German Import Price Index (DEC) (7:00GMT; 2:00EST)
                   (MoM)   (YoY)
Consensus:   -0.1%   2.4%
Previous:       -0.4%   2.8%

Outlook: Import prices in Germany are anticipated to slip for the fourth month in a row in December as oil remains relatively low and should decrease the value of imported crude. Estimates for the German import price index are set at -0.1 percent for the month and 2.4 percent for the year, which underpins speculation that the European Central Bank will opt to hold rates steady during February in order to wait for data indicating inflation pressures. Nevertheless, the ECB has maintained a tightening bias in fear of second round effects from previous energy price increases. As a result, the markets have pinned March as the month when the ECB will raise rates 25 basis points to 3.75 percent.

Previous: The price of German imports dropped for the third consecutive month during December at a rate of 0.4 percent, leading the annual rate down to 2.8 percent from 3.0 percent. The continuous weakening of oil prices led the decline, as the cost of imported crude fell 2.2 percent from October while natural-gas prices eased 0.4 percent. As a result more tepid underlying price pressures, inflation in the Euro-zone stayed below the European Central Bank's 2 percent limit for a third month in November at 1.8 percent. Nevertheless, ECB President Jean-Claude Trichet said that there was still a risk inflation will accelerate in 2007 as economic growth gives companies more room to pass on previous oil-price increases and encourages workers to demand higher wages.

Swiss UBS Consumption Indicator (DEC) (09:00 GMT; 04:00 EDT)
Consensus: N/A
Previous: 1.886

Outlook: Though there is no official consensus for the UBS Consumption Indicator, there is evidence for it to go either way in its December reading. If a contraction is realized, it would provide further evidence that the economy is on track to slow from its extraordinary performance in the first half of the year. As its stands, the Leading Indicators Index for the same period slipped for a sixth consecutive month to its lowest level since the beginning of the year. Much of this contraction is being attributed to stalling export demand from large trade partners like the US and Germany, which clearly defines the need for strong domestic spending. Perhaps the most burdensome weight on consumers last month was the SNB’s decision to hike the nation’s benchmark lending rate to 2.00 percent. With officials retaining lingo that suggests they will move forward with future hikes, financing costs on big purchases will continue to drain disposable income and beat down sentiment. On the other hand, there are a few reasons to believe the indicator will print higher. Retail sales in the previous month grew 3.3 percent on an annual basis, proposing a possible follow through in December. Furthermore, the average price for goods in the consumer basket passed unchanged for the second month in December. While the lack of inflation is a hindrance for rate hawks, it loosens Swiss purse strings as employment and wages continue to grow. Also for the month, there were 1,461 fewer unemployed in Switzerland, keeping the jobless rate at 3.1 percent. If consumer spending fails to take up the slack in exports, the steady rate regime from the SNB could be the first thing to falter, with growth close behind.

Previous: UBS’ Swiss consumer consumption indicator held steady in November as the holidays encouraged more liberal spending. The 1.89 read for the month matched the highest level of spending activity since July and suggested the Swiss consumer will be able to support the economy should demand from the nation’s larger export destinations slow. Looking to the relevant data for the period, it isn’t hard to find the reasoning for such an optimistic consumer. Besides the typical spending fervor that is associated with the season, employment strength and cheaper energy have stoked buying confidence. In November, energy costs close to the consumer (heating oil and gasoline) started to track the general decline in crude prices. Subsequently, car registrations grew markedly on the month. From the earnings’ standpoint, employment in the third quarter grew the most in five years, forcing employers to compete for skilled labor through wage negotiations.

US Durable Goods Orders (DEC) (13:30 GMT; 08:30 EDT)
                  (MoM) (Ex Transportation)
Consensus:  3.0%       0.5%
Previous:      1.9%      -1.1%

Outlook: US Durable Goods Orders look to improve off of recently dismal results, with analysts predicting a 0.5 percent Ex-transportation gain through the month of December. If predictions prove to be correct, it will be only the second time in six months that the number remains in positive territory, underlining the risks to US industrial production and consumer demand. Given a string of strongly positive economic data, it stands to reason that Durable Goods will produce a similarly impressive result. Risks to the US dollar arguably remain to the downside, however, with Greenback bears eager to pounce on perceptions of economic weakness.

Previous: Headline durable goods grew through the month of November, but strong sales of aircraft obscured the fact that Ex-Transport sales actually fell 1.1 percent through the period. Analyst cited a slowdown in capital expenditure as the main source of falling orders, as businesses worried that a broad economic slowdown would hurt overall demand. This fell in marked contrast with concurrent domestic spending data, however, as Consumer Spending grew at a 0.5 percent pace. Subsequent forecasts predict a rebound in Durable Goods orders, with consensus estimates of 0.5% growth through the final month of 2006.

US New Home Sales (DEC) (15:00 GMT; 10:00 EDT)
                   (Sales)  (MoM)
Consensus:  1052K    0.5%
Previous:      1047K    3.4%

Outlook: New home sales, unlike existing unit purchases, are usually seen as a timelier indicator for the housing market. Subsequently, expectations for a 0.5 percent increase in sales activity in December offers a strong case for the recently battered sector. Looking for reliable guides to forecasting the numbers, much of the associated data favors an improvement. For the same month, both housing starts and building permits grew more than expected. Developers broke ground on 1.642 million homes in December, a 4.5 percent increase over the previous period. More encouraging was the biggest jump in building permits in four years. Often seen as a leading indicator to future construction activity, the turn in permits came after marking the slowest pace of new filings in recent history. Even the drop in existing homes carries with it a few promising facets. Inventories contracted while the average price for previously owned homes passed unchanged, both encouraging figures for home builders. Outside of the pure data, developers had also offered incentives while enjoying the warmest December since 1957 to improve sales figures. If the housing market offers more evidence that a bottom is in place, one of the biggest weights on the economy and Fed policy could slowly be alleviated.

Previous: Sales of newly built homes grew 3.4 percent in November, more than economists predicted. The Commerce Department reported annual activity rose to 1.047 million units over the month as mortgage rates eased and builders increased incentives to move excess inventory. Breaking the data down into its geographical components revealed a surprising 22.4 percent jump in the Midwest, the biggest pickup in nearly two years. Consumers in the November found a few reasons to take on the burden of financing a new home. From a strict cost perspective, mortgage rates further eased off of recent record highs to average below 6.2 percent over the month. Furthermore, a boost in available income through savings with cheaper gasoline prices and attractive incentives from builders like a larger garage or flat screen television, helped to sell new home ownership to others. Despite the positive monthly performance though, there are still concerns over housing activity. For one, sales over the twelve months ending in November plummeted 15 percent. Also, inventories of unsold homes are not far from all-time highs set only months before.

John Kicklighter is a Currency Strategist at FXCM.