Financial markets around the world go full steam ahead this week after two-weeks of holiday disruption. Traders will be returning to their desks in time for major economic data releases from the US, UK, Canada, Australia and New Zealand so it promises to be a busy week.

This Week
The high volatility doesn’t get started until Tuesday with the Nationwide House Price Index at 07:00. The index is expected to show that house prices contracted by 1.5% in December compared to the -0.4% seen in November.

At 09:30 we will see the Services PMI for the month of December from the UK. The index currently stands below the expansion/ contraction zone registering a 40.1 in November. Economists are expecting further deterioration to 39.0 in December.

US high volatility is due at 15:00 with two releases expected. The ISM Non-Manufacturing PMI probably contracted further in December to 36.8 from 37.3 one month previous. Pending Home Sales, also due at 15:00, are likely to show a 0.8% contraction for the reporting period of November. This follows on from October’s -0.7 percent.

One of the most highly anticipated events of the week is due at 19:00 with the release of the FOMC Meeting Minutes. The minutes are from the Fed’s December 16th 2008 meeting where the decision was taken to cut the Federal Funds Rate from 1.00% to 0.25%. Traders will be looking for an insight into the decision and any indication that rates may be cut further to 0.00%.

At 21:45 the New Zealand Trade Balance will be announced. The data is for the month of November and is expected to show a contraction in the trade deficit from 942M to 838M NZD.

Wednesday will be slightly quieter with two high influence economic announcements due. At 00:30 the Australian Retail Sales Trend number for November will be released. A consensus estimate is yet to be released, however we are following on from a 0.2% MoM increase in October.

At 13:15 GMT we have the first of the week’s significant employment data. ADP Non-Farm Employment Change is expected to show 450K jobs were lost in December, following on from a revised number of -472K in November.

Thursday begins with high volatility from Australia. Building Approvals and Trade Balance data are both due at 00:30. Building Approvals for November are expected to show a 1.3% decline after a fall of 5.4% in October. Australia’s trade surplus is expected to have decreased slightly in November to AUD 2.15B, down from 2.95B the month before.

Later in the day we will see the BOE Interest Rate Statement. Expectations are that the Bank will reduce the Official Bank Rate to 1.50% from 2.00%.

At 13:30 US Initial Jobless Claims will be reported. Claims are expected to rise above the 500K mark once again to 540K from the 492K seen last week.

Canada’s Ivey PMI is set to be released at 15:00. The indicator is designed to give a snapshot of the economy as a whole and it is expected to continue its deterioration to 38.0 from the 40.2 seen in November.

High volatility will hit the market in three pockets on Friday, with the first coming from the UK. Manufacturing Production and PPI Input will be released at 09:30. Manufacturing Production will be reporting for the month of November where output likely fell by 0.5% on the month after a 1.4% decline in October. PPI Input for December will probably show that wholesale inflation fell by 2.0% in December after a 3.3% drop in November.

At 12:00 Canada will release employment data for the month of December. Employment Change is expected to show that the Canadian economy shed 21.0K jobs following a loss of 70.6K in November. The Unemployment Rate is expected to climb from 6.3 to 6.5 percent.

At 13:15 Canada will release its Housing Starts numbers for December. The annualized rate of new residential constructions is expected to have increased from 172K to 175K.

At 13:30 the highly anticipated Non-Farm Employment Change and Unemployment Rate numbers are due from the US. Non-Farm Employment Change is expected to show that the US lost 475K jobs in December after it shed 533K in November. The US Unemployment Rate likely grew to 7.0% from 6.7% one month previous.

At the same time Canada will release its monthly Building Permits data for November. There was a huge contraction of 15.7% in October with a further 3.7% fall expected in November.

Last Week
Last week was characterised by further weakness in Sterling as BOE Governor King confirmed that more rate cuts are coming “if that proves to be necessary”. The BOE Inflation Report also confirmed that inflation will fall to “well below” the Bank’s target 2.0% in two years time. At the present time the market is expecting the UK Official Bank Rate to hit 2.00% by mid 2009.

