• Swiss Trade Balance
• French Gross Domestic Product
• Canadian Retail Sales

Swiss Trade Balance (JAN) (12:15 GMT; 07:15 EST)
Consensus:      n/a
Previous:     0.51B

Outlook:   While no consensus is available for the trade number of Europeââ,¬â"¢s eight largest economy, there exists factors that will both trim and add to exports in January.  The largest potential detractor from the healthy surplus Switzerland has been running for the past four months will be the sharp reemergence of high crude oil prices.   In January, prices for the commodity advanced towards Septemberââ,¬â"¢s all-time high, stopping just short of the $70 bbl mark.  The sudden increase could have forced purchasing managers to cut back on their purchases of Swiss goods in a preemptive effort to protect revenues.  However, there is evidence that this may not have come to pass.  While crude prices surged, neither natural gas nor gasoline prices advanced; leaving demand from foreign consumers untouched.  Furthermore, business confidence in Germany, Switzerlandââ,¬â"¢s largest export market, jumped to a six year high despite the increase in energy prices.  Regardless of which way the balance moves for January, it is certain that SNB Jean-Pierre Roth will be interpreting both export and import figures, for consumer spending and foreign sales strength, to determine if and when another increase to the overnight lending rate would be justified.

Previous:  A rise in demand for foreign produced goods among Swiss consumers and companies provided the third consecutive monthly contraction in the nationââ,¬â"¢s trade surplus.   For the month of December, an annual 11.9 percent increase in imports far outpaced the 6.6 percent growth in Swiss shipments abroad.  However, officials remain optimistic about the figure since demand for Switzerlandââ,¬â"¢s goods from foreign consumers remains strong as well as the fact that domestic spending will boost, not only sales of foreign producers, but also manufacturers at home.  For the period, a continued decline in the price for energy products and a rise in business confidence helped to move goods out of Swiss inventories.  In December, the cost of crude oil, a necessary input for most manufacturers, continued to hover near lows not seen since the first half of the year.  In response to the cheaper oil, business confidence in the eurozone - Switzerlandââ,¬â"¢s largest export market - nudged higher with a direct affect on orders for Swiss goods.   Moreover, the strong import figures for the period were testament to consumers ability to absorb higher lending rates and further producer strong economic growth in the coming year.

French Gross Domestic Product (4Q P) (07:40 GMT; 02:40 EST)           
Consensus:      0.2%      
Previous:     0.7%      

Outlook:   Economic growth in France is expected to finish the year off at a dragging 1.3 percent pace that would trail expansion in the euro region for the first time in 8 years.    The fourth quarter figure, released form the national statistics office Insee, is facing drops in consumer confidence, exports and factory output that are also detracting from 2006ââ,¬â"¢s seemingly remote 2.5 percent forecast.  Over the final three months of 2005, consumer confidence plunged to a record low after riots broke out over the accidental deaths of two youths.  Output contributions from producers were also waning for the period.  While French industrial production fell over the final month of the year, output for the fourth quarter sank 0.4 percent as higher costs and trimmed demand left business leaders little recourse beyond slowing production and cutting jobs.  Conversely, though firings increased in the manufacturing sector, the overall jobless rate actually fell to a three year low 9.5 percent.   Perhaps the most worrisome outcome for the period was the state of exports for the quarter.  During recent periods of weak domestic spending, French growth has relied upon demand from abroad.  Over the fourth quarter, the French trade shortfall ballooned to an record 26.6 billion euros.  Given these figures, France may contribute little support for hawkish money policy from the ECB going into 2006.

Previous:  Growth in Europeââ,¬â"¢s third largest economy rebounded in the three months ending in September to an annual 1.8 percent on the back of a jump in manufacturing output and stronger sales abroad.  An 11 percent depreciation in the Euro and promising demand growth from foreign consumers helped exports cut Franceââ,¬â"¢s running trade deficit by nearly 500 million euros in the final month of the quarter.  This export number was also telling of business activity for September.  Industrial production rose 0.2 percent while output from manufacturers accelerated 0.8 percent.   Optimism from both of these figures further disseminated into the consumer arena with a marked improvement in the jobless rate, at a five year highs in the first half of the year, and healthy spending figures.

Canadian Retail Sales (MoM) (Dec) (13:30 GMT; 08:30 EST)

Headline
Consensus: 0.2%       
Previous: 1.1%      

Ex-Auto
Consensus: 0.5%       
Previous: 0.1%

Outlook:   Retail sales excluding autos are expected to expand as consumers with increased income spend on goods other than vehicles and auto body parts.  A rebound in energy prices may have alleviated pressure on gasoline stations, which had the largest decline among retailers in November.  However, rising oil prices did lead to better than expected international merchandise sales and manufacturing shipments as the increased prices lent to higher valuations.  In addition, the unexpected rise in housing starts looks to have increased sales of building and outdoor home supplies stores.  Should sales be released above consensus, earlier expectations for a 3 percent growth rate in the economy may come true prompting central bankers to consider higher interest rates.

Previous:   Canadian retail sales doubled its forecast in November, up 1.1% from 0.6%, while retail sales less autos jumped from -0.3% to 0.1%, suggesting the economy was growing at the fastest pace in four months.  Consumers were seen spending more in light of the job gains and income growth, raising retail sales to C$31.3 billion, the highest in four months, primarily from a boost in auto purchases to C$7.4 billion.  Consumers were spending more on building and outdoor home supplies, clothing and accessories, and pharmacies and personal care goods.  Purchases in general merchandise, furniture, home furnishings and electronics, and food and beverage were unchanged from the previous month.  The data suggested that in the fourth quarter the economy grew at 2.8%.  In lieu of strong economic data, the Bank of Canada raised interest rates to 3.50% from 3.25% to prevent inflation and keep the economy growing at a steady pace. 

Richard Lee is a Currency Strategist at FXCM.