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.

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.

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 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.