The "soft landing" in China, the Japanese central bank's decision on future monetary policy, and economic conditions on both sides of the Atlantic will be on the agenda in the week ahead, as traders return to their desks after the Easter holiday with renewed concerns about the EU debt crisis and mull over last Friday's weak Non-Farm Payrolls report.
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. CNY- China CPI- Consumer Price Index, the main measure of inflation, Sun., Apr. 8, 9:30 pm, ET.
Inflationary pressures in China are forecast to increase by 3.4% y/y in March from 3.2% y/y in the previous month. If inflation continues to rise, the Chinese central bank may be prompted to tighten monetary policy, which could lead to further slowdown in the second largest economy in the world.
2. JPY- Bank of Japan Interest Rate Announcement, Mon., Apr. 9, around 11:00 pm, ET.
The recent efforts of the Bank of Japan to weaken its currency have been successful and it would not be surprising to see policy makers considering additional quantitative easing as a tool to curb the yen strength, to create inflationary pressures and to stimulate the economy. It is not very likely that the benchmark rate will be changed from the current target band between 0% and 0.10%, but we might even hear some officials calling for a 2% inflation target, which could trigger another leg lower for the yen.
3. USD- U.S. Federal Reserve Beige Book, the Fed's official assessment on economic conditions in the 12 Federal Reserve districts, Wed., Apr. 11, 2:00 pm, ET.
Released exactly two weeks before the Fed's next monetary policy meeting on April 24-25, the Beige Book report should confirm the signs of consistent improvement in the U.S. economy, lessening the likelihood of more quantitative easing by the U.S. central bank. As long as QE3 odds remain low, the USD should benefit.
4. AUD- Australia Employment Report and Unemployment Rate, the main measures of labor market conditions, Wed., Apr. 11, 9:30 pm, ET.
After losing 15,400 jobs in February, the Australian economy is forecast to add up to 7,000 new jobs in March, but the unemployment rate is expected to increase to 5.3% from 5.2% in the previous month. A disappointing jobs report could see pressures rising on the Australian dollar.
5. EUR- Italy Debt Auction, Thurs., Apr. 12, 2:00 am, ET.
Last week's Spanish, Italian and French debt auctions were a reminder that things can get ugly in a matter of days when it comes to the EU debt crisis. With borrowing costs back on the rise, the outcome of the Italian auction will be closely watched by investors who remain unconvinced that the worst is behind. Needles to say, this would be a major risk event for the euro.
6. EUR- Euro-zone Industrial Production, an important gauge of industrial activity measuring the output of factories, mines and utilities, Thurs., Apr. 12, 5:00 am, ET.
Along with the weak manufacturing and services index data from last week, this could be another report that would have the potential to put into question the expectations of a Euro-zone recovery in the first quarter of 2012, with industrial activity forecast to drop by 0.2% m/m in March after increasing by 0.3% m/m in the previous month.
7. USD- U.S. Trade Balance of the difference between imports and exports, Thurs., Apr. 12, 8:30 am, ET.
The trade deficit's expansion in recent months has been one of the weak spots in the series of positive U.S. economic data, but there may be a sign of improvement with forecasts pointing to a reduction of the trade deficit to 51.9 billion in March from 52.6 billion in February.
8. CNY- China GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., Apr. 12, 10:00 pm, ET.
As China prepares for a "soft landing", the economy is forecast to continue the descent by registering slower economic growth of 8.4% q/a in the first quarter of 2012, compared with 8.9% q/a in Q4 2011. A weaker than expected report would have a negative impact on investor sentiment and risk appetite, making the higher-yielding currencies vulnerable.
9. USD- U.S. CPI- Consumer Price Index, the main measure of inflation in the world's largest economy, Fri., Apr. 13, 8:30 am, ET.
Following the jump by 0.4% m/m in February, the headline consumer price index in the U.S. is expected to pull back to 0.2% m/m in March, while the core CPI which excludes food and energy costs inches higher to 0.2% m/m from 0.1% m/m in the previous month. Neither of the two indexes is expected to deviate enough to force the Fed to change its existing monetary policy.
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. 13, 9:55 am, ET.
On again, off again in recent months, the outlook of U.S. consumers could see a slight improvement with a preliminary sentiment index reading of 76.5 in April compared with 76.2 in March.