With a plethora of high impact data due this week there should be no shortage of market volatility. However, the ECB’s  Minimum Bid Rate Announcement, US Retail Sales, CPI and UoM Consumer Sentiment look certain to dominate events.

This week
This week, high volatility events begin on Monday at 15:30 with the Bank of Canada Business Outlook Survey. The quarterly survey will be watched very closely due to the significance of the firms that are surveyed. A change in sentiment within these firms can be a precursor to future economic activity and economists will be looking for signs of job losses or a reduction in investment.

Also on Monday the NZIER Business Opinions Survey is due to be released. This is New Zealand’s equivalent to the BOC Outlook Survey so traders will be keen to see how businesses are likely to react to current economic conditions. This indicator came in at -19 in the third quarter of 2008.

On Tuesday our first major event will be Ben Bernanke’s participation in the Stamp Memorial Lecture Series organised by the London School Of Economics (LSE). He is due to speak about “Policy Responses to the Financial Crisis” at 13:00 in London.

At 13:30 US and Canadian Trade Balance data will be released. The US is currently running a trade deficit of $57.2B but this is expected to have improved slightly to $53.5B in November.

Canadian trade surplus for the month of November is expected to come in at CAD 3.3B after October’s 3.8B. Canadian trade surplus has been slowly eroded over recent months, falling from a revised $5.6B in September.

Building Consents from New Zealand will complete Tuesday’s events. The monthly reading for December will be closely watched following November’s 21.9% fall in approvals issued.

Australian Home Loans are due to be released at 00:30 on Wednesday morning. Data for November is expected to show a 1.0% increase in the number of new loans granted following on from a 1.3% increase in October.

Later in the day focus will shift to the US with Retail Sales and Core Retail Sales for the month of December due at 13:30. This data will be closely watched because it is an indication of consumer spending during the holiday season; largely regarded as the busiest in the retail sector’s calendar. A decline of 1.3% is expected in the Core number, following on from a 1.6% fall in November. The headline figure is expected to show a drop of 1.2% MoM after the 1.8% decline seen one month previous.

Thursday promises to be a very busy day, beginning at 00:30 with Australian employment data. Employment Change for December is expected to show that the Australian economy shed 20K jobs, following on from a reduction of 15.6K in November. The Unemployment Rate over the same time period is expected to have increased from 4.4% to 4.5%.

The most important piece of news of the day from Europe will be the combination of the ECB Interest Rate Announcement and the ECB Press Conference. Although the Minimum Bid Rate announcement itself is only regarded as a medium volatility event it cannot be denied that traders and economists will be watching it very closely. The ECB is expected to cut rates from 2.50% to 2.00%. Once this has been confirmed, attention will switch to the press conference for an insight into the decision. Traders will also be looking for clues to future interest rate moves. The ECB press conference is due at 13:30 GMT.

Also due at 13:30 is US PPI and Initial Jobless Claims. Wholesale inflation is expected to have declined by 2.0% in December, following on from a 2.2% decline in November. US Initial Jobless Claims came in slightly better than expected last week at 476K. However, this is still an indication that the US economy is in recession and a figure of 520K is expected this week.

Friday will be dominated by high ranking US data. We begin at 13:30 with the Core CPI. Economists are expecting an increase of 0.1% in consumer inflation for the month of December after a flat November.

The next piece of news to cross the wire will be TIC Net Long-Term Transactions. After a huge fall to $1.5B in October vs the $66.2B seen in September, net investments in US securities is only expected to recover to $2.0B for November.

To close the week we will see the University of Michigan Consumer Sentiment (preliminary reading). Economists are expecting the index to drop slightly to 59.5 from the revised 60.1 seen one month ago.

Next week will be the last of the calendar year without any holiday interruptions. We have a moderately busy economic calendar set out for us and it would not be unusual to see trading volume diminish significantly as the week wears on.

In particular traders will be watching CPI releases from major economies, Retail Sales and Interest Rate announcements from The Fed and BOJ.

Next Week
The first high volatility event is scheduled in the overnight session at 23:50 on Sunday. The Japanese Tankan Manufacturing Index is expected to deteriorate for the fourth quarter to -23. Third quarter data had seen the index slip into negative territory at -3.

