Inflation data in the UK and the US, US retail sales, PPI and employment data, Philly Fed Manufacturing Index and Consumer sentiment are the main events on Forex calendar. Here is an outlook on the highlights of this week.

Last week, NFP report was better than expected showing a job gain of 252K in December. The solid increase indicates further strengthening in the US economy. The Unemployment rate fell 0.2% to a 6-1/2 year low of 5.6%, beating forecasts for a 5.7% reading. However, average hourly earnings which showed a 6 cents increase in November, dipped 5 cents in December. Long-term unemployed continued to shrink in December, but the labor force participation rate fell to 62.7% from 62.9% in November. Will wage growth in the US labor market continue improve in the coming months?
  1. UK inflation data: Tuesday, 9:30. UK consumer prices plunged to a twelve year low of 1% in November, reaching half the BoE’s inflation target. The reading was worse than expected caused by a sharp and continuous decline in oil prices. However the low oil prices were positive for consumers, boosting spending and supporting UK growth. The Bank’s monetary policy committee said in its November inflation is likely to fall below 1% in early 2015. UK consumer prices are expected to increase by 0.7%.
  2. US retail sales: Wednesday, 13:30. U.S. consumer spending edged up in November amid the holiday shopping season, boosted further by lower gasoline prices. Meanwhile, retail sales excluding automobiles, gasoline, building materials and food services rose 0.6% after an unrevised 0.5% gain in October. Economists expected core sales to rise a mere 0.1% last month. The shopping spree accelerated growth in the fourth quarter. Retail sales are expected to gain 0.2%, while Core sales are predicted to increase by 0.1%.
  3. Australian employment data: Thursday, 0:30. Australia’s unemployment edged up to 6.3% in November as more people looked for jobs. Economic activity weakened by sluggish Chinese demand. However the Australian job market added 42,700 positions in November, much better than the 13,700 increase posted in the prior month and the 15,000 addition forecasted by analysts. This rise suggests improvement in the Australian labor market. Policymakers are preparing for further easing measures in case the weakness in the job market and domestic demand continues. Economists expect job growth to increase by 5,300 while the Unemployment rate is expected to remain unchanged at 6.3%.
  4. US PPI: Thursday, 13:30. Producer Price Index fell 0.2% in November prompted by lower oil prices, following a 0.2% gain in the prior month. Analysts expected a smaller decline of 0.1%. On an unadjusted basis, producer prices increased 1.4% for the 12 months ended November, the slowest 12-month increase since February 2014. Core producer prices, excluding food and energy remained unchanged after a 0.4% rise in November. Producer Price Index is expected to drop 0.3% this time.
  5. US Unemployment claims: Thursday, 13:30. The number initial claims for unemployment benefits declined last week by 4,000 to 294,000 amid a sharp decrease in dismissals. Strong consumer spending had a positive effect on the labor market, despite a weakening in global economy. The four-week moving average a more solid measure of labor market trends, remained below the 300,000 mark for the 17th straight week. Jobless claims is expected to reach 299,000 this week.
  6. US Philly Fed Manufacturing Index: Thursday, 15:00. Factory activity in the U.S. mid-Atlantic region plunged to 24.5 in December from 40.8 in the previous month, indicating slower activity. New orders fell to 15.7 from 35.7. Employment conditions weakened to 7.2, down from 22.4 marking the lowest level since April. Philly Fed Manufacturing Index is predicted to reach 20.3 this time.
  7. US Inflation data: Friday, 13:30. U.S. consumer prices registered their biggest decline in nearly six years in November amid a slide in gasoline prices. Consumer Price Index plunged 0.3%, following flat reading in October. On a yearly base CPI increased 1.3% the smallest gain in nine months, after posting a 1.7% rise in October. While inflation declines, the US job market continues to strengthen including a big gain in weekly earnings. Meanwhile, Core CPI excluding food and energy prices gained 0.1% following a 0.2% rise in the previous month. The rise suggests oil prices are the main cause for the sharp declines. Analysts expect consumer prices to dip 0.3% while Core prices are expected to increase 0.1%.
  8. US Prelim UoM Consumer Sentiment: Friday, 14:55. U.S. consumer sentiment surged in December to a near eight-year high amid improved earnings and better job prospects. Consumer sentiment edged up to 93.8 from 88.8 in November. The survey’s one-year inflation expectation rose to 2.9 percent from 2.8 percent, while its five-year inflation outlook also rose to 2.9 percent from 2.6 percent last month. Economists expect consumer sentiment to rise further to 94.2 this time.



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