On the other hand, Yen and the US Dollar were firm against the major currencies as economic data proved that the global economy is entering a recession. The GBP USD dove from an early week high of 1.5884 by over 1000 pips to a low of 1.4557. Based on closing prices this represents a weekly fall of 6.09%.

The GBP JPY was also very weak, falling by 7.43% on the week. This time last week one GBP would have bought you over 153 Yen, however the exchange rate currently stands at 143.02.

Other than the UK Inflation Report last week’s major news announcements were Initial Jobless Claims which hit a 7-year high of 516K and US Retail Sales which managed all-time YoY lows. Headline Retail Sales were down 2.8% YoY in October while Core Retail Sales were down by 2.2%. These numbers are even worse than 2001’s post September 11th data.

This Week
Once again the world’s major economies will be active this week with plenty to keep traders occupied. We begin at 23:50 on Sunday with Japanese preliminary GDP QoQ. The data is expected to show that the Japanese economy grew by 0.1% in the 3rd quarter after a 0.7% contraction in the previous period.

On Monday we have Real Retail Sales from Australia at 00:30. This indicator strips out the effects of inflation on Retail Sales. On a quarterly basis traders are expecting a 0.4% increase. In the last quarter Real Retail Sales fell by 0.6%.

Tuesday will be a busy day with Australian, UK, US and New Zealand data due. We begin at 00:30 with the RBA Monetary Policy Meeting Minutes which will offer an insight into the 0.75% rate cut on November 4th.

At 09:30 the UK’s YoY CPI is due. Economists are expecting inflation to fall from the 5.2% seen last month to 4.8%.

High volatility from the US begins with the Producer Price Index at 13:30. PPI is expected to post a -1.9% MoM for October after the 0.4% decline seen in September. This is followed by TIC Net Long-Term Transactions at 14:00. Foreign purchases of US securities have been in decline in recent months with a surplus of $18.0B expected in October.

At 14:30 Fed Chairman and US Treasury Secretary Paulson will testify before the US House of Representatives Financial Services Committee on the Troubled Asset Relief Program (TARP). High volatility is expected while the pair are making their remarks.

The data from New Zealand will be in the form of PPI Input. This data measures the rate of inflation experienced by manufacturers when purchasing goods and raw materials. The index came in at 5.6% in September.

Wednesday continues where a busy Tuesday left off. RBA Governor Stevens will speak in Melbourne. His remarks are expected to generate high volatility.

At 09:30 the BOE’s MPC Meeting Minutes will be released. Traders are expecting the vote count to be unanimous in favour of November 6th’s 1.50% interest rate cut.

At 13:30 we will see two high volatility events from the US. Core CPI is expected to show a 0.1% MoM increase in October. This is in-line with September’s number. Building Permits are expected to show a slight decline in the annualized number of residential permits issued. A number of 770K is anticipated for October.

At 19:00 we will have yet more insight into recent central bank rate cuts with the FOMC Meeting Minutes. This release corresponds to the 0.50% rate cut seen on October 29th.

A busy week for the UK continues on Thursday with October’s Retail Sales number due. A MoM decline of 0.9% is expected, steeper than September’s 0.4% fall.

Particular interest will be paid to this week’s Initial Jobless Claims report from the US at 13:30. As we have already mentioned, claims hit a 7-year high last week at 516K with a slightly lower number of 508K likely this week.

On Friday morning the BOJ Interest Rate Statement will be released. Rates are expected to remain on hold at 0.30% with the BOJ Press Conference likely to be the high volatility event.

The final high volatility event of the week will come from Canada with the Core CPI release. September saw a 0.4% increase with October expected to be completely flat at 0.0%.

For further information and updates be sure to visit our economic calendar. This week US PPI, BOE MPC Meeting Minutes, US Core CPI and Canadian Core CPI will all be supported by our visual analysis and historical data tool.

 

Last Week
Obviously last week’s major news was the rejection, modification and approval of the $700 billion credit market rescue plan in the US. President Bush finally signed the bill before the markets closed on Friday and the Emergency Economic Stabilization Act (EESA) of 2008 was born.