Monday will be a fairly quiet day with just the one significant event scheduled. The US Treasury will release treasury International Capital, or TIC Long-Term Transactions for October. Expectations are for a fall in the net value of foreign investment in US securities to $40.0B from the $66.2B seen September.

In the early hours of Tuesday morning, at 00:30, the RBA will release its Monetary Policy Meeting Minutes from the December 2nd meeting. High volatility is expected as traders look for an insight into the 1.00 percent cut in the Cash Rate.

At 09:30 we have the first of the week’s Consumer Price Index releases. Yearly CPI from the UK is expected to continue its moderation, likely down to 3.9% in November from 4.5% in October.

The US will also be releasing CPI data for November. The Fed prefers the Core CPI rate and this number is expected to show a 0.1% rise following the surprise -0.1% in October.

At the same time (13:30) Building Permits will also be released. Expectations are for a fall in the annualized number of new residential permits issued during November to 700K. The number for October came in at 708K, a MoM drop of 12 percent.

Possibly the most highly anticipated event of the week will take place at roughly 19:15 on Tuesday. The FOMC Interest Rate Statement is expected to reveal a 0.50 percent cut in the Federal Funds Rate to 0.50%. Interest rate futures are currently pricing this move in at 100% with a 75% chance of a deeper 0.75% cut.

Wednesday will be dominated by news from the UK. At 09:30 we are due to see Claimant Count Change and the December 4th BOE MPC Meeting Minutes. The monthly change in people claiming unemployment benefit for November probably increased to 45K from 36.5K a month earlier.

The MPC Meeting Minutes are expected to reveal a unanimous decision to cut rates by 1.00% on December 4th. However, traders will be very keen to see whether a larger cut was considered.

Moving forward to 11:00 we will see the CBI Distributive Trades Survey, or Realised Sales. The Index is expected to have improved slightly, up to -41 from -46 over the since the last release on November 28th.

In typical fashion, Thursday will be a busy day. We begin at 02:00 with the NBNZ Business Outlook Survey. The Index came in at -43 for the month of November.

High volatility is expected from the Eurozone with the German Ifo Business Climate Survey at 09:00. Consensus estimates are for a number of 84.0 after the 85.8 seen in November.

UK Retail Sales for November will be released at 09:30. Coming into the busy festive period MoM sales are expected to have fallen by 0.6% after a 0.1% decline in October.

Canadian Core Retail Sales should produce high volatility at 13:30. After an increase by 0.8% in September, sales are expected to have fallen by 1.0% in October.

At the same time US Initial Jobless Claims will also be released. Last weeks number of 573K was a 26-year high but claims are expected to moderate this time around, down to 558K.

On Friday morning we will see the second central bank monetary policy announcement of the week. The BOJ will release its Overnight Call Rate and is expected to remain on hold at 0.30%. High volatility will likely be reserved for the BOJ Press Conference later in the day as traders look for an insight into the decision.

Rounding off the week we have the Canadian Core CPI. Core CPI in November is expected to show a monthly decline of 0.2%, equalling the 0.2% drop seen in October.

The question on traders’ minds is whether the financial markets will continue to ignore poor economic data. Following the lack of decisive action on the back of Friday’s shockingly poor Non-Farm Employment report, it remains to be seen whether this week’s economic announcements will provide anything more than a knee-jerk price reaction seen at the time of release.

This Week
The first high volatility event of the week will be the UK’s PPI Input at 09:30 on Monday. Expectations are for a MoM decline in wholesale inflation by 2.9% in November after the -5.6% seen in October.

At 13:15 we are due to see Canadian Housing Starts for the month of November. Expectations are for an annualized number of 194K, down from the 212K reported for October.

At 14:00 (15:00 CET) ECB President Trichet is due to testify before the Committee on Economic and Monetary Affairs of the European Parliament. The Quarterly Hearing usually takes the form of an introductory statement followed by a Q&A session.

On Tuesday morning we will see further high volatility from RBA Governor Glenn Stevens' speech at the Australian Business Economists Annual Dinner in Sydney. The event is scheduled to begin at 09:00 UK time.

This will be closely followed by the UK’s Manufacturing Production at 09:30. Expectations are for a 0.6% contraction in output in October after a 0.8% contraction in September.

