UK Rightmove House Prices (JAN) (24:01 GMT; 19:01 EDT)
                          (MoM)                    (YoY)
Consensus:          N/A                        N/A
Previous:             -0.3%                     13.0%

Outlook: UK house prices look to continue their solid ascent, as a steadily rising year-over-year growth rate clearly leaves risks to the upside for housing costs. Given that these prices have directly contributed to economic expansion and subsequent inflation, traders are likely to pay relatively close attention to the figure. Though not traditionally a market-moving indicator due to its off-hours release time, it will give markets a better indication of real estate strength moving forward.

Previous: Rightmove House Prices sagged through the month of December, as sellers lowered ask prices in order to make quick sales ahead of the holidays. Despite the monthly drop, however, the annual rate moved higher for the fourth consecutive month—leaving it at its strongest since late 2004. Developments in the housing markets have clearly boosted outlook for the UK economy. As such, it is important that numbers continue to impress if we are to see optimism remain intact through upcoming trade.

Australian Producer Price Index (4Q) (00:30 GMT; 19:30 EDT)
                       (QoQ)                     (YoY)
Consensus:       0.2%                       N/A
Previous:           1.0%                       4.0%

Outlook: Inflation at the factory gate, the last government price gauge before next week’s CPI report, is expected to have slowed in the fourth quarter. The various indicators contributing to the PPI’s forecast are mixed, though a few big components are expected to leverage a greater influence on the overall index. Holding out a possibility of higher prices, the monthly NAB Business Indicator may offer some evidence of higher prices. As costs for raw materials or consumer demand falls, firms are often forced to raise prices to secure revenue levels. Subsequently, the NAB read printed four consecutive reads of 6 through November, the lowest level since December of 2005. More direct, TD Securities’ monthly gauge of consumer inflation may act as a reliable proxy for price pressures at the factory gate. Annual inflation rose to an seven month high 3.8 percent in December after steadily rising through the quarter. More convincing is the evidence for a contraction in PPI. The RBA’s Commodity Index, measuring the costs for a basket of raw materials, marked its lowest read in nearly three years in December. This drop in input costs will likely be passed through. Perhaps the most convincing argument is made by the Import Price Index, which dropped 3.2 percent over the fourth quarter. Domestic consumers should generally find the same price declines as foreign spenders. Should PPI surprise with a contraction for the period (like the IPI), then speculation for the consumer gauge and future rate policy will drop substantially.

Previous: Price paid to Australian factories rose 1.0 percent over the third quarter, decelerating from the six-year high pace recorded in the previous three months. According the Australian Bureau of Statistics, the producer price index was pressured lower by energy prices. As crude started to falter from record highs in July, refined fuels began to drop in tandem. In June, the average price per liter of petrol was A$1.38, but by the end of the third quarter, it had dropped to A$1.16 per liter. Despite the more reserved pace of price growth, however, the print did surpass expectations. A combination of utility and building material group inflation led the general push for the broad index. When the Consumer Price Index printed only a few days after the PPI, it had marked a rate still beyond the RBA’s 2 to 3 percent comfort range. Subsequently, the central bank monetary policy group issued another rate hike not long after the releases.

German Producer Prices (DEC) (07:00 GMT; 02:00 EDT)
                          MoM                       YoY
Consensus:         0.1%                       4.6%
Previous:             0.0%                       4.7%

Outlook: German producer prices are likely to inch slightly higher through the month of December, but the annual rate may match October’s yearly lows on falling energy prices. Given that last month’s sharp rise in costs was mostly due to the oil and other transitory sources, it stands to reason that risks may remain to the downside for December’s print. Market implications are fairly clear, with recent central bank commentary hinting that officials expect price pressures to moderate through the medium term. As such, Euro bulls hope for a higher than expected print, with any downward surprise to limit the likelihood of higher interest rates through the European Central Bank’s upcoming meetings.

Previous: Producer price inflation accelerated through the month of November, as rising energy costs clearly boosted operating expenses for domestic industry. Outside of energy prices, however, the PPI figure was much more moderate than initial reactions would suggest. The Ex Energy year-over-year inflation rate inched slightly lower to 2.9 percent on the month, down from 3.0 percent in October. Given this, markets seemingly altered expectations for future inflation results. Risks arguably remain to the downside for tomorrow’s report, but Euro bulls clearly hope for relatively high core inflation to persist through the medium term. This would only boost the likelihood of further ECB interest rate hikes and increase the attractiveness of a Euro-linked carry trade.

Swiss Producer & Import Prices (DEC) (08:15 GMT; 03:15 EDT)
                         (MoM)                    (YoY)
Consensus:         0.1%                     2.7%
Previous:             0.0%                     2.8%

Outlook: Encompassing inflation outside of the consumer sector, the Producer and Import Price Index for Switzerland is expected to print a modest pick up in December. Expected to print 0.1 percent price growth from November, the indicator may help assure speculators that the SNB will not be thrown off its tightening track for its next meeting. For the producer portion of the gauge, there are mixed readings. Suggesting Swiss manufacturers had trouble passing on higher prices to consumers, the SVME PMI reported a drop in its pricing component as both output dropped and inventories fell. However, a 3.3 percent jump in retail sales through November likely encouraged firmer pricing to match holiday demand. The deciding factor though may be the CPI for December which stagnated for the second month, even as its annual figure accelerated. From imports, the price pressures are clearly to the downside. Though the economic sprint in the EU likely kept prices for consumer goods and machinery supported, the drop in energy costs in the closing weeks of December may be too overwhelming. Should this inflation gauge rise as expected, it may hold inflation concerns over for another month and allow time for the CPI to restart.

Previous: Inflation measured at the factory gate and boarder stagnated in December. However, the monthly data was trumped by the pick up in the annual gauge from 2.4 percent in October to 2.8 percent. For the period, the key product groups were quickly noted. Substantial inflation in domestic and foreign metals helped to offset the cooling of imported energy prices. From the metals group the annual figures provide particularly high rates of inflation. Aluminum products were 23 percent more expensive in the 12 months through November, stainless steel rose 40 percent over the same period and imported zinc jumped 170 percent. On the other side of the equation, cheaper crude drove the import portion of the indicator 0.1 percent lower for the month. However, cheaper energy prices have also worked to push up consumer spending and allow producers to charge more from optimistic Swiss shoppers. This dichotomy will be important moving ahead as the Swiss government projects economic growth to slow to 1.7 percent in 2007 from an estimated 2.7 last year.

John Kicklighter is a Currency Strategist at FXCM.