• Monday – January 23, 2012 Australian Producer Prices (0030 GMT)
PPI measures changes in the selling prices received by producers. Because PPI analyzes changes in price that occur before the good reaches the retail level, it gives an early indication of inflationary pressures consumers will potentially later face for finished goods. The PPI reports data broken into stages of production, thereby tracking how manufacturers pass on increased costs or efficiency gains to the final consumer. The index may therefore be used as a detailed picture of how inflationary pressures feed through production lines and as a leading indicator for inflation pressures. The headline is the percentage change in the index from the previous quarter and year. The RBA has recently reduced benchmark interest rates, and a tame PPI will give it the room it needs to maneuver rates. A higher than expected number will cause the AUD to push higher.
• Tuesday – January 24, 2012 BOJ Interest Rate Decision
The Bank of Japan Policy Board meets once a month for two days to discuss economic developments inside and outside of the country. The culmination of the meeting is the announcement of any adjustments to interest rates or other aspects of monetary policy. Like any central bank the BOJ is tasked with ensuring price stability while taking into account economic growth, employment, and recommendations from the elected government. The main change that could be expected would be a alteration of the current asset purchase program.
• Tuesday – January 24, 2012 – EU PMI Services Final (900 GMT)
The Euro-zone Services Purchasing Managers Index (PMI) assesses business conditions in the services sector. The figure is determined based on monthly surveys of executives in Germany , France , Ireland , Italy and Spain . Combined, these countries account for roughly four fifths of total service sector activity in the Euro-zone. Since services account for two thirds of total Euro-zone GDP, the Services PMI is both a significant and timely indicator of the health of the economy. Higher Service PMI levels suggest upward future trends in output and employment of the industry. Given the current state of the EU debt crisis this number will be market significant to the Euro and the DAX.
• Wednesday – January 25, 2012 – Australian Consumer Prices (0030 GMT)
The CPI Index is the headline inflation gauge for Australia . In terms of measuring inflation, CPI is the most obvious way to quantify changes in purchasing power. The report tracks changes in the price of a basket of goods and services that is typically bought by a metropolitan Australian households. An increase in the index indicates that it takes more Australian Dollars to purchase this same set of basic consumer items. Unlike most other countries, Australia publishes CPI quarterly instead of monthly, increasing the market impact of the report upon release. The headline number is released as the percentage change from the previous quarter or year. On the heels of the PPI number early in the week, this double dose of inflation information will guide the Aussie dollar for the week.
• Wednesday – January 25, 2012 – UK GDP (930 GMT)
The GDP is an indicator for broad overall growth in the United Kingdom. Robust UK GDP growth signals a heightened level of economic activity, and therefore a high demand for currency. Economic expansion also raises concerns about inflationary pressure, which generally prompts monetary authorities to increase interest rates. The UK has recently shown data points that have been better than expected beginning with solid manufacturing numbers and more recently increasing employment numbers. A better than expected number should increase the value of the pound.
• Wednesday – January 25, 2012 – US FOMC Interest Rate Decision (1730 GMT)
This is the announcement of whether the Federal Reserve has increased, decreased or maintained the key interest rate. The FOMC meets eight times per year to decide on monetary policy. After each meeting policy decisions are announced. The main task of the FOMC is to set the monetary stance by fixing the overnight borrowing rate, which essentially sets short-term lending rates in the US. Through this mechanism, the FOMC attempts to affect price levels in order to keep inflation within the target range while maintaining stable economic growth and employment. Although there are no expectations to alter the current program of quantitative easing, investors will be monitoring the statement from Ben Bernanke to see how the FOMC looks at the current market environment.
• Thursday – January 26, 2012 – US Durable Goods Orders (1330 GMT)
The Durable goods release is the value of orders placed for relatively long lasting goods. Durable Goods are expected to last more than three years. Such products often require large investments and usually reflect optimism on the part of the buyer that their expenditure will be worthwhile. Because orders for goods have large sway over the actual production, this figure serves as an excellent forecast of U.S. output to come. Durable Goods are typically sensitive to economic changes. When consumers become skeptical about economic conditions, sales of durable goods are one of the first to be impacted since consumers can delay purchases of durable items, like cars and televisions, only spending money on necessities in times of economic hardship. This is a very volatile series but a solid gauge of current manufacturing and consumer sentiment.
• Friday – January 27, 2012 – US GDP (1330 GMT)
The GDP for the United States is a gauge of the overall output of the U.S. economy on the continental US GDP is the most comprehensive overall measure of economic output and provides key insight as to the driving forces of the economy. The headline figure is a gauge of the prior quarters overall output. Additionally, figures on inflation and corporate sales are included in the figure.
• Friday – January 27, 2012 – US Consumer Confidence (1455 GMT)
Assesses consumer confidence regarding personal finances, business conditions and purchasing power based on hundreds of telephone surveys. Especially valued for its quick turnaround, the University of Michigan Confidence survey is considered one of the foremost indicators of US consumer sentiment. The survey polls a smaller sample of consumers and is less established than the Conference Board Consumer Confidence Index. Confidence in the US has continued to increase, as the job market expands and housing value begin to stabilize.
