All Things Forex's  Instablog

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.

Apr. 1, 2013 (Allthingsforex.com) - Four monetary policy announcements by major central banks and the U.S. Non-Farm Payrolls and Employment Situation report will make for a busy start of the second quarter as traders continue to monitor the situation in Cyprus and await to find out if the European Central Bank will be able to restore confidence following a few tumultuous weeks in the euro-area.

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. ISM Manufacturing Index, a leading indicator of economic conditions measuring activity in the manufacturing sector, Mon., Apr. 1, 10:00 am, ET.

Manufacturing growth in the U.S. is forecast to expand at a slower pace with an index reading of 54.1 in March from 54.2 in February.

2. AUD- Reserve Bank of Australia Interest Rate Announcement, Mon., Apr. 1, 11:30 pm, ET.

Contrary to the expectations of a rate cut, the Reserve Bank of Australia sat on the sidelines last month and could do the same in April as the Australian economy and labor market seem to be gaining traction. On the other hand, the Reserve Bank of Australia could warn about persistent currency strength and could still keep the door open to a 25 bps rate cut if the economy starts to lose momentum. The Australian dollar could attract more bids if the central bank shows no desire to cuts rates in upcoming months.

3. USD- U.S. ADP Employment Report, a measure of job creation in the private sector of the U.S. economy, Wed., Apr. 3, 8:15 am, ET.

The U.S. private sector is forecast to register another month of stronger job creation with up to 216K jobs added in March, compared with 198K jobs in February.

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

In line with the current trend of improvement, the U.S. services sector is forecast to expand further with a non-manufacturing index reading of 56.1 in March from 56.0 in February.

5. JPY- Bank of Japan Interest Rate Announcement, Thurs., Apr. 4, around 12:00 am, ET.

As the new Bank of Japan Governor Haruhiko Kuroda presides over his first monetary policy meeting, expectations are high that he might announce new bold measures to fight deflation and to help him achieve his goal of reaching the 2% inflation target in two years. Policy makers are likely to reiterate their commitment to aggressive monetary policy easing, continuing full speed ahead with their open-ended QE program until the 2% inflation target is in sight. However, if the Bank of Japan's meeting does not deliver a "shock and awe" announcement, the yen could see a more significant price correction of its losses since last November.

6. EUR- Euro-zone Composite PMI- Purchasing Managers Index, a leading indicator of economic conditions measuring activity in the manufacturing and services sectors, Thurs., Apr. 4, 4:00 am, ET.

The chronic contraction in the euro-zone manufacturing and services sectors is forecast to continue as the Composite PMI remains below the 50 boom/bust line for a twentieth consecutive month with a final reading of 46.5 in March, confirming the preliminary estimate. The euro could stay under pressure if the report fails to instill optimism that conditions in the euro-area are improving.

7. GBP- Bank of England Interest Rate Announcement, Thurs., Apr. 4, 7:00 am, ET.

Although in the last couple of months the Bank of England policy makers have shown that they are not in a hurry to do more QE, with the U.K. economy contracting in the final quarter of last year and possibly in Q1 2013, a triple-dip recession will increase the odds that the Bank of England would have to consider another expansion of its Asset Purchase Program, and possibly even a rate cut in upcoming months. The Monetary Policy Committee would probably prefer to sit on the sidelines and maintain the existing monetary policy at the April meeting until they see the first Q1 2013 GDP estimate, scheduled for release on April 25. The pound has found some bids as a euro alternative during the Cyprus debacle, but could come under pressure again if the market sees a Q1 contraction in the U.K. and begins to price expectations that the Bank of England might have no other choice but to ease monetary policy further.

8. EUR- European Central Bank Interest Rate Announcement, Thurs., Apr. 4, 7:45 am, ET.

The current economic reality in the euro-zone continues to spell recession with chronic contraction in the area's manufacturing and services sectors. As if this is not bad enough, the bailout drama in Cyprus has created more uncertainty and a sense of distrust, while the euro-area's third-largest economy Italy still remains without a government. As a result, the European Central Bank is faced with major challenges to find a way to help the economy grow and to calm the nerves of investors. The euro would be likely to head lower into the $1.20′s if the European Central Bank reduces the benchmark rate or hints of an impending rate cut in the near future.

9. EUR- Euro-zone Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Fri., Apr. 5, 5:00 am, ET.

As a sign of more doom and gloom in the region's economy, consumer spending in the euro-area is forecast to drop by 0.3% m/m in February, compared with the 1.2% m/m increase in the previous month.

10. USD- U.S. Non-Farm Payrolls and Employment Situation, the main indicator of U.S. economic health measuring job creation and unemployment, Fri., Apr. 5, 8:30 am, ET.

The consensus forecasts point to another month of decent job creation in line with the recent trend of improvement in the U.S. labor market. The U.S. economy is expected to add 190K jobs in March compared with 236K in February, while the unemployment rate stays unchanged at 7.7%. The USD could benefit from an upbeat NFP report on expectations that the Fed could take the first step toward monetary policy tightening sooner rather than later.

In the broadcast today: Will the EUR Damage Last beyond the Cyprus Debacle? As the Cyprus debacle continues to raise anxiety levels by creating uncertainty and a sense of distrust throughout the euro-area, we examine the damage that has been inflicted on the EUR and ponder its long term implications for the single currency, we analyze the bearish breakout in the EUR/USD currency pair, we note the resumptions of the downtrend in the GBP/USD pair, we keep an eye on the USD/JPY currency pair, we highlight the market's reaction to the capital controls proposed by the government in Cyprus, the U.K. GDP, the Euro-zone Economic Sentiment, and the U.S. Pending Home Sales, we discuss new forecasts from Bank of New York-Mellon and Morgan Stanley, and prepare for the trading session ahead.