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The Trading Week: Oct. 18 - Oct. 22

|Includes: DIA, EEA, GBB, GOLD, JYN, QQQ, SPDR S&P 500 Trust ETF (SPY), UDN, USD
Oct. 15, 2010 ( – The U.S. housing and industrial production data, coupled with economic activity and inflation reports from major industrialized nations, will guide the direction for equities, commodities and currencies in the week ahead.   

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.    NZD- New Zealand CPI- Consumer Price Index, the main measure of inflation, Sun., Oct. 17, 5:45 pm, ET. 

Rising inflationary pressures could improve the odds of a rate hike as early as the Reserve Bank of New Zealand’s next meeting on October 28, especially if the inflation gauge registers a larger than the 0.3% q/q increase in the previous quarter.

2.    USD- U.S. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Mon., Oct. 18, 9:15 am, ET.

Manufacturing activity, which has been a leader of the U.S. economic recovery, could hit a bump on the road with forecasts pointing to a decline in industrial output by 0.1% m/m, compared with the 0.2% m/m increase in August.

3.    EUR- Germany ZEW Economic Sentiment Index, a leading indicator of economic conditions and business expectations in the Euro-zone’s largest economy, Tues., Oct. 19, 5:00 am, ET.

A drop below the previous -4.3 reading for the ZEW survey could give an early warning sign of a future slowdown in the largest economy in the Euro-zone.

4.    USD- U.S. Housing Starts, a leading indicator of housing market activity measuring construction of new residential properties, Tues., Oct. 19, 8:30 am, ET. 

September could be another month of improvement in the housing market as the U.S. housing starts are expected to increase to 600 K from 571 K in August.

5.    CAD- Bank of Canada Interest Rate Announcement, Tues., Oct. 19, 9:00 am, ET. 

After the disappointing Canadian jobs report and the drop in housing starts, the odds for a rate hike by the Bank of Canada have diminished. It would not be a surprise to see policy makers keeping rates unchanged at this meeting and possibly even at the bank’s final meeting for the year on December 7, 2010. 

6.     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., Oct. 20, 4:30 am, ET. 

Should the minutes reveal that the Bank of England policy makers are willing to maintain the current accommodative monetary policy and consider an expansion of the 200 B asset purchases program, the quantitative easing story could continue to weigh on the GBP.

7.    EUR- Euro-zone Composite Manufacturing and Services PMI- Purchasing Managers Indexes, two leading indicators of economic conditions measuring the activity of purchasing managers in the manufacturing and services sectors, Thurs., Oct. 21, 4:00 am, ET.

The preliminary flash estimate of the Euro-zone Composite PMI could signal a slowdown, with the manufacturing index forecasted to pull back below 53.7 along with a retreat in the services index below 54.1. 

8.    GBP- U.K. Retail Sales, an important gauge of consumer spending measuring the total receipts at retail establishments, Thurs., Oct. 21, 4:30 am, ET.

Last week’s British Retail Consortium data exposed the weakness in retail sales and this report could confirm the trend if sales at retail establishments drop for another consecutive month, following the previous 0.5% m/m decline.

9.    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, Fri., Oct. 22, 4:00 am, ET.   

The German IFO index was stronger than the forecasts last month, but a reading below 106.8 could reveal a downturn in business climate and expectations.   
10.     CAD- Canada CPI- Consumer Price Index, the main measure of inflation, Fri., Oct. 22, 7:00 am, ET.   

Subdued inflationary pressures would confirm the market’s doubts that the Bank of Canada would be willing to continue the campaign of interest rate hikes for the rest of the year. The inflation gauge could see a small increase by 0.1% m/m, compared with the 0.1% m/m decline in the previous month.