By Richard C. Lee
With the Fiscal Cliff behind us and the impending debt ceiling debate at least another month away, market focus will return to plain economic fundamentals next week. The sentiment is being bolstered by two central bank announcements - the ECB and BOE. And, although nothing really new is expected, both events are still likely to take the lion's share of attention.
German Factory Orders (January 8th, 6:00AM EST)
Not regularly a major event, the upcoming German factory orders report could inject some volatility as it stands to decline once again. Estimates have the measure dropping by 1.4% in November, after seeing an October 3.9% surge. This would be the third down month for the report and raise speculation of weakness in the German economy.
A lower than expected figure could worsen near-term prospects for the EUR/USD with the currency pair already failing to rise above 1.3300. As a result, the bearish report would place sights on the 1.3000 support.
Australian Retail Sales (January 8th, 7:30PM EST)
Month over month retail sales in Australia are expected to rise by 0.3% in the month of November. This would be the fourth month in a row that the survey has produced a string of positive results, and the first time since the end of 2011. A positive figure here would likely prolong the need for rate cuts by the RBA, lending to some bullish demand for the AUDUSD.
Expect to see support remain formidable in the 1.0400 area if this is released positively.
Bank of England Interest Rate Decision (January 10th, 7:00AM EST)
Nothing is expected to happen when the Bank of England meets for the first time in 2013. Although concerns have emerged over a divide in the central bank, it is unlikely that the monetary body will move to do anything other than wait-and-see. The key remains in the results from the Funding for Lending program, which is entering its sixth month of operation.
European Central Bank Interest Rate Decision (January 10th, 7:45AM EST)
In the same respect, the ECB is unlikely to move when it decides on interest rates on Thursday. Instead, monetary policy leaders will continue to highlight the option of the OMT scheme in quelling any more crisis concerns, and likely point to stabilization in the region's member economies in justifying no rate change.
U.S. Unemployment Claims (January 10th, 8:30AM EST)
First time unemployment clams are expected to decline once again, following the surprise increase to 372,000 this past week. Estimates are for the weekly claims to dip to 361,000, closer to the currently running 4-week moving average. Continued stabilization in the report is anticipated for the near term until payroll tax increases are activated.
Look for a better than anticipated figure to bolster the US dollar against the Japanese yen via the 87.00-89.00 barrier. A lower jobless claims could warrant a break of the top end of the consolidation range.
U.K. Manufacturing Production (January 11th, 4:30AM EST)
In one of the final releases of the week, U.K. manufacturing production is expected to rebound by 0.6% in the month over month comparison in November. The increase would be the third monthly gain in the last five and be bullish for the U.K. economy. The annualized figure would improve to -1.3% on the year, rather than the current -2.1% decline.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.