Swiss Retail Sales (NOV) (08:15 GMT; 03:15 EDT)
Consensus:         1.8%
Previous:             0.6%

Outlook: Swiss retail sales look to continue their recent pattern of growth, as the adjusted year-on-year expansion looks to triple its November pace. Though predictions are a far cry below the double-digit gains seen in Q2, 2006, there is ample reason to feel optimistic about the future of domestic consumer spending. With unemployment at a meager 3.1 percent through December, a strong labor market has clearly helped consumer confidence and has translated into significant consumption gains. Indeed, tomorrow’s figure looks to impress, but foreign currency traders may reserve judgment on overall implications for the Swiss Franc until a later date. Analysts have cited the lowest inflation rates in Western Europe as a primary reason for a muted outlook on central interest rates and tepid interest in holding CHF-long positions.

Previous: Swiss Adjusted Retail Sales growth fell to its lowest since May 2006, but the seemingly dismal number perhaps obscured the underlying trend in domestic consumption. For a more accurate frame of reference, economists cite overt bullishness among Swiss retailers as the more accurate barometer of spending—implying that businesses expect robust sales to continue. Of course, anecdotal evidence may only go so far if official statistics do not follow suit. Markets subsequently look to tomorrow’s print as a clear sign of whether to expect a persistent uptrend in domestic retail sales. If in fact the number disappoints, two consecutive months of mediocre gains could be the beginning of a more moderate pace of growth.

US Consumer Price Index (YoY) (DEC) (13:30 GMT; 08:30 EDT)
                       (Headline)             (Core)
Consensus:         2.4%                  2.6%
Previous:             2.0%                  2.6%

Outlook: The market’s favored inflation gauge is expected to pick up in December as producer and import indices provide a platform for speculation. Economists expect headline inflation to step up to 2.4 percent for the year as a modest rebound in energy during the period weighs in. Such a rebound in petroleum based products was reported in both the Import Price and Producer Price indices for the same period. In the PPI, the gasoline component grew 7.1 percent following a 17.9 percent jump the previous month. Similarly, imported energy products were 4.8 percent more expensive in December, the first increase in four months. However, this isolated inflation raises two problems for policy makers. For one, crude oil dropped nearly 20 percent since mid-December. Furthermore, the Fed’s Board holds the core price gauge dearer in its decision. This puts the expected 2.6 percent repeat from the core measurement in the spot light. With prices housing and rent prices cooling, consumer spending may be the last bastion of price growth. In November, retail sales jumped 1.0 percent as warm weather and the beginning of the holiday shopping season encouraged more liberal spending. Should cheaper energy and raw material prices seep into the core market groups further up stream, the Federal Reserve may finally be able to shift its attention to the depressed economy in decided future policy.

Previous: Inflation in the consumer basket stagnated in November as both the headline and core monthly figures reported no change. The same malaise was felt with the more closely watched annual figures. The headline report of annual CPI was able to step up to 2.0 percent growth, though this was still the second slowest pace of inflation in over two-and-a-half years. More significant was the dip in the core number. Price growth in the twelve months through November grew 2.5 percent, the second consecutive deceleration and the lowest measurement since June. From many of the various product groups, the signs of cheaper energy prices were showing through. Airfares dropped the most since November of 1999 while vehicle prices eased 0.8 percent. However, evidence of an inflation stronghold was still available. Housing costs which make up for nearly a third of the entire consumer price index grew 0.4 percent. What’s more, the turn in housing sales has led rental costs to put up 0.3 percent inflation. As core inflation begins to slow, speculation of a rate cut from the Fed has grown. However, the annual gauge enters the orbit of the central bank’s target rate, discussion of a cut will likely not be entertained.

Philly Fed Factory Survey (JAN) (17:00 GMT; 12:00 EDT)
Consensus:          3.1
Previous:             -2.3

Outlook: After dropping to the lowest level in over 3 years, the Philadelphia Fed index of manufacturing conditions is expected to rebound back into expansionary territory in the month of January.  Both the national ISM index and industrial production report for the month of December was not as bad as the Philly Fed survey forecasted.  Given some signs of underlying strength in the Philly Fed report and signals of further US economic growth since then, a rebound to 3.1 would be consistent with the other reports.  The US economy as a whole appears to be bottoming and we expect the manufacturing sector to do so as well.  Keep an eye out for the prices paid index, which could be dragged lower by the recent drop in oil prices.

Previous: For the first time in close to 1.5 years, the survey of manufacturing conditions for the Philadelphia region contracted in the month of November.  It was the biggest contraction since April 2003 and reflects the struggle that Philadelphia’s manufacturing sector was undergoing.  The main drag came from a drop in new orders as well as deterioration in the unfilled orders and inventory subcomponents.  However, a closer look at the report reveals that there was underlying strength as well.  The employment, shipments and expectation components all accelerated during the month of December.  In addition, the ISM adjusted Philly Fed index increased from 51.0 to 51.8, which was actually a better indicator of the outcome of the ISM report than the Philly Fed itself.

New Zealand Retail Sales (NOV) (21:45 GMT; 16:45 EDT)
                        (Headline)             (Ex-Autos)
Consensus:         -0.1%                     n/a
Previous:              0.3%                     0.2%

Outlook: Retail sales in New Zealand are expected to have slipped 0.1 percent in November, offering the RNBZ evidence that aggressive consumer spending may eventual revoke its support of the nation’s stubbornly high inflation rate.  Most of the indicators that can be used in the speculation of the sales number are either from the producer side or otherwise lagging. Reporting activity from the business side of New Zealand reports a broad improvement, though these numbers are likely skewed by exports. From the National Bank of New Zealand’s business sentiment gauge for the same period, the highest print since December 2004 rides on the demand found through domestic channels. Contradicting this number, though, a November PMI reads reported a dip in output with a specific contraction in new orders. From the consumer side of the economy, the argument for spending is still murky. A gauge of kiwi optimism rose to its highest level since the third quarter of 2005. However, the report covers the whole quarter and is likely influenced by cheaper energy prices. Equipped with the same caution, the third quarter government unemployment report finally picked up off of its 3.6 percent record low. Should retail sales start to abate in earnest during a time of receding energy prices, it would offer evidence that the slowing economy is taking its toll on the consumer and a rate cut may be warranted.

Previous: According to Statistics New Zealand, retail sales grew for the sixth consecutive month in November. Purchases of cars, recreational goods and perishables all helped to boost overall sales 0.3 percent for the period.  Vehicle purchases accelerated 4 percent after benefiting from a drop in energy prices. Conversely, gasoline receipts slipped 3.4 percent as fueling stations cut prices to keep up with the general slide in commodity fuel prices. Elsewhere, supermarket, department, sports goods and toy retailers all reported higher sales. RNBZ Governor Alan Bollard has recently pointed to aggressive consumer spending as the primary driver in inflation while the rest of the economy depresses the brakes. Consumer spending, which accounts for approximately 60 percent of the economy, has been one of the primary sources of inflation over the past year. Looking at strong preliminary electronic card sales, the holiday shopping season may keep in the consumer on their aggressive habit of buying, though economics will have to catch up eventually.

John Kicklighter is a Currency Strategist at FXCM.