At 10:00 the German ZEW Economic Sentiment number will be released. The index improved slightly last month to -53.5. However, economists are expecting a reading of -56.5 this time around.

Tuesday will also host the first of this week’s central bank interest rate announcements. The BOC Interest Rate Statement is likely to see the Overnight Rate slashed by 0.50 percent to 1.75%.

At 15:00 the first high volatility event of the week from the US is due. Pending Home Sales for October likely fell by 3.2% after Septembers 4.6% drop.

There is only one high volatility event scheduled for Wednesday and it comes during the overnight session. Australian Home Loans data for October likely saw an increase of 1.0 percent in the number of loans granted after the 2.7% fall in September.

Thursday will be a very busy day with the high volatility beginning in the overnight session. Australian Employment Change and Unemployment Rate are due for release at 00:30. Employment Change for November likely saw a fall of 15K jobs after the Australian economy added 34.3K in October. The Unemployment Rate, as of November, is likely to have increased to 4.4% from 4.3% in the previous month.

At 08:30 the SNB will be in focus as it announces the Libor Rate, releases its quarterly Monetary Policy Assessment and the Governing Board Members hold a press conference. High volatility can be expected for each one of these events with Libor midpoint likely to be shifted to 0.50% from 1.00%.

Focus will shift to North America at 13:30 with three high volatility events scheduled. The US Trade Balance will be released with a slight moderation to $53.5B in the trade deficit expected. At the same time Initial Jobless Claims will also be released. Economists expect 530K individuals to have filed for unemployment insurance for the first time during the past week.

At the same time, slightly overshadowed by the release from the US, the Canadian Trade Balance will also be released. The Canadian trade surplus is expected to have narrowed to CAD 3.2B from 4.5B in September.

Thursday will be rounded off by Core Retail Sales and Retail Sales from New Zealand. Core Retail Sales for October are expected to have increased by 0.8% MoM after a 0.5% decrease in September. For the same period Retail Sales were likely flat at 0.0% following on from a slight 0.1% increase a month earlier.

Friday will play host to a busy US session with some key data releases. At 13:30 Core Retail Sales, Retail Sales and the Producer Price Index will be hitting news wires. Core Retail Sales are expected to have fallen by 1.7% in November, with the headline Retail Sales number thought to have dropped by 1.9% in the same period. US PPI is also expected to fallen in November. Expectations are for a 2.0% fall in prices at the wholesale level after a similar 2.8% drop in October.

To round off the week we will see important consumer confidence data in the shape of the University of Michigan Consumer Sentiment number. Traders are expecting a reading of 55, relatively unchanged from last month’s final reading of 55.3.

This Week
The working week will be slightly shorter than usual in the US and Japan thanks to bank/ market holidays. The Labour Thanksgiving Day holiday takes place in Japan on Monday, while Thanksgiving Day will be celebrated in the US on Thursday. There is also an early market close at some US exchanges on Friday.

On Monday there will be major news from the Eurozone and the US. At 09:00 the German Ifo Business Climate Index will be announced. The Index is expected to slip to 88.8 from 90.2 in the previous month.

High volatility will come from the US at 15:00 with Existing Home Sales. Traders are expecting the annualized number to fall to 5.02M for the month of October, down from 5.18M seen in September.

Later in the day, at a time yet to be specified, President-Elect Obama is set to hold a press conference to discuss his economic team appointments. Although this event isn’t expected to create high volatility a reaction is expected from traders. This will probably be more evident in the stock market as traders assess the qualifications and suitability of those appointed.

Tuesday will be fairly action packed beginning with quarterly Inflation Expectations from New Zealand. The Reserve Bank of New Zealand survey of business managers is due at 02:00 with a CPI prediction of 3.0% seen at the last release.

High volatility is also expected for the MPC Treasury Committee Hearings at 09:45 on Tuesday. MPC members will testify before the UK Parliament’s Treasury Committee on the latest Inflation Report.

At 13:30 we will see high volatility from the US and Canada. Preliminary US GDP is due with a -0.5% reading expected after -0.3% in the previous quarter.

