French Unemployment Change (NOV) (23:00 GMT; 18:00 EST)
Consensus:  -20k
Previous: 5k

Outlook:  French unemployment data is expected to reflect an improving labor market in the month of November.  Tax breaks should boost jobs in the service sector as President Jacques Chirac aims to bring the unemployment rate down to 8 percent over the next few years.  With zero GDP growth in the third quarter however, the countryââ,¬â"¢s ability to spur further job gains remains questionable, but French Prime Minister Villepin has announced a variety of measures to try to boost consumer spending which could help.  The unemployment rate is not expected to change in November.  It should hold at 8.8 percent, which is a five year low. 

Previous:  Job losses increased by 5k in the month of October after unemployment dropped by the biggest amount in at least five years.  The deterioration was not a cause for concern because it was less than the market expected and represented nothing more than a bounce from the strength seen in the prior month.  The unemployment rate remained steady at 8.8 percent, which is the lowest in five years. 

Japanese Manufacturing PMI (DEC) (23:30GMT; 18:30EST)
Consensus: n/a
Previous: 53.7

Outlook: Japanese manufacturing PMI could make a comeback in December after declining for two month in a row to 53.7. Although the most recent reading of industrial production missed expectations at 0.7 percent against estimates of a more solid 1.0 percent rise, a breakdown of the data added a more bullish tone to the report. The headline rise in output was nothing to scoff at, but the components showed that both shipments and inventories gained. As a result, manufacturing PMI will likely be able to hold well above the 50 level, signaling an expansionary sector. This could create a more hawkish environment in the Bank of Japan, given the central bankââ,¬â"¢s concern of an appreciating domestic currency, officials will likely monitor manufacturing sector growth as a bellwether for Japanese export health. If output continues to gain, the Bank of Japan may emphasize the need to normalize interest rates despite weak consumption and inflation.

Previous: Japanese manufacturing activity in November grew at the slowest pace in a year and a half as cooling demand at home offset a rise in orders from overseas. The Purchasing Managers Index, slipped to a seasonally adjusted 53.7, the lowest since May 2005, from 54.1. The index tends to have a good track record of anticipating gross domestic product and shows that Japan's economy has experienced the longest postwar period of continuous growth. Key to the easing of the PMI was a tapering off of orders from the domestic market, particularly for electronic goods and clothing and textiles. The new orders index, a barometer of future demand that combines goods orders from both home and abroad, slipped to 53.2, a 21-month low, from 53.7 the month prior. However, the employment index posted at 54.9 from 55.5, which was the highest reading since the survey was launched five years ago. Overall, the data highlighted the issues of the Japanese economy, where wages and consumption are weakening despite improving prospects for business, namely exporters.

German GfK Consumer Confidence (MoM) (JAN) (5:10 GMT; 2:10 EST)
Consensus: 9.4  
Previous: 9.4       

Outlook: Consumer confidence is expected to remain supported in the month of January as holiday spending continues to help in bolstering optimism in the German economy.  Already, retail sales figures are anticipated to have reversed negative readings in previous months, as a higher VAT tax is forcing consumers into early purchases for the holiday season.  Subsequently supportive of current sentiment has been an expanding export sector.  Both industrial production and factory orders have remained healthy in the fourth quarter as global demand continues to head for German based goods, boosting growth in the country.  The notion will likely keep the report at the five year high according to the consensus expectations, adding to early pressure on European Central bankers in keeping to an already implemented tightening cycle.

Previous: German consumer confidence surged to a five year as growing economic development continues to spur on confidence in the public eye.  The notion is likely to support heavy holiday spending with capital spending by businesses likely to follow, not too far behind.  Additionally attributed to the higher mark, seems to be an increase in forwarded purchases as consumers of Europeââ,¬â"¢s largest economy attempt to beat out the newly enacted VAT tax.  Expected to be implemented in 2007, the new VAT tax will increase the tax on goods and services to 19 percent from 16 percent in the country.  Although worrisome earlier in the year, sentiment is shifting to the idea that the tax is likely to do little in hindering the current pace of purchases in the coming quarters.  As a result, European Central Bank policy makers are likely to remain steadfast in their currently hawkish outlook, suggestive of further rate hikes early on in the beginning of 2007.

KOF Swiss Leading Indicator (DEC) (9:30GMT; 5:30EST)
Consensus: 1.62
Previous: 1.73

Outlook: The KOF Leading Indicator Index, used to predict growth in the coming six to nine months, is expected to slow for the sixth consecutive month in December  Economists expect the forward-looking indicator to fall 9 points to 1.62, which would be the lowest print since the January figure and a substantial distance from the six-year high set in July.  Multiple economic releases since last monthââ,¬â"¢s KOF report underpin the expectations for weaker growth in the months ahead. While the employment level for November slipped to 3.1 percent from 3.2 percent, consumption has weakened as indicated by the UBS indicator, which hit 1.890 in November, as well as adjusted real retail sales, which fell to 0.6 percent from a year earlier.  Trade data also points to a diminishing leading indicator, as last monthââ,¬â"¢s balance posted at a smaller than expected surplus of 1.30 billion Swiss francs. Overall, the KOF release should continue to signal that growth in Switzerland has already peaked, though the economy should remain buoyant with the help of export demand and steady domestic consumption.

Previous: The KOF index of leading economic indicators missed badly to the downside in November, printing at 1.73 versus 1.90 expected. The month prior was revised downward as well from 2.00 to 1.95. This was the fifth consecutive monthly decline in the KOF suggesting that Swiss growth may have peaked.  The news did not effect Swiss National Bankââ,¬â"¢s widely expected decision to raise rates by 25 basis points to 2.00 percent in December.  The central bank did, however, downgrade growth and inflation expectations for 2007. Nevertheless, Swiss National Bank made it clear in its quarterly assessment that the further gradual normalization of policy will continue as long as growth is in line with expectations.

John Kicklighter is a Currency Strategist at FXCM.