US initial jobless claims fell fractionally last week to 294k. The reading, below the 298k level of the previous corresponding week but higher than expectations for a decline to 290k, left the series 4-week average largely unchanged at 290.5k. Despite the fall in new claims continuing claims rose to 2.452m from 2.351m, the highest level seen since late November.

US consumer credit expanded by $14.08b in November, a level below the $15.97b increase of October and expectations for a slowdown to $15b. The increase, the slowest since August 2014, was driven entirely by a $15.03b expansion in non-revolving credit, namely student and auto loans, with revolving credit, largely credit cards, falling by $946m, the steepest monthly contraction recorded since November 2013.

Canada new home prices rose for a fourth-consecutive month in November with an increase of 0.1% reported. The reading, in line with the increase seen in October and market expectations, left the annual rate of change slightly higher at +1.7%.

As expected the Bank of England MPC left their key bank rate and asset purchase program steady at 0.5% and £375b respectively in January. Keeping with tradition no statement was released alongside the decision meaning discussions, and indeed voting patterns, won’t be known until the minutes are released later in the month.

Eurozone retail turnover rose by 0.6% in November. The reading, matching the gain of October, left the annual increase at 1.5%, fractionally below the 1.6% pace seen previously. Perhaps reflective of the fall in crude oil prices turnover in automotive fuel jumped 1.4% following a 0.5% increase in October.

Eurozone producer prices fell for a second-consecutive month in November with a decline of 0.3% reported. The decrease, coming on the back of a 0.3% decline in October, left the annual rate at -1.6%, the fastest pace of deflation since April 2014. As was the case with the regional CPI release a 0.7% drop in energy prices, the fourth month in five that a fall has been recorded, largely explained the decline with prices ex-energy declining by a smaller 0.2%.

German industrial orders fell heavily in November after rising strongly in October with a decrease of 2.4% reported. The reading was below the upwardly-revised 2.9% increase of October and expectations for a decline of 0.7% with domestic orders, down 4.7% on month, largely responsible for the ugly headline miss. Overall falls of 2.3% and 3.1% for intermediate and capital goods were enough to offset a 2.6% increase in orders for durable consumer goods.

Greek unemployment fell by 0.2% to 25.8% in October, the lowest level seen since August 2012. While the data appears to be moving in the right direction, the number of employed persons increased by 6853 from a year earlier while those unemployed fell by 13491, total inactive persons continues to grow whilst youth unemployment remains in excess of 50%.

UK house prices logged their largest month-on-month increase since July in December with the Halifax house price index rising 0.9%. Despite being higher than the 0.5% increase of November and expectations for a further gain of 0.3% the annual rate of growth slipped to +7.8%, the slowest pace seen since January 2014.


The Day Ahead (AEDT)

The ASX 200 looks set to rally for a second-consecutive session today with SPI futures pointing to a rise of 45pts on the open. While the index will jump out of the gates on the back of broad-based gains it will be interesting to see whether the momentum can be maintained throughout the session in light of US non-farm payrolls for December being released later on this evening. As is always the case when retail sales data is released the ABS figures at 11.30am will also be influential on the consumer staples and discretionary sectors in the back-half of the session.

The AUDUSD has held onto gains achieved in yesterday’s Asian session overnight with the pair currently fetching .8111. With short positioning amongst speculative investors likely to be trimmed before tonight’s US non-farm payrolls report a strong retail sales figure at 11.30am could well act as the catalyst for a sharp, short-covering rally today. Conversely, should the data disappoint, it’s likely that the subsequent dip in the Aussie will be bought into by the market. Support is found at .8100, .8080 and below .8040 with resistance kicking in above .8125 and again at .8150. If the latter goes it will open the door for a move back towards .8216, the high struck back in late December.

Australian retail sales figures for November will be released at 11.30am this morning. Markets are looking for an increase of 0.2% on month, down from 0.4% in October. Elsewhere in the region we’ll also receive CPI and PPI figures from China, the REINZ house price index and building consents from New Zealand along with the latest leading index from Japan.

US non-farm payrolls for December will be released at 12.30am tomorrow morning. Markets are looking for net job creation of 240k, down from 321k in November, with the unemployment rate expected to dip to 5.7% from 5.8%. Elsewhere average hourly earnings are expected to grow 0.2%, half the rate of November, with the average work week tipped to remain steady at 34.6 hours. As ever, keep an eye out for revisions, they’re often more influential that the current numbers themselves.

Aside from the US payrolls report that will dominate all others markets will also have to digest wholesale inventories and sales from the States, housing starts, building permits and unemployment figures from Canada, industrial output and trade data from Germany and France along with construction output and international trade figures from the UK. On the policy front Jeffrey Lacker, Richmond Fed President and 2015 FOMC voter, will also be in action in the early hours of tomorrow morning.

Market Map Jan 9 2015

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