Trading Week Outlook: August 9 - 13, 2010

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From Seeking Alpha

In the aftermath of yet another disappointing employment report, the week ahead will see traders focused on the Federal Open Market Committee’s interest rate announcement for signs of whether the Fed is considering additional monetary policy stimulus on concerns of weak jobs creation and “unusually uncertain” economic outlook.

In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that every currency trader should pay attention to.

1. JPY- Bank of Japan Interest Rate Announcement, Tues., Aug. 10, expected around 12:00 am, ET.

With the Japanese Yen strengthening, exports declining and deflation still not going away, the Bank of Japan will be likely to keep rates at their record low level of 0.10%.

2. USD- U.S. U.S. FOMC- Federal Market Committee Interest Rate Announcement, Tues., Aug. 10, 2:15 pm, ET.

The U.S. Non-Farm Payrolls report showed the economy losing larger-than-expected amount of jobs in July and has exponentially increased the odds that the Fed could be forced into offering additional monetary policy stimulus. Low inflation and weak jobs creation should warrant maintaining the benchmark interest rate near 0% for “extended period”.

3. GBP- U.K. Jobless Claims and Unemployment Rate, the main gauges of employment trends and labor market conditions, Wed., Aug. 11, 4:30 am, ET.

The U.K. labor market could see another month of improvement with lesser amount of people claiming unemployment benefits compared with the previous month and the unemployment rate remaining unchanged at 7.8%.

4. GBP- Bank of England Inflation Report, the central bank’s official assessment on current economic conditions, inflationary pressures and future inflation expectations, Wed., Aug. 11, 5:30 am, ET.

In its latest inflation report, the Bank of England forecasted a gradual decline in inflationary pressures. However, the U.K. inflation has remained stubbornly above the bank’s 3.0% ceiling which has prompted one policy maker to vote for an interest rate hike at the last two monetary policy meetings. Should the outlook on inflation get a higher revision, more Monetary Policy Committee members could begin to view raising rates from their record low level as a necessary measure to keep inflation in check.

5. AUD- Australia Employment Situation and Unemployment Rate, the main gauges of employment trends and labor market conditions, Wed., Aug. 11, 9:30 pm, ET.

The Australian economy enjoys a strong labor market, but jobs creation could slow to 20.1K jobs in July from 45.9K in June. The unemployment rate is forecasted to stay low at 5.1%.

6. JPY- Japan Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Thurs., Aug. 12, 12:30 am, ET.

The report is expected to reveal signs of economic slowdown in Japan and confirm the 1.5% month-over-month decline in industrial production as shown in the preliminary estimate released in July.

7. EUR- Euro-zone Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Thurs., Aug. 12, 5:00 am, ET.

Industrial activity in the Euro-zone is forecasted to increase at a slower pace by 0.7% m/m in July from 1.0% in June, but after the unexpected drop in German industrial production, there may be a potential for a negative surprise which could cause a reassessment of the market’s optimistic outlook on the Euro-zone economy.

8. EUR- Euro-zone GDP- Gross Domestic Product, the main measure of economic activity and growth, Fri., Aug. 13, 5:00 am, ET.

The preliminary estimate of the Euro-zone GDP is expected to confirm expectations that the Euro-zone grew faster by 0.7% in Q2 2010 compared with the first quarter growth of 0.2%.

9. USD- U.S. CPI- Consumer Price Index, the main measure of inflation in the world’s largest economy, and U.S. Retail Sales, an important measure of consumer spending, Fri., Aug. 13, 8:30 am, ET.

The Fed’s preferred PCE inflation gauge recently showed subdued inflationary pressures in the U.S., but the month-over-month index of consumer prices could see an increase by 0.2% from a reading of -0.1% in the previous month. The U.S. retail sales are also forecasted to pick up by 0.5% m/m in July from -0.5% in June.

10. USD- U.S. Consumer Sentiment, the University of Michigan's monthly survey of 500 households on their financial conditions and outlook of the economy, Fri., Aug. 13, 9:55 am, ET.

After a brief pullback, the trend of improvement in the U.S. consumer sentiment could resume with a reading of 69.4, up from 67.8 in the previous month.

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20108

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