1. German Industrial Production
2. US Consumer Credit
3. Reserve Bank of Australia Rate Decision

German Industrial Production (DEC) (11:00 GMT; 6:00 EST) (MoM)  (YoY)
Consensus:   0.7%  5.0%
Previous:  -0.3%  4.7%

Outlook: Industrial Production in Germany, Europe's largest economy, is expected to rise 0.7 percent from November, when it declined 0.3 percent.  The consensus comes largely from rising exports over the period that helped bolster profits at companies that were otherwise hurt by weak consumer spending.  Spending by Germans has taken a hit over the months as consumers' confidence has contracted on rising unemployment and softer retail sales.  Over the same period, unemployment rose to 11.3 percent from a year low 11.2 percent in November and sales at retailers fell for the second month in a row by 1.4 percent.  Other constraints on production for the period will lie with higher lending rates and rising energy costs.  A rebound in crude oil from multiple month lows in the beginning of December brought the necessary commodity once again above $60 bbl.  The European Central Bank's decision to raise lending rates for the first time in five years will also put pressure on expansion in the industry.  The benchmark-lending rate was increased 25 basis points on December 1st in an attempt to temper inflation that rested just above the ECB's target.

Previous: German Industrial Production saw a retraction of 0.3 percent in November amid high fuel costs that increased spending on production and limited output, and concern over job cuts. On the other hand, industrial production rose 4.7 percent in November from a year earlier, the fastest pace in almost five years, as growth in Europe's largest economy gathers momentum and more people and companies invest their foreign earnings at home. With the driving force beginning to switch from predominately exports to a greater degree domestic demand, this expansion may be more sustainable. An index of European consumer confidence last month rose to the highest level in more than five years, German unemployment plunged the most since the country's 1990 unification, manufacturers hired workers for the first time since 2002, and service industries grew the most in almost two years.

US Consumer Credit (DEC) (20:00 GMT; 15:00 EST)
Consensus:   $4.2B
Previous:  -$0.6B

Outlook:  Consumers are expected to have increased their borrowing habits for the first time in three months in December as optimism from a strengthening labor market and receding energy prices loosens spending habits.  This confidence for the last month of the year is likely to translate to increased purchases on non-revolving debt like credit card.  Retail sales for December rose 0.7 percent.  Non-revolving debt is expected to also have rebounded for the period as lower gasoline prices attracted potential buyers back to car dealerships that have seen slimming profits since crude prices surged after Hurricane Katrina.  The medium and longer-term outlook for this form of lending could weaken considerable however if consumer confidence is unable to overtake other factors that are weighing on lending habits.  Key amongst those being rising lending rates and stalling housing prices.  The Fed Reserve has kept to a strict diet of 25 basis point hikes to the overnight lending rate that has made borrowing a less and less affordable proposition.  Stalling housing prices could also be a draw on potential lending with fewer consumers using equity in their houses to make purchases.  

Previous:  Borrowing by consumers fell for a second consecutive month in November by $649 million on an unexpected decline in revolving loans - like those for autos.  The month's decline in purchases on credit represented the first back-to-back decline in over 13 years.  Loans for non-revolving debt, like that for credit cards, actually rose for the period by $335 million for the month.   However, on the large, consumers still looked to tap into higher home values to borrow against rather than take on additional credit debt.  Rather, the largest decline in borrowing by US consumers came from the $984 million decline in new non-revolving debt.  This was the third consecutive decline in loans on items such as autos.   Despite auto sales for the period expanding 2.6 percent in November, Americans have been reluctant to purchase items like new vehicles with energy prices producing significant drains on incomes.

RBA Rate Decision (22:00 GMT; 17:00 EST)
Consensus:  5.50%
Previous:  5.50%

Outlook:  Officials at the Reserve Bank of Australia are expected to leave the over-night lending rate unchanged for the 10th consecutive month at their February 7th meeting.  At the meeting, Governor Ian Macfarlane and other monetary policy officials will be met with inflation that has cooled within tolerance levels.  Inflation rose 2.8 percent in the final three months of 2005, while some key components have taken the likelihood of near-term inflation off the table.  The central bank looks to keep annual price growth within a 2 to 3 percent band.  Two of the main contributors to inflation, housing and consumer spending, have also eased significantly.  Retail spending in the fourth quarter sank 0.3 percent despite unemployment reaching lows not seen in 40 years.  Price growth in real estate is also looking soft with building approvals dropping 3.5 percent for the month of December.  However, despite these recent figures, there are some signals for price growth to quicken in the coming months.  A measure by TD Securities of price growth in consumer products reported a 0.7 percent increase in December, the fastest pace in the indexes three and a half year history.  This rise came largely on the back of more expensive gasoline, which highlights comments Macfarlane made in December, that "[l]ooking ahead, it is easier to envisage upward risks to the outlook for inflation and economic activity" than it would for those same factors to ease.  While the RBA does not release comments when it leaves lending rates unchanged, the bank's quarterly statement on monetary policy is due on February 13th and the Governor's half-yearly testimony is to be given to parliament on the 17th.

Previous:  On December 6th, the Reserve Bank of Australia left is benchmark interest rate unchanged at 5.50 percent. The benchmark interest rate has remained unchanged at this four-year high as a part of the central bank's effort to deflate the housing market. In doing so, economy growth as well as household spending has also declined as seen in the country's third quarter GDP growth of only 0.2 percent, which was much lower than the half percent growth that was expected and the 1.2 percent growth in the second quarter. However, employment is still holding up at 5.1 percent jobless rate recorded for November while inflation sits at the 3 percent upper limit of the bank's target range. All in all, the assessment of the Australian economy is rather balanced.  While interest rates are being moved around the world, the RBA really has no compelling reason to move rates in the foreseeable future.

Richard Lee is a Currency Strategist at FXCM.