Last week’s market obsession with debt and in particular the problems with Greece will, no doubt, continue to dominate the markets this week although expect to see a rally in the euro as fears are calmed and investor risk returns.  However, the start of this week will be relatively quiet in terms of trading volumes given that the US and Canada are closed on Monday and the Chinese markets closed all week for the New Year Holidays.

Here is a breakdown of the more important fundamental news items for the various countries and which are likely to move the markets.

Japan

The first major news item for this week is in Japan in a couple of hours time with the release of Preliminary GDP forecast at 1% against a previous of 0.3% suggesting that Japan’s economy has grown at its fastest pace since Q1 of 2008.  Clearly export demand appears to have returned and should the actual be better than forecast then this should be good for the Yen and the Nikkei.  As this is the preliminary version it is red flag announcement being the first of 2 releases.

There is little other news for Japan until Thursday when we have the overnight call rate which is forecast at 0.1%, and is the interest rate at which the BOJ (Bank of Japan) re-discounts bills and extends loans to financial institutions.  This decision is coupled with a BOJ press conference but the timing of this tentative at present.

UK

Very little for Monday which is likely to move markets with the first tier one news item being CPI (Consumer Prices Index) on Tuesday which is forecast at 3.6%, significantly higher than the 2.9% last time and as a consequence is set to exceed the target set by the BOE.   No doubt Gov King will be sharpening his pencil in preparation for communicating with Chancellor Darling to explain why the Bank has overshot the 3%.  We could see some volatility as the markets take the news at face value as a signal for a potential rise in interest rates, sooner rather than later and then promptly reverse once rational thought returns.

Wednesday sees the unemployment data which is expected to show a small fall once again.

The key number on Friday is retail sales which are forecast at -0.5% against a previous of -0.3%, so worse than previous which could be bad news for sterling & the UK economy, if correct.

Europe

Nothing on Monday.  Key number on Tuesday is the German ZEW economic sentiment – a very important release which is forecast much worse than previous at 42.5, down from 47.2 which could dent any recovery in the euro which we might see on Monday.

The week rounds off on Friday for Europe with a series of PMI manufacturing and services data all of which is second tier.

USA

Holiday on Monday.  Tuesday’s key number is the TIC data – which measures the difference in value between foreign purchases of long term securities and those purchased by US citizens.  The number forecast is 50.3bn, a significant change from last month’s 126.8bn.  The data indicates the demand for both domestic securities (Treasuries) and currency since overseas buyers need to obtain the dollar in order to buy the securities.

Wednesday’s level one data is Building Permits forecast at 0.63m against a previous of 0.65m and this number measures the total of new building permits issued and therefore is considered a leading indicator for both the housing market and general economy.  The other piece of news on Wednesday is the release of the FOMC minutes due late in the trading session so watch out for these.

Thursday is a busy day with three key announcements; first is PPI (producers’ price index)  forecast at 0.8%, against a previous of 0.2% and should the number be higher than forecast then this could be dollar positive.  At the same time we have the weekly unemployment claims which are currently forecast to show a small uplift from the last time at 445k vs 440k previous.  Finally on Thursday we have the Philly Fed manufacturing index which is forecast to show an improving picture, up 2 points to 17.2 from previous.

The main news item on Friday is the Core CPI data, coupled with CPI, the first of which is forecast at 0.2% and the latter at 0.3%, both marginally than last month’s 0.1% for both.

Canada

Holiday on Monday.  No major announcements either Tuesday or Wednesday with the first item being core CPI and CPI on Thursday.  These are forecast to come in at 0.1% and 0.3% respectively, both moving into positive territory following last month’s negative figure of -0.3% for both.  Friday sees core retail sales forecast to show a modest improvement from last month’s flat performance at 0% rising to this month’s 0.4%.

Australia

The week starts for the Aussie on Tuesday with the release of the Monetary Policy Minutes which is considered a red flag item and should be closed watched for any clues as when the RBA will be looking to raise interest rates.    Thursday sees RBA Gov Stevens speaks as he testifies before the House of Representatives in Canberra.

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