Investors in the US remain unconvinced by the bill with the DOW and the S&P500 closing at lows for the week. The DOW closed down 1.5% on Friday at 10,325.38 and the S&P at 1,099.23, off by 1.35% on the day. This brings up staggering losses for the week of 7.3% and 9.4% for the DOW and S&P respectively.

This week traders will be keenly anticipating Monday’s market open. Will investors and institutions be encouraged by the EESA or does it signal the beginning of a financial winter?

This Week
Even though economic news might be taking a back seat to the US bailout, we still have a very busy week in store.

The first high volatility of the week should be seen when Canadian Building Permits are released at 13:30 on Monday. Permit approvals are expected to fall by 1.4% MoM compared to August’s 1.8% increase.

A little later at 15:00 we have the Ivey PMI, also from Canada. The Richard Ivey School of Business index should indicate weak expansion amongst the surveyed purchasing managers with a reading of 51, down from the 51.5 previous.

Towards the end of the day, at 22:00, the NZIER Business Confidence reading will be released. New Zealand is braced for more bad news after last month’s -64 reading.

Tuesday will be dominated by global interest rate news. First up we have the BOJ Interest Rate Announcement which is expected before 4am UK time. The BOJ is likely to keep rates on hold at 0.50% once again. Although this event is only regarded as medium impact news the BOJ Press Conference later in the day should be met with high volatility.

Prior to this press conference we will see the RBA Interest Rate Statement. Economists are predicting a half-point cut to 6.50% and any more/ less than this will likely bring massive volatility to an already high-impact event.

The first high volatility from the UK will be seen on Tuesday. The Halifax House Price Index is due, but this release is subject to change as we have seen before. Expectations are for a MoM decrease of 1.8%, the same as we saw for August.

One UK event that will not be subject to a schedule rearrangement is the Manufacturing Production number. MoM the industry is likely to have contracted by 0.2%, the same as in the previous reporting period.

High volatility will come from the US when Ben Bernanke talks about the economic outlook in Washington DC at 18:15. We can also expect high volatility from the FOMC Meeting Minutes due for release at 19:00.

Wednesday will begin with Australian Home Loans data. MoM economists are expecting a 1.0% fall in the number of new loans granted compared to a 0.2% fall in the previous month.

Canadian construction/ housing data will return to focus at 13:15 with Housing Starts expected. An annualized number of 207K new residential buildings are likely to have been started in the month of September. This can be compared to a number of 211K in August.

The US housing market is seen as key to economic strength so Pending Home Sales will be very closely watched at 15:00. Once again numbers are expected to have fallen on a monthly basis. For the month of September a negative figure of 1.5% is expected.

Early on Thursday morning Australia will release Employment Change and Unemployment Rate data at 01:30. This data could be key to the AUDUSD rate depending on the RBA rate decision earlier in the week. Economists are expecting the change in the number of employed people to remain flat in September and an unemployment rate of 4.3%.

At midday the BOE Interest Rate Statement will be released. The general consensus is for a rate cut to 4.75%. Some economists believe that this will be the beginning of a dovish cycle that takes the Official Bank Rate to 3.5% over the next 12 months.

A G7 Meeting has been pencilled in for either Thursday or Friday this week. It is to be held in Washington DC and traders should be aware that officials are likely to talk to the press throughout the day. These events can bring high volatility to the market.

Friday will bring another wave of Canadian and US high volatility. Beginning at 12:00 we will see the Canadian Employment Change and Unemployment Rate. The Canadian labour market is expected to have added 11.0K jobs in September while the Unemployment Rate is likely to have increased to 6.2%.

At 13:30 the US and Canadian Trade Balance figures will be released. The US deficit is expected to have contracted slightly to $59.5 billion from the 62.2B seen previously. Canadian trade surplus probably fell to CAD 4.6B from 4.9B in August.

As always our economic calendar will keep you up to date with the week’s data.