Canada will be releasing Core Retail Sales with a MoM increase of 0.2% forecast after the -0.3% seen last month. Retail Sales are also due but the Core number is seen as more important.

Later in the day the Conference Board’s US Consumer Confidence Index will be released. High volatility is expected for the indicator which is likely to remain at 38.0 for the second month in succession.

Wednesday will produce the second bout of GDP data for the week. The UK will announce its revised GDP reading for the 3rd quarter. No revisions are anticipated for the final reading so it is likely that UK GDP contracted by 0.5% in Q3.

At 13:30 there will be a US double header with Core Durable Goods Orders and Initial Jobless Claims due for release. Core Durable Goods Orders probably fell by 1.4% on the month after a revised 1.0% decline seen in September. Initial Jobless Claims will be closely watched after the 542K 16-year high last week. A slightly lower number of 530K is anticipated this time around.

At 15:00 we will see US New Home Sales. If analyst expectations are correct the annualized pace of New Home Sales will fall to 443K from 464K in September.

Rounding off a busy Wednesday will be the New Zealand Trade Balance. Expectations are for a narrowing of the trade deficit to 1000M from 1183M New Zealand Dollars.

As we have already discussed, Thursday will be slightly quieter than usual with the US holiday but we will have several important releases. First up at 00:30 is Private New Capital Expenditure from Australia. Expectations are for a 0.5% quarterly growth in private business expenditure, down from growth of 5.7% in the previous quarter.

At 02:00 we will see the National Bank of New Zealand Business Outlook report. The survey of business confidence came in at -42.3 last month.

At 07:00 we will see the UK’s Nationwide House Price Index. Average home prices in the UK continue to decline with a monthly fall of 1.7% expected according to the high street mortgage lender. This comes after a 1.4% decline in September.

After a quiet afternoon session New Zealand’s Building Consents are due for release. A monthly increase of 8.4% was seen in September.

Friday will be a quiet end to the week with only one high volatility event scheduled. The Confederation of British Industry (CBI) Realised Sales index is expected to show further decline in sales volume throughout British Industry. The index is expected to read -35 after -27 seen last month.

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
The BOE surprised traders last week when its Monetary Policy Committee (MPC) decided to cut interest rates by 150 basis points to 3.00%. The market had been expecting a much less aggressive cut to 4.00%. This move fuelled speculation that the BOE will need to cut rates at a faster pace than other central banks and heightened the likelihood that the Official Bank Rate will eventually reach 0.00%.

As you might expect, the GBP closed lower on the week against all other major currencies on the back of this speculation. Although the existing Sterling bearish trends remain in consolidation there are absolutely no signs of a reversal in the medium to long term. The Pound’s value over the coming months will depend on the pace at which the ECB, Federal Reserve and others slash rates. However, the ECB has demonstrated much more measured cuts and the Federal Funds Rate already sits at 1.00% with very little room to the downside.

In the US, Barack Obama became the first African-American President of the United States with 53% of the popular vote. One thing is for certain, he is unlikely to experience any honeymoon period when he is sworn in come January. He will be more than aware of the disappointing economic data coming out of the United States last week.

US Non-Farm Employment Change came in worse than expected at -240K compared to the -200K expected. To make matters worse, September’s data was revised down 125K to -284K. September and October’s data together make the worst two-month series since 2001. Unemployment also surged to the highest level since 1994. It now stands at 6.5%, much worse than the 6.3% expected and 6.1% seen in September.

This Week
The high volatility begins in the early hours of Monday morning this week with Australian Home Loans and the RBA Monetary Policy Statement. September’s Home Loans came in at -2.2% and a further MoM drop of 2.7% is expected to have occurred in October.

Also on Monday we have PPI Input from the UK. This data measures inflation in the prices paid by manufacturers for goods and raw materials. PPI Input is expected to come in at -2.6% MoM for October, compared to -1.2% the month previous.

High volatility from North America is also expected with Canadian Housing Starts expected at 13:15. In September construction on 218K new residential buildings began (annualized) with this number expected to fall to 202K in October.

Monday evening will play host to PPI Input from New Zealand. Prices in September increased by 5.6%.

Tuesday will be fairly quiet this week with French, US and Canadian bank holidays. Although some stock exchanges will remain open large banks will not. Low volatility is likely throughout the Forex market.

