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.

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.