After a month of consolidation, much volatility is expected for the first week of 2007 on the back of a economic release scheduled with important indicators every day. The US calendar will start will ISM manufacturing index on Tuesday. This manufacturing index has dropped for the fourth consecutive month in Nov and reached a sub-50 contraction level of 49.5 for the first time since 2003. A rebound is expected by economists to push this index back to expansionary level 50 and end the losing streak. Tuesday will also be a manufacturing day featuring Manufacturing PMI indices from Germany, Eurozone and UK.
The highly anticipated release of Fed Minutes was rescheduled to Wednesday. Focus will be, again, on Fed's view on growth and inflation, in particular, after further indication of slow down in housing and manufacturing industries and tamed inflation data. Markets are expecting the Fed to hold steady in first quarter but such expectation could easily flip to rate cut in case of a dovish minutes from the Fed.
ISM non-manufacturing index will be featured on Thursday, which is expected to retreat mildly to 57.0 after scoring a surprise 58.9 in Nov. Such reading, together with a rebound in the manufacturing index, will suggest that those the pace of the economy in US has slowed, it's still steady and will reduce the odd that Fed will cut rate soon. Thursday will also feature services PMI indices from Germany, Eurozone and UK. Plus Canadian PPI.
Non-Farm payroll will be featured on Friday. Consensus call for a mild drop in job growth to 115k in Dec, with unemployment rate remains at 4.5%. Again, focus will also be in revisions to prior data as well as other indicators including wages. Also, Eurozone PPI and retail sales will be released.
In short, we'll be having a busy week with highly market moving economic releases every day. Prepare for a roller coaster ride!
Wish our readers a prosperous and profitable 2007!
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