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The Trading Week: Dec. 13 - Dec. 17

|Includes: SPDR Dow Jones Industrial Average ETF (DIA), EEA, GBB, GOLD, JYN, QQQ, UDN, USD
Dec. 10, 2010 ( – With some experts already forecasting QE3 in 2011, traders will focus in the week ahead on the U.S. Federal Open Market Committee interest rate announcement for clues of the Fed’s outlook on the economy and the future monetary policy of the world’s largest central bank.

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.    GBP- U.K. CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of England, Tues., Dec. 14, 4:30 am, ET. 

The U.K. inflationary pressures could remain stubbornly above the Bank of England’s 3.0% ceiling as the consumer inflation gauge is forecast to increase by 3.1% y/y in November from 3.2% y/y in October.

2.    EUR- Germany ZEW Economic Sentiment Index, a leading indicator of economic conditions and business expectations in the Euro-zone’s largest economy, Tues., Dec. 14, 5:00 am, ET.

The consensus forecasts are pointing to a sharp rise in the ZEW index to a reading of 4.0 compared with 1.8 in the previous month.

3.    USD- U.S. Retail Sales, an important gauge of consumer spending measuring the total receipts at retail establishments, Tues., Dec. 14, 8:30 am, ET.

The U.S. consumer spending could see another month of increase with retail sales up by 0.7% m/m in November, but lower that the 1.2% m/m reading in October. However, a better-than-expected reading would not be a surprise considering the potential for a positive effect from Black Friday on the retail sales figures. 

4.    USD- U.S. FOMC- Federal Open Market Committee Interest Rate Announcement, Tues., Dec. 14, 2:15 pm, ET.

Although some experts are already forecasting QE3 in 2011, the Fed’s December meeting would not be very likely to bring any surprises. The benchmark rate is forecast to remain unchanged and the Fed is expected to “stay the course” with their current ultra accommodative monetary policy. The FOMC members have been very clear on why they decided that QE2 was needed and we could see even more explanation, coupled with a cautious outlook on the U.S. economy. Should the Fed be perceived as less accommodative and willing to reduce the size of QE if the economy and the labor market improve, the U.S. dollar could benefit.

5.    JPY- Japan Tankan Index, Bank of Japan’s quarterly survey of large and small manufacturing and services companies, which serves as the main indicator of economic conditions in Japan, Tues., Dec. 14, 6:50 pm, ET.

This benchmark survey is expected to signal a slowdown in the Japanese economy in Q4 with a manufacturing sector index reading of 4 from 8 and a services sector reading of 0 from 2 in the previous quarter.

6.    GBP- U.K. Jobless Claims and Unemployment Rate, the main gauges of employment trends and labor market conditions, Wed., Dec. 15, 4:30 am, ET.

The U.K. labor market could see a month of improvement with the unemployment rate forecast to remain unchanged at 7.7% and the number of people claiming unemployment people declining by 2,900 compared with a reading of -3,700 in the previous month. 

7.    USD- U.S. CPI- Consumer Price Index, the main measure of inflation in the world’s largest economy, Wed., Dec. 15, 8:30 am, ET.  

The inflation report could confirm the expectations for subdued inflationary pressures in the U.S. as the month-over-month index of consumer prices registers a small increase by 0.2% m/m in November and the Core CPI also rises by 0.2% m/m from the flat reading of 0.0% m/m in October.

8.    CHF- Swiss National Bank Interest Rate Announcement, Thurs., Dec. 16, 3:30 am, ET.

With all major central banks prudently deciding to keep the monetary policy status-quo at their December meetings, the Swiss National Bank is expected to follow suit, leaving the benchmark rate unchanged at the record low of 0.25%. 

9.    USD- U.S. Housing Starts, a leading indicator of housing market activity measuring construction of new residential properties, Thurs., Dec. 16, 8:30 am, ET.

November could see a slight improvement with housing starts expected to increase to 550 K from 520 K in October and the building permits forecast to rise to 570 K from 550 K.

10.     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., Dec. 17, 4:00 am, ET.

The German IFO index could register a small decline with a reading of 109.1 in December, compared with 109.3 in the previous month.