Next Week

December 19, 2008

The holiday-abbreviated week ahead will mostly feature the usual end-of-month barrage of Japanese monthly indicators covering corporate service prices, customs trade, retail sales, household spending, consumer prices, employment and unemployment, auto output, industrial production, service-sector workers’ sentiment, and the manufacturing purchasing managers’ index. The BOJ monthly report and quarterly business sentiment are due, too. Japan observes a holiday on Tuesday (commemorating the Emperor’s birthday) but will be open on the 25th and 26th.

After Japan, the United States releases the week’s most meaningful data. These will include the final 3Q GDP revision, personal income and spending, durable goods orders, personal income and spending, and both new and existing home sales. Weekly jobless claims, chain store sales, and energy inventories always attract some interest.

Continental Europe has widespread market closures on Wednesday and Friday (Boxing Day) as well as Christmas. Euroland’s current account and industrial orders will be reported. So will French and Italian producer prices. Germany and Italy release consumer confidence, while Belgium’s business sentiment, which can be a bellwether for all of Euroland, are also due.

Britain reports revised GDP from the third quarter, the associated current account deficit, and the monthly Nationwide house price index. Canada and Australia respectively release monthly GDP and leading economic indicators.

Poland is one of the very few economies where a central bank meeting is scheduled, and it probably will result in a rate cut of at least 50 basis points. Very few central bankers have planned public speaking engagements. Trichet of the ECB is one.

Traditionally, more foreign exchange business gets done in the week following Christmas than the week before, but little has happened in a traditional way in 2008.

It’s been a year to forget. With only two work-weeks left in 2008, the dollar’s year-to-date changes range from drops of 20% against the yen and 2.5% against the Swiss franc to gains of 5% against the euro, 23% against the Canadian dollar, 28% against the Australian dollar and 33% against sterling. Ten-year bond yields are down by 191 basis points in the U.S., 139 bps in Britain, 132 bps in Germany, and 28 bps in Japan. Among major equity indices, accrued losses amount to at least 34% for the Dow, Ftse, Dax, and Nikkei with the latter two down by 41.8% and 43.9%.


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