This helped the Canadian Dollar recover from much worse than expected employment data. The Canadian Labor market shed 5K jobs in June while it was expected to create 10K. This contributed to an increase in the Unemployment Rate from 6.1% to 6.2%.

This week we have a jam packed economic calendar with high volatility events right from the off. We begin the week on Sunday night with Core Retail Sales and Retail Sales from New Zealand. The Core number is expected to increase by 0.5% MoM while Retail Sales are expected to moderate by 0.1% on a monthly basis.

Monday: On Monday morning the main focus will be UK PPI Input MoM. The monthly rate is expected to come in at 2.5%, less than last month's 3.8%. However, this will still see the YoY number climb to 28.9%.

The rest of the London and New York sessions will be fairly quiet with Industrial Production from the Eurozone and the Fed Governors open meeting and vote on mortgage rule changes.

At 23:45 Monday night we will see further high impact data from New Zealand. This time it is the CPI QoQ. Growth in the Consumer Price Index is expected to climb to 1.4% QoQ.

Tuesday: Tuesday promises to be a busy day with high volatility events from the UK, Australia, Japan, Eurozone, US and Canada. We begin the day at 00:01 with the UK's RICS House Price Balance.  This survey measures the percentage of chartered surveyors reporting a reduction in house prices in their area. The market is anticipating that 93.8% of respondents will register a price drop. At 09:30 we will see the UK CPI with the YoY rate expected to climb to 3.6% pushing the data further above the BOE's 2.0% threshold. Not surprisingly Core CPI is expected to remain at 1.5% indicating that food and energy costs remain the main driving factors of consumer inflation.

At 02:30 the RBA will release the minutes from their last Interest Rate Meeting. Traders will be interested to see the RBA's views on slowing economic growth and the chances of any more interest rate hikes in the near future. The Australian Dollar has been trading at or near 25-year highs against the US Dollar for some time now in the face of strong commodity prices and a favourable interest rate gap.

Japanese Yen traders will be focussed on the Interest Rate Announcement and the accompanying BOJ Press Conference. With interest rates expected to remain steady at 0.50% more focus will fall on the press conference. Traders will be keen to see if the BOJ expects economic growth to remain relatively flat. It is expected that interest rates will remain at 0.50% for the foreseeable future.

Although the Euro is likely to react more to data from the US than its own economic data there is one high volatility release due. The German ZEW Economic Sentiment  will probably fall again to -55.5.

It will be a busy day in the US with Core Retail Sales, Retail Sales and PPI at 13:30 followed by Bernanke's Testimony to the Senate Committee on Banking, Housing and Urban Affairs at 15:00. Retail Sales are expected to moderate slightly from May's impressive growth with the Core figure expected at 0.9% and Retail Sales at 0.4%. Elsewhere PPI is expected at 1.3% MoM, down from the 1.4% growth in May.

Canada will join Japan in making its latest Interest Rate Statement. Rates are expected to remain on hold at 3.00% but with the BOC's bias towards cutting rates traders will be on the lookout for any surprise cuts. The rate statement will also be closely scrutinised for changes in the language that may indicate rate moves in the months to come.

Further high volatility events for the week are as follows:

Wednesday:
04:05 RBA Governor Stevens Speaks
09:30 UK Claimant Count Change
10:00 Eurozone CPI YoY
13:30 US Core CPI MoM
14:00 TIC Net Long-Term Transactions
15:00 Bernanke Testifies before the House Committee on Financial Services
19:00 FOMC Meeting Minutes

Thursday:
BOC Monetary Policy Report
BOC Governor Carney Speaks

Visual Analysis and Historical Data
This week the visual analysis and historical data tool will support the US PPI and US Core CPI data releases.

The GBPUSD currency pair promises to be in focus this week as the UK and US both have busy economic release schedules

On Monday we will see PPI Input and Trade Balance data from the UK at 09:30. Both of these releases are regarded with maximum importance. Economists are expecting PPI Input to come in at 1.8% MoM. The index is important because it assumes that the manufacturing sector will look to pass on increasing costs to the consumer. Elevated Producer Inflation has been caused by an increase in fuel and commodity prices and the impact of a softening Pound. PPI Output is also set to be released at the same time although this is slightly less important to the market.

The UK Trade Balance, released by The Office for National Statistics, is expected to narrow slightly to -7.5 billion pounds from an expected revision of -£7.6 bln in February.

This Tuesday (13^th) will be equally as busy. Just after midnight UK time, the RICS House Price Balance will be released. Economists are expecting 80% of mortgage surveyors polled to report house prices falling in their area from the 78.5% last month.

At 09:30 the highly anticipated UK Consumer Price Index will be released. Traders will be most interested in the CPI YoY because it is the benchmark reading that the BOE uses in its monetary policy considerations. The CPI is expected to increase to 2.6% from a previous reading of 2.5%. Core CPI is also expected to increase from 1.2% to 1.3%

After a quiet Monday, the first high volatility news from the US will be released on Tuesday. The action starts at 13:20 with Fed Chairman Bernanke’s speech at the Atlanta Fed’s Financial Markets Conference. Then, at 13:30 (08:30 EDT) Retail Sales and Core Retail Sales are due. Retail sales are expected to decrease MoM by -0.2%, however the core number is set to rise by 0.2%.

Later in the week we will see the further action from the UK and US with BOE Quarterly Inflation Report (Wednesday @10:30), US Core CPI MoM (Wednesday @ 13:30), Empire State Business (Manufacturing) Conditions Index (Thursday, 13:30), TIC Net Long-Term Transactions (Thursday, 14:00), Fed Chairman Bernanke speaking at the Chicago Fed’s annual convention (Thursday, 14:30), Philadelphia Fed’s Manufacturing Index (Thursday, 15:00) and finally Michigan Consumer Sentiment at 14:55 on Friday.

Outside of the US and UK this week the following high volatility events are scheduled:

NZD – Retail Sales MoM, Wednesday @ 23:45
NZD – PPI Input MoM, Thursday @ 23:45
JPY – Preliminary GDP QoQ, Friday @ 00:50

Economic Speeches and Comments

As usual there are a number of key comment and events to be aware of, especially from the US. The Atlanta Fed’s Financial Markets Conference dominates the first part of the week with no less than 3 Federal Reserve officials speaking on Tuesday. The market will focus on Bernanke’s comments at 13:20 with Warsh and Plosser participating in discussions later in the day.

Bernanke is also due to speak at the Chicago Fed’s Annual Conference on Bank Structure and Competition on Thursday, 14:30. This is also a high profile event as Bernanke’s comments focus on “Risk Management at Banking Organizations”.

Full details can be found at this week’s speech and comment calendar.

Also this week, the visual analysis and historical data tool is available for Core US CPI.