It's a light week of ecomomic reports with a dramatic backdrop

A light week for economic reports leads up to a dramatic Dec. 18-19 U.S. Federal Reserve meeting, with a potential policy retreat hanging in the balance. Since June, economic reports have been held up to a simple litmus test: Do the data influence the Fed's Open Market Committee decision-makers on whether to continue an $85 billion per month asset purchasing program that has applied downward pressure on interest rates and provided liquidity for financial markets? Last week's Labor Department report pegging November unemployment at 7 percent, a sharp drop from the previous month's 7.3 percent rate, sent markets lower on anticipation that that was the improvement that will provoke a Fed retreat from the asset purchasing program soon. Although the data schedule is light this week, expect every report to be magnified in importance, as investors try to anticipate when the Fed will make a move. The schedule for the week includes: Monday -- A monthly European Commission report on investor confidence showed a deterioration with the index at 8, down from 9.3 in November. From Athens, Greece reported that its gross domestic product shrank 3 percent in the third quarter after contracting at a rate of 3.8 percent in the second. From Statistics Canada, a report on November housing starts is due. Tuesday -- The Office of National Statistics in Britain is set to release October's industrial production report. The U.S. wholesale inventories report for October is also due. Wednesday -- No substantial reports expected from Asia, Europe or the United States. Thursday -- Eurostat's industrial production report for October is due and the U.S. Labor Department's weekly report on unemployment benefit claims are due. Also, the The Commerce Department is scheduled to release reports on business inventory for October and retail sales for November. Friday -- Eurostat's third-quarter employment situation report a U.S. Bureau of Labor Statistics report on producer prices are due.