With the verdict still out on the Greek bailout package approval, the President’s Day holiday-shortened week ahead will keep all eyes focused on the Eurogroup meeting as the EU finance ministers convene to decide the future fate of the debt-ridden nation, while series of Euro-zone and U.S. economic data will offer more insights on economic conditions on both sides of the Atlantic.
In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that will move the markets around the globe.
1. JPY- Japan Trade Balance of the difference between imports and exports, Sunday, February 19, 6:50 pm, ET.
The alarming trend of rising trade deficit and deteriorating economic conditions in Japan could continue with another deficit expansion to 830 billion from 570 billion, increasing the odds that the Ministry of Finance and the Bank of Japan could be forced to go beyond the recently announced 10Trn expansion of the bank’s funds for asset purchases as a tool to stimulate the economy and to weaken the yen.
2. EUR- Eurogroup Meeting of Finance Ministers, Monday, February 20, all day event.
Three weeks of negotiations have held the markets hostage to the Greek drama as the decision for additional financial aid to Greece was delayed. Burning the midnight oil, the Eurogroup finance ministers are expected to announce their final decision at the meeting. An approval of the Greek bailout package, if coupled with upbeat Euro-zone economic data throughout the week, could give the euro a boost.
3. EUR- Euro-zone Manufacturing and Services PMI- Purchasing Managers Indexes, two leading indicators of economic conditions measuring activity in the manufacturing and services sectors, Wednesday, February 22, 4:00 am, ET.
There has been a steady improvement in the Euro-zone purchasing managers’ indexes in recent months and forecasts point to a continuation of that as the manufacturing index rises to 49.3 from 48.8 and the service index inches further into expansion territory to 50.7 from 50.4.
4. GBP- Bank of England Monetary Policy Committee Meeting Minutes, Wednesday, February 22, 4:30 am, ET.
At its February meeting, the Bank of England decided to expand the size of the Asset Purchases Program by another 50 billion pounds. Many called last year’s 75 billion expansion a “vote of no confidence” in the EU leaders’ ability to contain the debt crisis and it looks like the majority of the Monetary Policy Committee still shares that view. The minutes should serve as a reminder of the Bank of England’s accommodative stance, especially if the report reveals that despite of the additional expansion, the central bank remains open to the idea of doing even more quantitative easing.
5. USD- U.S. Existing Home Sales, the main gauge of the condition of the U.S. housing market measuring the number of closed sales of previously constructed homes, condominiums and co-ops, Wednesday, February 22, 10:00 am, ET.
Although still rather weak, the U.S. housing market could see some hopeful signs with sales of existing homes forecast to increase to 4.67 million in January, compared with 4.61 million in the previous month.
6. EUR- Germany IFO Business Climate Index, a leading indicator of economic conditions and business expectations, Thurs., Feb. 23, 4:00 am, ET.
With the ZEW economic sentiment index much better than expected, the IFO index could follow suit with a reading of 108.6 from 108.3, offering another glimpse of hope from the Euro-zone’s largest economy.
7. USD- U.S. Jobless Claims, an important gauge of labor market conditions measuring first-time claims for unemployment benefits, Thursday, February 23, 8:30 am, ET.
Falling significantly lower to 348K last week, the trend of improvement in jobless claims is forecast to continue with another week of decline to 345K. In recent months, there has been a steady improvement with jobless claims staying below 375K- the number which economists estimate could signal better labor market conditions and further decline in the unemployment rate.
8. GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Friday, February 24, 4:30 am, ET.
After expanding by 0.6% q/q in Q3, the preliminary estimate of the U.K. GDP showed the economy contracting by 0.2% q/q in the fourth quarter of 2011. The revised estimate is expected to be in line with the earlier one, confirming the 0.2% q/q contraction in Q4 2011. A weaker than expected GDP report could become a risk event for the GBP.
9. USD- U.S. Consumer Sentiment, the University of Michigan's monthly survey of 500 households on their financial conditions and outlook of the economy, Friday, February 24, 9:55 am, ET.
The retreat in consumer sentiment is expected to continue with the pullback in the index confirmed at 72.5 in February, same as the preliminary estimate and below the January reading of 75.
10. USD- U.S. New Home Sales, an important gauge of housing market activity measuring sales of newly constructed homes, Friday, February 24, 10:00 am, ET.
Just as the sales of existing homes, new home purchases are also expected to inch higher to 316K in January, compared with 307K in the previous month. Stronger labor and housing market data should be able to lower the odds of more quantitative easing by the Fed.