July 31, 2010 (Allthingsforex.com) – The busy trading week ahead will bring a sequence of crucial U.S. economic data culminating with the U.S. Non-Farm Payrolls and Employment Situation report, which could provide further evidence that slow jobs creation and high unemployment could continue to restrain the Fed from raising rates and possibly even force the central bank into offering additional monetary policy stimulus.
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. USD- U.S. ISM Manufacturing Index, a leading indicator of industrial activity, where a reading above or below 50 is the dividing line between economic expansion and contraction, Mon., Aug. 2, 10:00 am, ET.
The sector leading the U.S. economic recovery is expected to expand for another month, but this time at a slower pace to 54.3 in July from 56.2 in June.
2. AUD- Reserve Bank of Australia Interest Rate Announcement, Tues., Aug. 3, 12:30 am, ET.
The unexpectedly lower inflationary pressures in Australia in Q2 2010, coupled with signs of a global economic slowdown, would be the likely factors that could influence the Reserve Bank of Australia policy makers’ decision to keep interest rates unchanged for another month.
3. USD- U.S. Personal Income and Outlays, a measure of the income received and purchases made by consumers, released along with the Personal Consumption and Expenditures Price Index- a leading indicator of inflation preferred by the Fed because it measures a variable basket of goods and services, as opposed to the CPI-Consumer Price Index which measures a fixed basket of goods and services, Tues., Aug. 3, 8:30 am, ET.
The core PCE Index is forecasted to show subdued inflationary pressures in the U.S. as the gauge remains unchanged from the previous month’s reading of 0.2%, while consumer spending in July registers a smaller increase by 0.1% m/m, compared with 0.2% m/m in June.
4. USD- U.S. ADP-Automatic Data Processing Employment Report, a measure of jobs lost or added to the private sector of the economy, also serving as a preliminary estimate for the outcome of the monthly non-farm payrolls, Wed., Aug. 4, 8:15 am, ET.
The private sector of the U.S. economy is expected to add as many as 36,000 new jobs in July, as opposed to only 13,000 jobs in June. Faster private sector jobs creation could reduce the number of jobs forecasted to be lost in Friday’s non-farm payrolls report.
5. USD- U.S. ISM Non-Manufacturing Index, a leading indicator of economic conditions in the services industries: agriculture, mining, construction, transportation, communications, wholesale trade and retail trade, Wed., Aug. 4, 10:00 am, ET.
The ISM Non-Manufacturing Index could expose another sign of U.S. economic slowdown with activity in the services industries pulling back to 53.3 from a previous reading of 53.8.
6. GBP- Bank of England Interest Rate Announcement, Thurs., Aug. 5, 7:00 am, ET.
The Bank of England is not expected to make any changes to their current record low interest rate of 0.5% and the Monetary Policy Committee members are likely to continue to keep the lid on the 200 billion Pounds Asset Purchases Program.
7. EUR- European Central Bank Interest Rate Announcement, Thurs., Aug. 5, 7:45 am, ET.
The European Central Bank may not yet be in a position to start raising rates despite of the positive outcome of the European banks stress tests, which for the time being have managed to calm investors’ fears of contagion from the sovereign debt crisis in the Euro-zone.
8. GBP- U.K. Industrial Production and Manufacturing Output, the main gauge of industrial activity measuring the output of factories, mines and utilities, Fri., Aug. 6, 4:30 am, ET.
This could be another economic report, following the better-than-expected Q2 GDP, showing positive momentum in the U.K. economy, with the U.K. manufacturing output forecasted to increase by 0.5% m/m from 0.3%, and industrial production growing by 0.3% m/m from 0.7% in the previous month.
9. CAD- Canada Employment Situation and Unemployment Rate, the main gauge of employment trends and labor market conditions, Fri., Aug. 6, 7:00 am, ET.
The Canadian economy added almost five times more jobs that initially forecasted in June, but we could see lesser jobs creation by 10.3 K jobs in July, compared with the 93.2 K in the previous month, while the unemployment rate is forecasted to remain unchanged at 7.9%.
10. USD- U.S. Non-Farm Payrolls and Employment Situation Report, one of the most important indicators of economic health, measuring the number of new jobs created or lost in the world’s largest economy, Fri., Aug. 6, 8:30 am, ET.
With consensus forecasts pointing to another month of job losses by up to 75,000, expectations for this report are already low, which could create an opportunity for the market to react positively if the actual numbers show lesser amount of jobs lost in the month of July. On the other hand, there would still be a probability that the market sentiment could turn sour as the unemployment rate is expected to increase to 9.6% in July from 9.5% in June.