Euro-Zone Producer Price Index (DEC) (10:00GMT; 5:00EST)
                   (MoM)   (YoY)
Consensus:  0.0%     4.1%
Previous:      0.0%     4.3%

Outlook: Inflation across the Euro-Zone measured at the factory gate is expected to slow to a more tepid annual rate of growth in December at 4.1 percent as the monthly rate is anticipated to stagnate. Estimates for the region’s pressure gauge are derived from the PPI performance of the group’s largest economies, and given Germany’s annualized decline to 4.4 percent from 4.7 percent, it is even more likely that the broader Euro-zone figure will slip as well. The German figure reflected a 7.2 percent decline in oil-related products, which will likely be a major factor in the headline Euro-zone figure. Nevertheless, concerns regarding price risks remain high as inflation hawks fear that faster economic growth throughout the Euro-zone has given companies further scope to pass on previous cost increases, which could feed into consumer prices in coming months. This will likely be especially of concern to the European Central Bank, which still maintains a tightening bias as they consider rates to still be “low” and policy to be “accommodative.”

Previous: Producer prices in the Euro-zone stagnated in October as continually weak energy prices offset gains in intermediate goods and capital goods prices. However, the annual rate of PPI accelerated to 4.3 percent from the one year low of 4.0 percent. The data indicated that slight inflation may be in the pipeline for Euro-zone, but did not warrant monetary policy tightening immediately by the European Central Bank. As a result, rate hike expectations were delayed until March as the central bank remained hawkish, but would likely need to prudently assess more data.

US Change In Nonfarm Payrolls (JAN) (13:30 GMT; 08:30 EST)
Consensus: 150,000
Previous: 167,000

Outlook: US payrolls are expected to grow by 150,000 new hires in January, a number that would help confirm the stabilization in the labor market. As usual, there is no lack of periphery indicators available to steer last minute revisions to the market’s unofficial consensus. Starting with the workers themselves, the consumer confidence survey from the Conference Board reported a rise in its labor differential. The manufacturing sector may slow its pace of hiring, with some regions actually turning to layoffs. For January, the nationwide ISM manufacturing reported a contraction in its employment component for the third consecutive month. Always the most accessible, the private employment gauges have all boosted expectations. In the past days, the Hudson Index grew from 102.7 to 104.2 while the Monster report regrouped from its seasonal low. Hot and cold in its ability to predict the government payroll number, the ADP measure of private sector grew 152,000 following the sharp 40,000 person drop in December. Perhaps the most reliable data comes from the Government themselves. The four-week average for first time jobless claims fell to its lowest level since February. With the Fed recognizing a tight labor market and the economy showing greater dependency on consumer spending, a deviation from the ‘neutral’ 100,000 to 200,000 range could upset the dollar’s calm.

Previous: US employers took on an additional 167,000 new workers in December. Taken together with the previous month’s 154,000 addition, the Fed’s assessment that a 100,000 to 200,000 would signify stabilization in the labor market is beginning to come to fruition. Employment has been one of the driving components behind the optimistic outlook from consumers. At the same time, wages round out full support for liberal spending habits. Average hourly earnings over the month grew 0.5 percent while the year-over-year pace marked the fastest expansion since November of 2000. Breaking the numbers down, service-based firms are clearly supporting overall hiring trends. Service managers took on 178,000 new employees in December, though retailers laid off a net 9,200 people leading into the holiday season. Elsewhere, the month saw a loss of 3,000 construction jobs following a 25,000 cut in November. Hit by a drop in new orders and still working off a glut in inventories, factories continued to trim their ranks with a 12,000 person cut.

US Factory Orders (DEC) (15:00 GMT; 10:00 EST)
Consensus: 1.9%
Previous: 0.9%

Outlook: Factory orders likely grew through the month of December, as a previous bounce in manufacturing highlighted improved demand through year-end 2006. Such a jump may be short-lived, however, as today’s US ISM Manufacturing numbers showed that overall activity declined in January. The market implications for tomorrow’s Factory figures are subsequently mixed. Emphasis will clearly fall to the earlier Non-Farm Payrolls report, which promises to spark great volatility across USD-denominated currencies on any surprises. One could easily claim that volatility will have dried up through the later hours and the Factory Orders release, but the reaction to yesterday’s Chicago PMI figures is a stark reminder that even second-tier releases can cause violent price movements.

Previous: Factory orders inched higher after losing 4.5 percent through October, but month to month volatility in the figures lent little credence to the bounce-back. In fact, the bounce was largely due to increased demand for military equipment—implying that broader manufacturing strength was limited. Hopes remain low for US manufacturer, but a subsequent jump in December ISM figures improved outlook on domestic industry. January’s print below the 50 boom/bust mark almost instantaneously eliminated renewed optimism, however, as a previous stabilization in sector growth appears increasingly tenuous.

John Kicklighter is a Currency Strategist at FXCM.