At 10:00 we will see high volatility from the German ZEW Economic Sentiment reading. A reading of -62.5 is expected, slightly higher than the -63.0 seen the month before but the index is fixed firmly in pessimistic territory.

At 20:00 the Reserve Bank of New Zealand will release its Financial Stability Report. The report is released twice per year and a press conference is usually held at the release time.

On Wednesday we will see employment data from the UK with Claimant Count Change regarded as most important. It is expected that 40K more UK workers are out of employment, and consequently claiming unemployment benefit when compared to a month earlier.

More high volatility will come from the UK at 10:30 with the BOE Inflation Report due for release. Of course traders will be watching this report closely because it explains the Bank’s view of inflation over the coming two years. However, further interest cuts in the UK may already be set in stone despite these inflation projections.

At 21:45 we will see Core Retail Sales and Retail Sales from New Zealand. The core number is expected to fall by 0.1% MoM compared to a 0.8% increase in September, while the headline number should grow by 0.1% on the month. Growth of 0.4% was seen in the month of September.

Thursday will see Germany deliver its second high volatility release of the week with preliminary quarterly GDP. The German economy is expected to have contracted by 0.2% over the last quarter.

At 13:30 we will see Trade Balance data from the US and Canada. The US trade deficit probably shrunk slightly in October from $59.1B to 56.5B. In Canada, trade surplus is expected to have fallen by CAD 700M to 5.1B.

After a fairly quiet week the US will finish with a flurry of high volatility with no less than 4 such events on Friday, although it does share one of these with the Eurozone.

At 13:30 we will see Core Retail Sales and Retail Sales releases. The core number likely fell by 1.1% on October when compared to -0.6% in September. Headline Retail Sales are expected to have fallen by 2.0% over the same period.

Also at 13:30 we have Fed Chairman Bernanke and ECB President Trichet taking part in a panel discussion at the 5th ECB Banking Conference in Frankfurt. The discussion will be on the topic of "International Interdependencies and Monetary Policy - a Policy Maker's View".

To round up the week we will see preliminary University of Michigan Consumer Sentiment with a reading of 56.0 expected.

Last Week
Global markets stabilised a little last week as fears of a worldwide market meltdown were eased. Words of support from world leaders began to transform into solid action plans and in some cases actual cash injections.

However, worries over global recession were remembered after a host of poor economic data, especially from the US. Traders were especially worried about US Core Retail Sales, Retail Sales, Building Permits and Housing Starts. All four economic indicators missed expectations and this was reflected by the Michigan Consumer Sentiment number which fell from 70.3 to a lowly 57.5.

This Week
The economic calendar is slightly lighter than normal this week which may keep both stock and forex markets in consolidation. Key events will be the RBNZ and BOC Interest Rate Statements, Bernanke testimony and the BOE Meeting Minutes.

The first high volatility event of the week come from Australia at 01:30 Monday morning. The Australian PPI is expected to come in at 0.9%, compared to 1.0% in the previous quarter.

Later the same day we will see probably the most highly anticipated US event of the week with Bernanke’s testimony before the House of Representatives Budget Committee at 15:00.

At 22:45 we will see QoQ CPI data from New Zealand. Inflationary pressures are expected to moderate slightly from 1.6% previously to 1.5%.

Tuesday will begin with more high volatility from Australia. The October 7th Interest Rate Meeting Minutes are expected. Traders will be very interested in the discussions that took place at a meeting where the RBA surprisingly by cutting a full 100 basis points to 6.00%.

At 03:10 RBA Governor Glenn Stevens is expected to bring more high volatility to the markets when he speaks about the international economy in Sydney.

The BOC Interest Rate Statement is due at 14:00 with a 0.50% cut expected. This will bring the Overnight Rate to 2.00% from 2.50%. This will mean that the BOC has cut the rate by a full one-percentage point in the last 14 days.

We will see some late volatility from the UK as BOE Governor Mervyn King speaks in Leeds. He is due to speak at 20:10 UK time.

The flurry of Australian data continues on Wednesday with the Australian CPI. Economists are expecting an AUD negative release with 1.0% consumer inflation compared to 1.5% in the previous quarter.

