Swiss SVME PMI (JAN) (8:30GMT; 3:30EST)
Consensus: 64.7
Previous: 65.0

Outlook: Swiss factory growth is expected to continue its decline in January, with analyst estimates pinned at 64.7. While there is increased concern over the health of the economy, economists expect manufacturing to remain buoyant. Supporting this theory is the carry through in consumer confidence and a healthy export market. Exports of Swiss-manufactured goods represent a good portion of the total and this leaves the responsibility for the sector’s health in good hands given the jump in consumer and business spending in European neighbors like Germany. Domestically, consumer spending has yet to be seriously gouged. Though a number of indicators have suggested the Swiss economy is turning, unemployment remains at lows, encouraging more liberal spending habits. However, while these few factors could help sustain factories in the short-term, the weight of slowing growth and rising interest rates could start to put the breaks on manufacturing. With factory activity is one of the pillars of growth in the country, a significant slowdown may cause the central bank to find yet another reason to cap its hawkish rate policy.

Previous: Manufacturing growth in Switzerland slowed in December as SVME PMI slipped in line with expectations to 65.0 from 67.0. A breakdown of the data continues to show expansion in the industrial sector, as output rose to the highest level since August’s record. Additionally, the employment component also made a strong contribution, jumping to 65.2 from 63.2. In fact, one of the only parts of the index to decline was the purchase price component, which is not entirely surprising as producer and import prices stagnated during the month, bringing the annual rate down to 2.6 percent. Overall, the PMI result was still indicative of relatively strong industrial expansion, which should continue to benefit from resilient export growth.

US Personal Spending (DEC) (13:30 GMT; 08:30 EST)
                   (Spending) (Income)
Consensus:      0.7%       0.5%
Previous:          0.5%       0.3%

Outlook: Consumer spending, which accounts for nearly two-thirds of the US economy, is expected to accelerate in the final month of the year. Economists’ predictions of a 0.7 percent rise in personal consumption in December are well supported by sentiment and related spending reads. Last month, American’s revealed relatively high levels of confidence in their current financial condition. The University of Michigan’s survey slipped slightly for the third month, but held close to its highest level in 15 months. The modest correction is blamed on a small pick up in average gasoline prices and continued concern over home values. On the other hand, high employment and respectable wage growth has pushed the Conference Board’s confidence gauge to move onto its highest level in nearly four years. In December, the jobless rate held near its five year lows at 4.5 percent while annual earnings growth printed a month of 4.2 percent growth, the fastest pace of wage inflation since November 2000. Furthermore, any doubts that the income and confidence have not developed into improved spending are squashed when looking to retail sales for the same period. Retailers sold 0.9 percent last month, following 0.6 percent growth last month. Should momentum behind income and spending follow through into the new year, expectations for growth will climb in step.

Previous: The Commerce Department’s spending and income indicators revealed a strong start to the holiday shopping season. Spending in consumer base of the world’s largest economy grew 0.5 percent in November, the quickest pace of growth since July but slightly less than economists had predicted. Breaking the overall spending numbers into its relevant components, purchases of durable goods surged 1.6 percent, non-durables picked up 1.0 percent and services received a comparatively lackluster 0.1 percent boost. These numbers reveal an interesting divergence in spending habits as American’s purchase longer-lasting, more-expensive goods and ease up on making every day purchases. This may be a seasonality factor as income is being diverted to holiday spending. At the same time purse strings were loosened, income was steady ahead. Repeating October’s 0.3 percent pace of wage growth, November’s print reflects the tight labor market that has led competitive wage growth.

US ISM Manufacturing (JAN) (10:00 GMT; 05:00 EST)
Consensus: 51.7
Previous: 51.4

Outlook: ISM Manufacturing is expected to inch higher after December’s surprise gain, as analysts widely believe that US manufacturing will grow at a very gradual pace through the medium term. Previously sagging demand has been enough to take producers’ leftover inventory to alarming levels, but a jump in exports has been enough to leave inventories slightly lower through recent sampling periods. Industrial firms hope that this will only continue through subsequent months, but markets are not entirely sure that this will have meaningful impact on the broader economy. Indeed, today’s GDP figures show that the aggregate economy grew an impressive 3.5 annualized percent through the final quarter despite manufacturing weakness. Implications for the currency market are relatively clear; it will take a substantive surprise to spark large price moves ahead of Friday’s Non-Farm Payrolls report.

Previous: US industry surprised market analysts through the month of December, pushing the ISM manufacturing above the 50 boom/bust level after a previous dip below. This was enough to improve forecasts on overall sector profitability, but had little lasting effect on outlook for the broader economy. Analysts look to tomorrow’s report in much the same way; unless there is a large surprise above or below, traders will continue to pay more attention to services sector and consumer-linked reports.

Australian Trade Balance (DEC) (00:30 GMT; 19:30 EST)
Consensus: -A$1.000B
Previous: -A$0.843B

Outlook: Australia’s physical trade deficit is expected to grow to A$1 billion in December as the drought weighs cuts into exports and a well-funded consumer stokes import spending. In the closing month of the year, shipments of Australian goods across the boarders may have been constrained across a number of key product groups. The most obvious slump may be in agricultural goods. Australia is considered is considered one of the breadbaskets of East, providing wheat, cattle and other soft commodities to China and other Asian countries. Such a title underlines the importance of the worst drought the nation has suffered in over a century. Elsewhere, the mining sector may offer a limited contribution to exports. During the commodity boom in mid-2006, shipments of base-metals and energy products helped close the gapping trade surplus. However, in December, the Commodity Index, following a basket of key Australian raw goods, reported its slowest year over year growth since March of 2004. At the same time, the surge in profits at these firms in the months before has led to a surge in investment in equipment and machinery and mass hiring. In the third quarter, capital investment in the sector rose 27 percent, following an 80 percent jump in the first half of the year. Similarly, consumers, enjoying a 30-year low jobless rate and rising wages, likely increased their purchases of foreign goods. As the severity of the drought eases and the RBA’s recent rate hikes start to cut into spending, trade should start moving towards a positive balance.

Previous: The trade deficit was nearly halved in November, slimming down to a A$843 million shortfall from A$1.508 billion the month before. Helping to alleviate some of the burden on the fragile balance, a drop in imports, led by fuel and business equipment investment, helped leverage a pick up in foreign coal and beef shipment. In November, imports fell 3.0 percent to A$18.87 billion. The drop was paced by a 6 percent drop in intermediate goods that include necessary raw materials like fuels as prices plunged. On that same note, a few of the key commodity exports from Australia suffered from the same price gouge. Alternatively, the high volume meat shipments and a jump in demand for Australian manufactured goods helped to boost exports for the third consecutive month. During the period, meat sales abroad jumped 4 percent while manufactured goods surged 13 percent. An additional gain for growth stocking exports was a 5 percent rise in coal shipments.

John Kicklighter is a Currency Strategist at FXCM.