Sep. 23, 2012 (Allthingsforex.com) - Amidst the signs of a global slowdown, economic data scheduled from the U.S. and the euro-zone will keep the U.S. dollar and the euro in the center of the market's attention in the final days of September.
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. EUR- Germany IFO Business Climate Index, a leading indicator of economic conditions measuring the outlook of businesses, Mon., Sep. 24, 4:00 am, ET.
No significant improvement is expected in the euro-area's largest economy as the German business climate and expectations index stays unchanged at 102.3 in September, same as the 102.3 reading in August.
2. USD- U.S. Consumer Confidence, a measure of consumers' outlook on the economy, Tues., Sep. 25, 10:00 am, ET.
The outlook of U.S. consumers is forecast to be a bit more optimistic, pushing the consumer confidence index higher to 62.0 in September from 60.6 in the previous month.
3. USD- U.S. New Home Sales, an important gauge of housing market conditions measuring sales of new homes, Wed., Sep. 26, 10:00 am, ET.
Following the stronger existing home sales and housing starts data, sales of new homes in the U.S. are forecast to register a slight increase to 380K in August from 372K in July.
4. EUR- Italy 10-year Bond Auction, Thurs., Sep. 27, around 2:00 am, ET.
The Italian government will sell its benchmark 10-year bonds and traders will watch the auction results closely in order to find out if investors will demand higher premiums to hold the debt of the troubled nation. Rising borrowing costs and weak demand could increase the pressure on the euro.
5. GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., Sep. 27, 4:30 am, ET.
The final reading of the Q2 2012 GDP is forecast to confirm the preliminary estimates that the U.K. economy contracted by 0.5% q/q and continued the struggle with its double-dip recession for a third consecutive quarter. The report could weigh on the GBP as the markets are reminded that the lack of growth could force the Bank of England into additional quantitative easing as early as its upcoming meeting on October 4.
6. USD- U.S. GDP- Gross Domestic Product, the main measure of economic activity and growth in the world's largest economy, Thurs., Sep. 27, 8:30 am, ET.
Slower economic growth in the world's largest economy would be the outcome of the GDP report for the second quarter of 2012 as consensus forecasts point to a final reading of 1.7% q/a, same as the previous estimate. Although it is not likely that this final number will be revised higher, the USD could benefit from future upbeat U.S. economic data which could prompt the Fed to shorten its open-ended QE timeframe.
7. USD- U.S. Pending Home Sales, a leading indicator of housing market activity measuring pending home sale contracts, Thurs., Sep. 27, 10:00 am, ET.
Possibly the only negative housing report this month, the 2.4% m/m increase in the pending home sales index in July is expected to be followed by a drop by 0.7% m/m in August.
8. JPY- Japan CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of Japan, Thurs., Sep. 27, 7:30 pm, ET.
The Japanese national core inflation gauge is forecast to remain in deflation territory with a reading of -0.2% y/y in August compared with -0.3% y/y in July. With deflation being an issue and with the economy slowing, the Bank of Japan could feel the urge to consider additional easing as well as measures to curb the persistent strength of the Japanese yen.
9. USD- U.S. Personal Income and Outlays, a measure of consumer income and spending, released along with the PCE Price Index- the Fed's preferred gauge of inflation, Fri., Sep. 28, 8:30 am, ET.
Consumer spending is forecast to increase for another month by 0.5% m/m in August from 0.4% m/m in July, while the Fed's preferred core PCE Index inches a bit higher by 0.1% m/m in August compared with 0% m/m in the previous month.
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., Sep. 28, 9:55 am, ET.
The report will wrap up what looks like a sequence of mixed U.S. economic data with a slightly lower revision in the consumer sentiment index to 78.9 in September from the preliminary estimate of 79.2.