At 09:30 we will hear from the BOE Monetary Policy Committee with the BOE Meeting Minutes (visual analysis) release. It is expected that the MPC voted unanimously to cut rates by 0.50% on October 8th as part of the coordinated global move.

The USD/ CAD will be in focus at 13:30 with Canada’s Core Retail Sales expected to crate high volatility. Core sales are expected to moderate slightly down to 0.3% growth in September from 0.4% in August.

Wednesday is rounded off by the second central bank rate announcement of the week. The RBNZ Interest Rate Statement is due at 21:00 with the Official Cash Rate likely to be cut by 1.00% from 7.50% to 6.50%. This mirrors the actions of the RBA earlier in the month who also cut by 1.00%.

The first high volatility event of Thursday will be from the UK. Retail Sales is due at 09:30. This data has been highly volatile of late and this trend looks set to continue. Retail Sales for September are expected to have fallen by 0.8% in September when compared to a 1.2% increase in August.

The Bank of Canada will take the spotlight for the second time in a week on Thursday. The BOC Monetary Policy Report is due at 15:30 and BOC Governor Carney will hold a press conference on the same topic at 16:15.

On Friday morning we are due to see preliminary GDP data from the UK. Gross domestic product is expected to show negative growth of 0.2% after the previous quarter’s number of 0.0%.

Canada’s Core CPI (visual analysis) is due at 12:00 with growth in September expected to mirror that of August at 0.3%. Traders pay most attention the Core number and so does the BOC.

To round off the week we have Existing Home Sales (visual analysis) from the US. This release will also be supported by our visual analysis and historical data tool. The sale of existing residential homes is expected to have increased slightly in September with 4.95M units sold compared to 4.91M in August.

Last Week
The most interesting price action last week came on Friday with the US Dollar giving back some of its recent gains. The Dollar sell-off was triggered by weaker than expected PPI and Retail Sales news and speculation that the Fed may have to cut interest rates further in order to stimulate the economy.

However, it is unlikely that the Greenback has formed anything more than a short-term top on healthy profit taking activity. The Fed may very well have to cut interest rates further; interest rate futures are currently pricing in a 40% chance of a cut by December, up from 0% a month ago. But the medium term outlook remains the same.

There is still no change in the view that other country’s economies (Eurozone and UK in particular) are slowing faster than in the US. This will lead to interest rate cuts from the respective central banks. Due to the fact that their rates are currently much higher than the Fed’s the Dollar will be supported by the theory that ECB and BOE interest rate cuts will be much more aggressive than any more from the Fed.

This Week
We begin the week on Monday with traders keen to see how Friday’s profit taking has been digested over the weekend. With no high volatility events planned it could be a quiet session, especially with the Japanese national holiday ‘Respect for the Aged Day’.

Monday’s highlights are likely to be the Swiss double header at 08:15 with PPI MoM and Retail Sales YoY due for release. The Producer Price Index is likely to come in at -0.2% after last month’s 0.5% increase. Retail Sales are expected to show a sharp increase with expectations at 2.3% compared to the yearly figure released last month of 0.7%.

Later in the day we are also likely to see some volatility from the US with the Empire State Manufacturing Survey, Capacity Utilization Rate and Industrial Production set for release. All three indicators are likely to show evidence of a waning US economy. The Manufacturing Survey will probably come in at 1.5 vs 2.8 last month, Capacity Utilization will fall to 79.6% from 79.9% and Industrial Production probably contracted by 0.3% last month.

In the early hours of Tuesday morning we will have our first high volatility event of the week. The RBA Monetary Policy Meeting Minutes will be released with traders keen to see how September 2nd’s meeting unfolded. The decision was taken at the time to leave the cash rate unchanged at 7.00%.

Tuesday will play host to four very big announcements with no less than 3 CPI numbers and the FOMC Interest Rate Statement all due. First up is UK CPI with consumer inflation expected to smash the BOE’s 2.0% target once again. Economists are predicting year-over-year inflation at 4.6%, up from the 4.4% in July.

