The week starts with the ISM Maufacturing publication in the US, which measures the activity of purchasing managers in the manufaturing sector. Analysts expect a reading of 52.8, suggesting expansion. On Tuesday, the Euro zone will be in the spotlight with the PPI and unemployment rate publications. Investors playing on the Australian dollar will certainly be waiting for three important reports from Australia: interest rate statement (forecast 6.50%, prior: 6.50%), trade balance, and retail sales. In mid-week, we will learn about the activity of purchasing managers in the services sector (ISM Non-manufacturing Index) and the employment change in the private sector (ADP Employment Report).

Thursday will be the day of central banks. The European Central Bank is expected to keep interest rates at 4.00%, as well as the Bank of England at 5.75%. Chairmans of both banks were prediciting interest rates hikes 2-3 months ago, but due to the recent financial crisis those plans had to be postponed. European Central Bank’s (ECB) President Jean-Claude Trichet will hold a press conference in Frankfurt following the Governing Council's interest rate announcement. Of course, investors will look for clues about the future monetary policy of the ECB.

On Friday, employment information from the US and Canada will be published. Obviously, the most awaited report will be the US Non-farm payrolls publication. Last month’s surprising reading of -4 caused the American dollar to lose ground on all fronts. Since then, the greenback depreciated against the euro all the way to 1.4280. This time, analysts expect that 100K jobs were added. Along with the payrolls report, the unemployment rate and average earnings will be announced.

Since central banks in the Euro zone and England are expected to keep interest rates at their current level, attention of investors will be focused on the US job market data. I do not expect such a shocking reading of the payrolls report as last time but 100K forecasted jobs added seems to me a little optimistic. Time will verify those expectations. During last week, appetite for risk increased slighlty lifting both the Dow Jones and S&P 500. To a big surprise of Polish investors, the WIG20 declined to below 3,700. Better news from the US should lift the Warsaw Stock Exchanges’s major index. No macroeconomic reports are being published this week in Poland so the direction of the WIG20 will depend on how global markets behave.

Adam Narczewski