1. Australian Building Approvals
2. Swiss Trade Balance
3. Euro zone Producer Price Index
4. European Central Bank Rate Announcement

Australian Building Approvals (DEC) (0:30 GMT, 19:30 EST)
Consensus:     -0.7%   
Previous:     3.4%       

Outlook:  The volatile Australian building approvals indicator is expected to show permits fell slightly by 0.7 percent in December.  Realization of this consensus would make for the largest monthly decline in approvals in four months and leaves optimism for a return to strength in the housing market uncertain.  The housing sector, which was a large contributor to economic expansion over the years, has softened over the past two years in response to the Reserve Bank of Australiaââ,¬â"¢s tightening on monetary policy.  The RBA, headed by Governor Ian Macfarlane, had increased the benchmark-lending rate three times since 2003 and last on March of 2005, in a successful effort to curb inflation and a booming housing market.  Strong employment and wage growth recently have been the only offsetting factors to the more than effective monetary policy stance.  However, with housing prices dropping 1.0 percent in the third quarter and other demands on consumersââ,¬â"¢ money rising, it will remain to be seen how many more increases in approvals can be achieved under the current lending rate regime. 

Previous:  Australian building approvals rose nearly double what was expected in November as burgeoning employment and earnings helped encouraged Australians to take on the expensive investment of building.  The volatile indicator reported approvals grew 3.4 percent over October, the largest increase in six months, against expectations of a more modest 1.8 percent gain.   Demand for housing has wavered over the past two years with steep lending rates falling outside consumersââ,¬â"¢ ability to fund construction.    However, a shift in wage growth and unemployment helped to put more Australians in a position to finance such an endeavor.  The jobless rate in November fell to 5.1 percent from a seven-month high 5.2 percent, one step closer to the 30 year lows reached in June.  In reaction to the favorable shift in employment, companies were required to pay more to attract new hires from the dwindling labor pool.  Wages in the third quarter grew 4.2 percent annually; the largest increase since record keeping began in 1997. 

Swiss Trade Balance (DEC) (7:15 GMT, 2:15 EST)
Consensus:     N/A
Previous:     0.76 billion

Outlook: Although economists have not made official estimates regarding Switzerlandââ,¬â"¢s December trade balance, the nationââ,¬â"¢s recent economic trends hint that trade volume will continue to rise in both imports and exports.  Growth in imports, however, will likely be stronger than increases in exports as Swiss businesses and consumers demand more foreign goods in the midst of economic expansion.  Switzerlandââ,¬â"¢s employment situation suggests further growth, as indexes of job openings increased dramatically towards the end of 2005 and companies expressed their intent to increase hiring.  As employment increases, consumption and imports will follow, causing the trade balance to narrow.  A narrowing trade balance in the context of overall economic growth may prompt the Swiss National Bank to tighten monetary policy further. 

Previous:  Switzerlandââ,¬â"¢s trade surplus in November was 0.76B Swiss francs, revised downward from original estimates of 0.94B.  Although exports outweighed imports, imports grew at a faster rate of 4.4 percent whereas exports increased by 4.1 percent from the previous month.  Recently, Switzerland has been experiencing economic expansion driven by trade, the total volume of which is at its highest level in 16 years.  The fact that imports grew at a faster rate than exports in November suggests that export-driven growth may have encouraged greater consumption on the domestic front.  Recognizing the increasing momentum of trade activity in November, the Swiss National Bank increased interest rates for the first time in more than a year in mid-December. 

Euro-Zone PPI (DEC) (10:00 GMT, 5:00 EST)
Consensus:     0.2%
Previous:     -0.2%

Outlook: Following trend-setting nations as Germany and the United Kingdom as indicators of wider European economic environment, economists are predicting the Euro-Zoneââ,¬â"¢s Producer Price Index (PPI) to increase 0.2% in the month of December.  Higher energy prices are likely to inflate producer prices across Europe.  In Germany, input prices increased by 0.3% over the month.  A similar case arose in the U.K., where higher fuel prices have driven up producersââ,¬â"¢ costs in the past month.  Price inflation however, has not been passed down to the retail level as a result of intense industrial sector competition. Consumers have actually seen deflation in the prices they pay for retail goods.  If the trend of increasing input prices spreads throughout Europe, the European Central Bank will have to combat inflationary pressures resulting from higher wage demands made by European workers.  At the moment, interest rate futures trading implies that investors are expecting a 25 basis-point interest rate hike by the end of the first quarter and another quarter-point increase by the end of the third quarter. 

Previous: European producers saw deflation of 0.2% in November largely at the hands of falling energy prices.  If not for the 1.6% fall in energy prices, input costs would actually have increased by 0.1%.  Capital, durable, and non-durable inputs were relatively stable, but the price of intermediate goods increased 0.3%.  Just as the fall in energy prices was responsible for the decline in overall producer prices on the month, the larger trend of soaring fuel costs in the past year made producer prices in November 4.2% higher than they were during the same month in 2004.  Most nations of the Euro-Zone saw producer price inflation in the range of -1.0% to 1.0%.  Input prices in Lithuania, however, realized a more dramatic change of -1.4% while prices in the United Kingdom inflated 3.7%. 

European Central Bank Rate Decision (FEB) (12:45 GMT; 7:45 EST)
Consensus:     2.25%
Previous:     2.25%

Outlook:  A heavy consensus has built behind expectations for the European Central Bank to stay rates at its February meeting.  Unlike the previous meeting, the considerably translucent central bank has released few comments that truly support a rate hike will be on the agenda.  Looking back to the December meeting when monetary policy officials headed by president Jean-Claude Trichet decided to increase the overnight lending rate for the first time in five years, there were clear signals given by officials to prepare the market for the hawkish move.  The same does not apply for the February meeting.  Also overall economic data available to the bank remains rather benign while a few important indicators are scheduled for release this week.  A measure of manufacturing is expected to show the sector to have accelerated the most since July 2004 in December, while a services industry indicator is predicted to rise to a five month high.  However, speculation that the ECB will add an additional 25 basis points to the overnight rate in March is running hot.  And with large member economies showing improvement and oil-spurred inflation back within purview it is easy to see why. 

Previous:  The European Unionââ,¬â"¢s central bank decided to keep its benchmark-lending rate unchanged at 2.25 percent on January 12th to provide the regionââ,¬â"¢s economy room to accelerate.  While the board of officials abstained a rate hike, comments from ECB President Jean-Claude Trichet remained hawkish.  Trichet said rates were still at historical lows and the central bank would remain vigilant for signs of inflation.  Some of the specific risks to the bankââ,¬â"¢s targeted 2 percent inflation rate Trichet mentioned were high oil prices, levels of consumer confidence and concerns over global imbalances.  Already, a few indicators were lending their weight towards possible inflationary shifts.  Consumer confidence in the European area rose to its highest level in over five years while investor confidence in Germany, the largest economy in the group, advanced to a two year high.  However, officials held their hand until these indicators began to effect consumer prices.

Richard Lee is a Currency Strategist at FXCM.