Half an hour later, at 10:00 UK time, the Eurozone CPI will be released. The Consumer Price Index is expected to remain at 3.8% YoY. It should also be noted that the Eurozone ZEW Economic Sentiment is due for release at the same time. It is unlikely that this data will conflict significantly with the CPI but traders should be alert non the less. ZEW Sentiment is expected at -55.0 vs -55.7 last month.

The next high volatility event will be the US Core CPI MoM. The data came in at 0.3% last month with 0.2% expected this time.

Half an hour later at 14:00 we can expect the Treasury International Capital (TIC) Net Long-Term Transactions. The data, which measures the inflow of capital from abroad, is expected to show a surplus of $55.0B compared to $53.4B last month.

At 19:15 the FOMC Interest Rate Statement is due. The Federal Funds Rate is expected to remain at 2.00% with traders watching the language in the accompanying statement very closely. The focus will be on any change in the language that may allude to a rate cut before the end of the year.

Wednesday will see the release of the BOJ Interest Rate Announcement. Although it is not considered a high volatility event in itself with the Overnight Call Rate expected to remain at 0.50%, the BOJ Press Conference due before 08:00 will draw high volatility.

The next round of high volatility on Wednesday is due from the UK. The BOE MPC Meeting Minutes and Claimant Count Change will hit the wire at 09:30. Claimant Count Change is expected to increase slightly with 22.2K expected vs 20.1K reported previously. The MPC Meeting Minutes are likely to show a 1-1-7 vote split in favour of keeping rates unchanged at 5.00%.

Next up for the US is the release of Building Permits. Economists are expecting a figure of 925K residential permits issued compared to 937K last month.

On Thursday the first high volatility event will come from the UK at 09:30. Retail Sales MoM are due with a figure of -0.4% expected compared to a 0.8% increase last month. UK Retail Sales have been exceptionally volatile of late with numbers ranging from 3.6% to -4.3% over the previous 3 months. It would be very wise for traders to exercise caution around the time of this event; especially those focussed on short-term price swings.

At 13:00 the third central bank announcement is due. This time it comes in the shape of the SNB Interest Rate Statement. The Statement is comprised of the LIBOR Rate and the Monetary Policy Assessment. The general consensus is that the SNB will remain on hold at 2.75%.

The final high volatility event of the week will come at 23:45 on Thursday night from New Zealand. The Current Account balance is expected to have fallen further into negative territory to $ -3.4B from $ -2.2B last month.

Friday promises to be a quiet day, especially in the New York session. Early volatility will be seen when BOC Deputy Governor Murray speaks in Toronto and later on for the German PPI number. However, both of these events are only classified with a medium volatility rating.

Our Visual Analysis and Historical Data tool will come into use this week with the US Core CPI supported.

For all the latest numbers and updates please check our economic calendar and expect a breakdown of the US Core CPI right here on Tuesday.

The US Producer Price Index (PPI) came in worse than expected for the month of August, the Bureau of Labor Statistics reported today.

The PPI for Finished Goods came in at -0.9% MoM compared to the -0.5% that had been expected. This seasonally adjusted figure compares to the 1.2% and 1.8% increases seen in July and June respectively. Today’s number represents the first downturn in wholesale inflation since December 2007.

Looking at the year-over-year numbers we can see that inflation has risen by 9.6%, 2 ticks lower than the 9.8% YoY growth reported for July.

The main contributing factor to August’s number was the sharp fall in energy prices. Month-over-month energy prices were down by 4.6% compared to an increase of 3.1% in the previous month. Food prices remained firm posting a 0.3% increase for the second month in a row.

The Core PPI, which strips out the volatile Energy and Food components, came out in line with expectations 0.2%. This means that the unadjusted yearly rate of 3.6% remains at the highest level seen since May 1991. 

Elsewhere the lesser important Intermediate Goods posted -1.0% growth for July and Crude Goods a much larger -11.9%.

Today’s data left the US Dollar slightly lower across the board. At the time of writing the EURUSD is at 1.4222 compared to the 1.4000 it had been at 24 hours earlier. GBPUSD was up to 1.7943 from 1.7577. It should be noted however that Retail Sales data contributed to these price moves also.
 

Last week was a key week in terms of economic indicators. We saw central bank interest rate announcements from the RBA, BOC, BOE and ECB and key employment data from the US.

