April 28 2013

Apr. 28, 2013 (Allthingsforex.com) – The next moves by the world’s two major central banks and the condition of the U.S. labor market will be on top of the agenda in the week ahead, as the markets prepare for a likely announcement of additional monetary policy easing by the European Central Bank.

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.    USD- U.S. Personal Income and Outlays, a measure of consumer income and spending, released along with the PCE Price Index- the Fed’s preferred gauge of inflation, Mon., Apr. 29, 8:30 am, ET.

Consumer spending in the U.S. is forecast to register a smaller increase by 0.2% m/m in March, compared with 0.7% m/m in February. The Fed’s preferred core PCE Index could show inflation inching slightly higher by 0.1% m/m, but not enough to convince the Federal Open Markets Committee to change the direction of its current monetary policy.

2.    USD- U.S. Pending Home Sales, a leading indicator of housing market activity measuring pending home sale contracts, Mon., Apr. 29, 10:00 am, ET.

After dropping by 0.4% m/m in February, the pending home sales index is expected to get back on track with 0.3% m/m increase in March.

3.    EUR- Euro-zone HICP- Harmonized Index of Consumer Prices, the main measure of inflation preferred by the European Central Bank, Tues., Apr. 30, 5:00 am, ET.

Inflation in the euro-area is forecast to subside further to 1.6% y/y in April from 1.7% y/y in March. With the inflation gauge dropping below the European Central Bank’s 2% target, the formation of deflationary pressures could become one of the main factors that could prompt the ECB into additional monetary policy easing.

4.    USD- U.S. Consumer Confidence, a measure of consumers’ outlook on the economy, Tues., Apr. 30, 10:00 am, ET.

The outlook of U.S. consumers is forecast to remain optimistic, keeping the consumer confidence index above 60 with reading of 60.5 in April from 59.7 in the previous month.

5.    USD- U.S. ADP Employment Report, a measure of job creation in the private sector of the U.S. economy, Wed., May 1, 8:15 am, ET.

Job creation in the U.S. private sector is forecast to be less than it was in the previous month with 145K jobs added in April, compared with 158K jobs in March.

6.    USD- U.S. ISM Manufacturing Index, a leading indicator of economic conditions measuring activity in the manufacturing sector, Wed., May 1, 10:00 am, ET.

Activity in the U.S. manufacturing sector is forecast to lose a bit of steam with a reading 51.1 in April from 51.3 in March.

7.    USD- U.S. FOMC- Federal Open Markets Committee Interest Rate Announcement, Wed., May 1, 2:00 pm, ET.

Recent reports from the labor market and other sectors of the economy have sparked concerns that the U.S. may be losing momentum. In addition, the world’s largest economy will be dealing with the impact from the sequestration in the months ahead. Such economic backdrop does not create a sense of urgency for the Fed to start tightening anytime soon. The FOMC will maintain the current monetary policy course at its May meeting, and probably into 2014. The majority of policy makers will be likely to reiterate their commitment to open-ended QE until the unemployment rate falls below 6.5% or inflation exceeds 2.5%. No end in sight to QE and “exceptionally low levels for the federal funds rate” could weigh on the USD.

8.    EUR- European Central Bank Interest Rate Announcement, Thurs., May 2, 7:45 am, ET.

Mired in recession and record high unemployment, the euro-zone economy continues to suffer from a chronic contraction in its manufacturing and services sectors. With economic growth still nowhere to be seen, it would not be shocking to witness the European Central Bank announcing additional monetary policy easing measures as early as the next meeting on May 2. The euro will be pushed back into the $1.20′s if the European Central Bank announces LTRO 3, reduces the benchmark rate or hints of an impending rate cut in the near future.

9.    USD- U.S. Non-Farm Payrolls and Employment Situation, the main indicator of U.S. economic health measuring job creation and unemployment, Fri., May 3, 8:30 am, ET.

Following a dismal NFP report in March, job creation is expected to gain momentum in April. The U.S. economy is forecast to add 155K jobs compared with 88K in March, while the unemployment rate stays unchanged at 7.6%. An upbeat NFP report should help to dismiss last month’s unexpected drop as a one-off event and could give the USD a boost on expectations that the Fed might take the first step toward monetary policy tightening sooner rather than later.

