The central bank surprised the markets last week by maintaining interest rates at 4.25%. The markets had predicted a 0.25% cut, which would have likely pushed the aussie downwards.

In the US, Producer Price Index (PPI); primary sign of consumer inflation that value the producer’s price change of finished goods and services, deduction is expected from 0.3% on December down to 0.1%. Meanwhile no change is predicted in the Core PPI (not including food and energy) and 0.1% on this month as well.

In the US, Elizabeth Duke, Federal Reserve Governor is due to speak in Virginia.

Updates: The Aussie dipped under 1.03 as the ANZ Job Advertisements dropped by 0.9%, triggering worries about employment. It managed to climb back up as home loans rose by 1.4%. The better than expected Chinese GDP (8.9% annualized) certainly gave a boost to the Aussie that touched 1.0450 before sliding lower. Australian New Motor Vehicle Sales disappointed with a big drop of 2.9%. This prevented another move upwards. AUD/USD is struggling around 1.04. Australian employment data disappointed with a drop of nearly 30K jobs, although it’s important to note that full time jobs were actually on the rise. AUD/USD managed to rise above 1.04 once again, also on the European optimism.

Last week, positive housing data with new housing starts increasing unexpectedly to 200,200 units in December from 186,000 inthe previous month with a rise in multiple urban starts. Meantime new housing price index also increased above predictions gaining 0.3%. However the total value of building permits dropped by 3.6%, mostly inOntario. Will the housing sector continue to thrive ?

In the US, Unemployment Claims, measures the unemployment insurance that was filed on the last month, predicted to rise by 8K up to 389K

After a sluggish 2011, the Australian economy is expected to post a respectable growth rate of  4 per cent in 2012. The news from down under is not all good however, as the debt crisis in Europe will wipe out $20 billion from expected revenue over the next four years. The outlook for the Aussie is cautiously positive, as there is renewed hope that European leaders will act forcefully to get the debt crisis under control.

Last week the Bank of Canada members left the interest rate unchanged at 1% confident in the current market situation but worried about possible downside risks from the European continent. Ivey PMI jumped in October to 59.9 after dropping to54.4 in September indicating improvement in the Canadian economy. WillCanada be able to avoid the harsh impact of the European debt crisis?

In the US, Producer Price Index (PPI), important consumer inflation sign that value the producer’s goods and services prices, about to reduce from 0.8% on October down to -0.1%, and the Core PPI (not including energy and food) is due to decrease from  0.2% down to 0.1%.

Employment figures came out within expectations, with a gain of 10K jobs and a small drop in the unemployment rate. Other indicators were also OK, but not good enough to boost the Aussie.