1. German Industrial Production
2. U.S. Non-Farm Payrolls

German Industrial Production (NOV-Preliminary) (11:00 GMT, 6:00 EST)
Consensus: -0.3%
Previous: 1.2%

Outlook:  German industrial production is widely expected to fall in the month of November.  Analysts estimate that production will print a -0.3%, a significant decline from the October and September gains of 1.2% and 1.5%, respectively.  Since Germany is the Eurozone's largest economy, traders will be widely anticipating this number as a precursor to which actions the ECB will take in the coming months.  Interestingly, the recent string of economic data provides evidence that the current consensus may be a little understated.  The German manufacturing index grew at its fastest pace in 16-months, from 52.7 to 53.6.  German factory orders - which were also expected to be negative this month - came in at a whopping 1.7%.  Helping to fuel this growth is the fact that the Euro posted a 13% decline against the US Dollar in 2005, which has really bolstered the country's exports.  If industrial production shows some strength this month, this could provide policy makers with the daunting task as to whether or not they should raise interest rates from 2.25% to 2.50% in the first quarter of 2006.  

Previous:  Industrial production for the month of October rose more than expected, showing a monthly increase of 1.1%.  Analysts had been calling for a moderate half point rise, following the unanticipated gain of 1.5% in September.  Production at factories, utilities, construction sites and mines are largely being propelled by an increased demand for exports.  The retreat in oil prices and a falling Euro are the main fundamentals driving this global demand.  As the Euro declines, German goods sold abroad become much cheaper because it takes fewer dollars to purchase the same amount of goods.  With domestic demand slowly picking up, and GDP expectations of 1.9% - 2.1% in 2006, there remains the possibility of further rate hike considerations by the European Central Bank.

US Nonfarm Payrolls (DEC) (13:30 GMT, 8:30 EST)
Consensus: 200,000
Previous: 215,000

Outlook: U.S. Nonfarm Payrolls are expected to show a monthly increase of 200,000 jobs, a slight decrease from November's 215,000 gain.  Those workers who were displaced from their jobs as a result of Hurricanes Katrina and Rita are widely expected to have contributed heavily to employment last month.  Also contributing to the robust report is the theory that business investment increased in the month on rising expectations of holiday spending.  Notably contributive, U.S. jobless claims dropped to 291,000 this morning, the lowest level seen in over five years - bringing the four-week moving average down to 316,750.  In addition, both the ISM-Manufacturing and Non-Manufacturing reports remain above expansionary levels, indicating further growth in the economy.

Previous:  Nonfarm Payrolls added 215,000 jobs in the month of November, marking the biggest gain since July.  The numbers bounced back from two months of weak data, following the aftermath of Hurricanes Katrina and Rita.  October's gains were revised lower to 44,000 from the originally reported 56,000.  The report also indicated that there was an increase in hourly earnings of 3.2% over last year - the largest increase in two years.  Analysts believe that this may cause companies to raise its prices in the near future, which may eventually lead to inflationary pressures as labor costs rise.  With faster employment growth fueling stronger consumer spending, continued growth is expected as the economy heads into the New Year.

Richard Lee is a Currency Strategist at FXCM.