10.    USD- U.S. ISM Non-Manufacturing Index, a leading indicator of economic conditions measuring activity in the services sector, Fri., May 3, 10:00 am, ET.

Although at a slightly slower pace, activity in the U.S. services sector is forecast to expand for another month with an index reading of 54.1 in April from 54.4 in March.



Frankfurt professor’s concerns echo recent alarms being sounded across Europe over Berlin’s stance on EU fiscal policy. A leaked policy paper from France was redolent with fear of and hostility to Merkel and her prescriptions in the euro crisis…


Powered by Guardian.co.ukThis article titled “German role in steering euro crisis could lead to disaster, warns expert” was written by Ian Traynor in Leuven, for theguardian.com on Sunday 28th April 2013 14.37 UTC

One of Germany's most influential political thinkers has delivered a stark warning that its post-second world war liberal democracy cannot be taken for granted and its dominant role in managing Europe's debt crisis could lead to disaster.

Jürgen Habermas, the Frankfurt professor whose political thinking has helped shape Germany over the past 50 years, called for the EU to be turned into a supranational democracy and the eurozone to become a fully fledged political union, while lambasting the "technocratic" handling of the crisis by Brussels and European leaders.

In his first big speech on the euro crisis, delivered at Leuven University, east of Brussels, Habermas called for a revival of Europe's doomed constitutional ambitions, arguing that the disconnect between what needed to be done in economic policy and what was deemed to be politically feasible for voters was one of the biggest perils facing the continent. "Postponing democracy is rather a dangerous move," he said.

At 83, Habermas has long been revered as a guru and mentor to the post-1968 generation of centre-left German politicians. He is a champion of a democratically underpinned European federation, and has reserved some of his most trenchant criticism for Berlin's role in the three-year crisis.

"The German government holds the key to the fate of the European Union in its hands. The main question is whether Germany is not only in a position to take the initiative, but also whether it could have an interest in doing so," he said.

"The leadership role that falls to Germany today is not only awakening historical ghosts all around us, but also tempts us to choose a unilateral national course or even to succumb to power fantasies of a 'German Europe'.

Euro coins and banknotes
Habermas says the EU elite’s response to the currency crisis has been to construct a technocracy without democratic roots. Photograph: Reuters

"We Germans should have learned from the catastrophes of the first half of the 20th century that it is in our national interest to avoid permanently the dilemma of a semi-hegemonic status that can hardly hold up without sliding into conflicts."

Habermas's wakeup call came at the end of a week of similar alarms being sounded on both sides of the country's borders. The Polish prime minister, Donald Tusk, in the presence of the German chancellor, Angela Merkel, in Berlin last week, said there were worries about German domination of the EU "everywhere, without exception".

A leaked draft policy paper from France's governing socialist party on Friday was redolent with fear of and hostility to Merkel and her policy prescriptions in the euro crisis.

Habermas demanded a sea change in German policy, away from insisting on "stabilising" the budgets of vulnerable eurozone countries by slashing social security systems and public services, to a policy of "solidarity" entailing common eurozone liability, mutualised debt, and euro bonds.

He located Germany's traditional EU enthusiasm in the post-Nazi quest for international rehabilitation through reconciliation with France and driving European unification processes, all occurring under the protection and promotion of the US in cold-war western Europe until the Soviet collapse in 1989.

Habermas said: "The German population at large could develop a liberal self-understanding for the first time. This arduous transformation of a political mentality cannot be taken for granted … Germany not only has an interest in a policy of solidarity, it has even a corresponding normative obligation … What is required is a co-operative effort from a shared political perspective to promote growth and competitiveness in the eurozone as a whole."

Such an effort would require Germany and several other countries to accept short- and medium-term redistribution in its long-term interest, he added, "a classic example of solidarity".

The structural imbalances between the economies of greatly divergent eurozone countries at the root of the crisis were certain to worsen under the policies being pursued, Habermas argued, because governments were making decisions "exclusively from [their] own national perspective. Until now, the German government has clung steadfastly to this dogma".

He said the EU elite's response to the crisis had been to construct a "technocracy without democratic roots", trapping Europe in a dilemma of legitimacy and accountability, between "the economic policies required to preserve the euro and, on the other, the political steps to closer integration. The steps that are necessary are unpopular and meet with spontaneous popular resistance".

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