Trading Week Outlook: November 21 - 25, 2011

by: All Things Forex

The Thanksgiving holiday-shortened trading week ahead will bring a list of important economic data from the U.S., the Euro-zone and the U.K., but it will likely be the latest news from the EU debt crisis, rising borrowing costs, and the deadlock of the U.S. congressional “super committee” struggling to meet a $1.2 trillion deficit reduction target, that will continue to rattle the financial markets.

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. 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, Mon., Nov. 21, 10:00 am, ET.

Dependent on a stronger economy and a significant decline in unemployment, the U.S. housing market is expected to continue to show signs of weakness with sales of existing homes forecast to slow to 4.85M in October from 4.91M in September.

2. USD- U.S. GDP- Gross Domestic Product, the main measure of economic activity and growth in the world’s largest economy, Tues., Nov. 22, 8:30 am, ET.

The revised estimate of the U.S. Q3 GDP is forecast to maintain the optimistic outlook and rule out double dip expectations by confirming that the U.S. economy grew by 2.5% q/a in the third quarter, compared with 1.3% q/a in Q2 2011.

3. USD- U.S. FOMC Meeting Minutes, a detailed record of the Fed’s last monetary policy meeting that may provide an outlook on the economy, inflation and the Fed’s future monetary policy, Tues., Nov. 22, 2:00 pm, ET.

With the Fed clearly staying the course, the minutes from the latest Federal Open Market Committee meeting would be likely to serve as a reminder of the Fed’s cautious outlook on the economy and the U.S. central bank’s commitment to continue its ultra-accommodative monetary policy, while still keeping the QE3 door open.

4. EUR- Euro-zone Composite PMI- Purchasing Managers Index, a leading indicator of economic activity in the manufacturing and service sectors, Wed., Nov. 23, 4:00 am, ET.

Many economists already predict a mild recession in the Euro-zone and the Composite PMI could be in line with these expectations as the manufacturing and services indexes fall further in contraction territory- manufacturing to 46.5 in November from 47.1 in October, and services to 46.1 in November compared with 46.4 in the previous month.

5. GBP- Bank of England Monetary Policy Committee Meeting Minutes, a comprehensive report of the central bank’s meeting that could provide an outlook on the economy, interest rates and future monetary policy, Wed., Nov. 23, 4:30 am, ET.

Two weeks after the Bank of England’s decision to keep rates at their record low 0.5% level since March 2009 for another month in November, the minutes could confirm that the Monetary Policy Committee is open to the idea of more quantitative easing and additional expansion of its Asset Purchase Program in upcoming months. Expectations of such monetary policy should weigh on the GBP which is also not immuned from risk aversion flows.

6. 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 Federal Reserve, Wed., Nov. 23, 8:30 am, ET.

Released along with the U.S. Jobless Claims and Durable Goods Orders (with jobless claims forecast to decline for another week to 387K from 388K and orders for durable goods to drop by 0.7% m/m in October from -0.6 m/m in September), the U.S. consumer spending is forecast to rise by 0.4% m/m from 0.6% m/m and personal income to increase by 0.3% m/m in October from 0.1% m/m in the previous month. The Fed’s preferred inflation gauge, the core PCE Index, is expected to show inflationary pressures inching higher by 0.2% m/m in October from the flat 0% m/m reading in September.

7. USD- U.S. Consumer Sentiment, the University of Michigan's monthly survey of 500 households on their financial conditions and outlook of the economy, Wed., Nov. 23, 9:55 am, ET.

Ending the weekly sequence of mixed U.S. economic data on a high note ahead of the Thanksgiving holiday, the consumer sentiment index for November is forecast to bring another month of improvement with a reading of 64.6, compared with 60.9 in October.

8. EUR- Germany IFO Institute Business Climate and Expectations Index, a leading indicator of economic conditions and business expectations in the Euro-zone’s largest economy, Thurs., Nov. 24, 4:00 am, ET.

Following the drop in the ZEW sentiment index, the German IFO index is forecast to point to a gloomy business climate outlook with a reading of 105.5 in November from 106.4 in October.

9. GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., Nov. 24, 4:30 am, ET.

The second reading of the U.K. GDP for the third quarter of 2011 is forecast to be in line with the preliminary estimate of 0.5% q/q growth compared with 0.2% q/q in the second quarter.

10. JPY- Japan CPI- Consumer Price Index, the main measure of inflation, Thurs., Nov. 24, 6:30 pm, ET.

Inflationary pressures in Japan are expected to register a slight 0.1% m/m drop in October from 0.2% in September, but when it comes to Japan, a lot more interesting is the situation with the yen and its persistent strength. With the U.S. dollar giving away almost all of its post-intervention gains and approaching previous record lows, it would be prudent to place the yen on an intervention watch once again.