Apr. 6, 2013 (Allthingsforex.com) – In the aftermath of the Bank of Japan’s “shock and awe” decision to double down on its monthly asset purchases, the week ahead could offer reassurance of the Fed’s commitment to continue its aggressive monetary policy easing, while traders watch a sequence of important economic data from the U.S., the U.K. and the euro-zone and gauge economic conditions on both sides of the Atlantic.
In preparation for the new trading week, here is the outlook for the Top 10 spotlight economic events that will move the markets around the globe.
1. JPY- Japan Current Account, an important measure of foreign trade, Sun., Apr. 7, 7:50 pm, ET.
For three consecutive months, the current account deficit in Japan has been on the rise and this alarming trend is expected to continue with the deficit forecast to expand above 400 billion yen in March following a jump to 364.8 billion yen in the previous month. The report could offer a clue for the one of the reasons behind the Bank of Japan’s decision to go all in and could give further impetus to yen selling on expectations that a rising account deficit could force the Japanese government and the Bank of Japan to consider even more aggressive measures to weaken the currency and to stimulate the economy.
2. EUR- Germany Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Mon., Apr. 8, 6:00 am, ET.
After staying flat in January, industrial activity in the euro-zone’s largest economy is forecast to pick up the pace with an increase by 0.3% m/m in February.
3. CHF- Swiss CPI- Consumer Price Index, the main measure of inflation preferred by the Swiss National Bank, Tues., Apr. 9, 3:15 am, ET.
Inflationary pressures in Switzerland are forecast to increase by 0.3% m/m in March for a second consecutive month, which could lift the overall yearly inflation reading. On the other hand, should the inflation gauge remain in deflation territory, the Swiss National Bank will be in no hurry to let go of the franc ceiling which was set at 1.20 per euro in September, 2011.
4. GBP- U.K. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Tues., Apr. 9, 4:30 am, ET.
The jump to a seven-month high in the Services PMI last week has somewhat eased the fears of a triple-dip recession in the U.K. and this report could do the same with industrial production forecast to increase by 0.3% m/m in February after dropping by 1.2% m/m in January. The GBP could attract more bids if the U.K. economic data continues to boost optimism and reduces the odds of additional easing by the Bank of England.
5. USD- U.S. FOMC Meeting Minutes, a detailed report of the Fed’s latest meeting containing an outlook on monetary policy and the economy, Wed., Apr. 10, 2:00 pm, ET.
Series of weaker than expected reports from the U.S. have raised concerns that the economy may be losing momentum, increasing the probability that the Fed will not be in a rush to tighten monetary policy. The minutes could confirm these expectations by echoing the Fed’s decision to stay on the QE course until the unemployment rate drops below 6.5% or inflation rises above 2.5%. The USD could see pressures rising if the report reassures the markets that the Fed will continue full speed ahead with open-ended quantitative easing.
6. AUD- Australia Employment and Unemployment Rate, the two main gauges of labor market conditions measuring job creation and unemployment, Wed., Apr. 10, 9:30 pm, ET.
Following last month’s blockbuster jobs report which showed a record job creation of 71,500 new jobs, the Australian economy is expected to lose 7,200 jobs in March, while the unemployment rate remains unchanged at 5.4%. A weak employment report could raise the odds of a rate cut by the Reserve Bank of Australia and could weigh on the Australian dollar.
7. USD- U.S. Jobless Claims, an important gauge of labor market conditions measuring first-time claims for unemployment benefits, Thurs., Apr. 11, 8:30 am, ET.
The U.S. jobless claims are forecast to pull back to 362K from last week’s unexpected jump to 385K. If this is the case, the spike could be dismissed as a one-off event. On the other hand, another surprising increase could trigger concerns that a new trend of rising claims for unemployment benefits could be in its early stages of development.
8. EUR- Euro-zone Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Fri., Apr. 12, 5:00 am, ET.
Identical to the German report, industrial activity in the Euro-zone is forecast to gain traction with a 0.2% m/m increase in February after dropping by 0.4% m/m in the previous month. The EUR could get a boost if the report instills optimism that the region’s economy may be on the path to recovery.
9. USD- U.S. Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Fri., Apr. 12, 8:30 am, ET.
Consumer spending in the U.S. is expected to register an increase for another month, but at a slower pace, with retail sales rising by 0.2% m/m in March, compared with 1.1% m/m in February.
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., Apr. 12, 9:55 am, ET.
The preliminary estimate of the U.S. consumer sentiment index is forecast to show a small improvement with a reading of 78.8 in April from 78.6 in the previous month. Following the dismal Non-Farm Payrolls last Friday, a surprising drop in consumer sentiment and a sequence of weaker U.S. economic data in the week ahead could elevate fears that conditions in the world’s largest economy may be deteriorating.