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    THE WEEK AHEAD: 4th Jan 2016

    2016 kicks off with a host of PMI data across the globe but the ones I'll be paying particular focus on is the US manufacturing PMI, with the Eurozone and Chinese equivalents. 

    United States: Manufacturing is expected to contract at a slower pace with a forecast of 49.1 (compared with 48.6 previously) so any disappointment here could with on the Greenback. Non-manufacturing (services) however is providing a better outlook and accounts for a larger section of GDP and is expected to tick higher to 56 from 59.1. A theme I will be monitoring throughout 2016 is whether manufacturing catches up with services, or drags services down with it. The FOMC minutes will provide further details on the meeting which saw the FED raise interest rates for the first time in nine years. Nonfarm payrolls on Friday is expected to print another 202k jobs and unemployment remain stable at 5%. 

    China: Manufacturing PMI is a traders favourite, with today's Caixin read being preferred over the official Chinese read. However both versions have been within contraction mode, but if Caixin PMI contracts faster than December's 48.6 then it could provide a risk-off sentiment leading into Europe. Services PMI is following the global pattern of remain buoyant (in contrast the global manufacturing PMI reads) and expected to tick higher to 52.3 compared with 51.2 previously. If this trend continues then it could reduce the pain from the manufacturing print.  Inflation is expected to tick higher to 1.7% whilst purchase price index (producer inflation) continues to concern investors with back-to-back negative prints. 

    Europe: German inflation, manufacturing orders and industrial production will be in focus for the Eurozone's largest economy. Eurozone inflation is expected to tick higher from 0.2% to 0.3% and could help support the Euro if it surprises to the upside, as this reduces the chances of further stimulus from ECB. Eurozone’s economic sentiment indicator is also released, which provides a broad view of the Eurozone and individual constituents' outlook of the economy. Whilst the general consensus for Euro in 2016 is lower due to the FED tightening and ECB QE program, any positive data is likely to extend the correction to allow bears to positions themselves at higher prices. 

    United Kingdom: Manufacturing, construction and services PMI's all continue to expand so no significant changes are expected this week. However it is services which accounts for the highest proportion of GDP so will be an indicator traders will primarily focus on as they try to decipher any rate changes for 2016 which, at present, seems unlikely. 

    Australia: Commodity prices have been declining each month by double digits since March 2014 and not posted a gain since April 2012, so we can safely bet prices will continue their downward spiral later today. Iron Ore sits merely points above its' all-time lows and accounts for 34.7% of the commodity index. If this trend persists on Wednesday it will cause further concern for RBA's growth targets, as will the fact that manufacturing sector appears to be following suits and edging closer towards contraction status itself. PMI construction Index is on Thursday and expanding slightly at 50.7 but if we see all three sectors below 50 then it could provide a weaker AUD as traders anticipate rate cuts later this year. Retail sales has remained buoyant throughout most of 2015, with only September's report seeing a -0.1% negative print and Friday presents data for the end of year, so likely to remain positive which may provide further support for the Aussie Dollar. 

    CanadaA busy week for the Canadian Dollar which kick's off with the RBC/Markit PMI read on Tuesday. October saw a record low of 48 but December contracted at a slower rate of 48.6. Whilst this indicator remains below 50 then traders will continue to assume rate cuts from the BoC in early 2016, especially whilst oil prices remain near multi-year lows. Ivey's PMI paints a rosier picture, with a record high of 63.6 printed in December but this is expected to come in around 56.7 on Friday. The employment index could provide further calls for a rate cut if job creation contracts further and misses the 10.4k forecasted and could help USDCAD break above the 1.40 barrier. 

    New Zealand: A quiet opening week of the year with only global dairy prices lined up. Whilst the prior two reads have been positive it should be taken in context the we have seen more (and larger) declines over 2015 to suggest recent gains are merely corrective, with dairy prices likely to weigh on NZD in 2016.

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