All interest rate announcements came in as expected but US employment data managed to surprise to the downside. Non-Farm Payrolls fell more than expected (-84K) for August and the Unemployment Rate jumped from 5.7 to 6.1%. This represents the highest rate since September 2003.

Despite this negative US economic news the Dollar remained firm, supported by carry trade unwinding and a further fall in oil prices. NYMEX crude oil posted a weekly low through the $110 level at $105.13.

This Week
Early market focus will be centred on a rumoured announcement from US Treasury Secretary Paulson due on Sunday evening. It is expected that he will announce a plan for the US Government to take control of Fannie Mae and Freddie Mac for at least a year.

This week will also play host to a 3-day OPEC meeting that takes place in Vienna. Running from Monday through to Wednesday, the main body of the programme is scheduled for Tuesday. Traders will be watching for any unscheduled announcements made to the press throughout the 3 days.

Monday begins with an RBA testimony before the House of Representatives Standing Committee on Economics. Lead by Glenn Stevens, the RBA will testify on the latest semi-annual economic outlook.

At 09:30 the UK PPI Input number is due for release. The number is expected to fall by 1.2% after a -0.6% reading for July.

Later in the day we have a high volatility event from Canada. Building Permits will be released and further contraction is expected. July saw -5.3% and a further -1.0% is expected from August.

Tuesday will bring us more high volatility with Australian data first up. At 02:30 we will see both Home Loans and Retail Sales. Home Loans posted a -3.7% for July and a month-over-month 0.0% move is anticipated for the month of August. Retail sales, on the other hand, are expected to post a mild recovery. July figures were reported at -1.0% but numbers for August should show a 0.5% increase.

In the UK session traders will be focussed on Manufacturing Production. A number of -0.1% is anticipated after a -0.5% report in the previous month.

Further Canadian construction data is due on Tuesday at 13:15. It comes in the form of the Housing Starts report and is expected to show 194K new residential constructions getting underway. This would be an improvement from the 187K annualized reported in August.

The first high volatility economic indicator from the US is scheduled for release at 15:00 on Tuesday. Pending Home Sales MoM are likely to have fallen by 1.2% in August after a 5.3% increase in July.

On Wednesday we will see the first high volatility event from the Eurozone. ECB President Trichet will testify before the European Parliament Committee on Economic and Monetary Affairs in Brussels.

Towards the end of the day (22:00) we have the RBNZ Interest Rate Announcement. It is expected that the RBNZ will cut interest rates for the second time in 2 meetings to 7.75%. This will be an interesting event because the last cut (happened back on the 23rd of July) surprised most market participants.

Thursday is often the busiest day in terms of economic releases and this week is no exception. For the second time in 3 days Australia leads the field with two high volatility events at 02:30. This time Employment Change and Unemployment Rate are to be reported. Employment Change is expected to come in at 5.5K jobs created while Unemployment Rate could increase from 4.3% to 4.4%.

Thursday will also play host to the third central bank testimony of the week. The BOE MPC, including Mervyn King, will testify on the August 2008 Inflation Report before the UK Treasury Committee at 09:45.

At 13:30 we have a high volatility announcement from Canada and the US. Both countries will be reporting their latest Trade Balance figures. Canada is expected to report a surplus of $5.6B from $5.8B in the previous month while the US deficit is likely to increase to $58B from $56.8B previously reported.

Finally for Thursday we have Core Retail Sales and Retail Sales from New Zealand. Last month’s Core number came in flat at 0.0% while the raw number posted a 0.9% gain. This month data is expected at 0.2% and -0.3% for Core Retail Sales and Retail Sales respectively.

Friday will be dominated by high volatility data from the United States. At 13:30 we will see Core Retail Sales, Retail Sales and PPI (supported by our Visual Analysis tool). Core Retail Sales are expected to contract by 0.2% MoM while Retail Sales should be up by 0.2%. The Producer Price Index is expected at -0.5% after last month’s 1.2% gain.

At 14:55 we have the final high volatility announcement from the US and for the week in the shape of the preliminary University of Michigan Consumer Sentiment. Sentiment is expected to increase to 64 from last month’s revised figure of 63.

For full details of this week’s economic news and daily updates please see our economic calendar and economic speeches pages.