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The Trading Week: Dec. 20 - Dec. 24

|Includes: SPDR Dow Jones Industrial Average ETF (DIA), EEA, GBB, GOLD, JYN, QQQ, UDN, USD
Dec. 17, 2010 ( – In the Christmas holiday-shortened week ahead, traders will focus on the main gauges of economic activity and growth from some of the largest industrialized nations in the world.     

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.    JPY- Bank of Japan Interest Rate Announcement, Tues., Dec. 21, expected around 12:00 am, ET.  

As all major central banks have prudently decided to keep the monetary policy status-quo at their December meetings, the Bank of Japan is expected to follow suit, leaving the benchmark rate unchanged in its record low target band between 0% and 0.10%. 

2.    CAD- Canada CPI- Consumer Price Index, the main measure of inflation, Tues., Dec. 21, 7:00 am, ET.

Rising inflationary pressures could improve the odds for the Bank of Canada to extend their campaign of interest rate hikes into 2011, with inflation forecast to rise by 0.4% m/m, same as the 0.4% m/m increase in the previous month.

3.    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., Dec. 22, 4:30 am, ET.

Stubbornly high inflation and the threat of economic slowdown as a result of the U.K. government’s massive spending cuts create a difficult situation for the Bank of England policy makers. The minutes are expected to show a three-way division in the Monetary Policy Committee, along with more details on the Bank of England’s cautious outlook on inflation and the economy.  

4.    GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Wed., Dec. 22, 4:30 am, ET.

The final reading of the U.K. GDP is forecast to confirm economic growth at 0.8% q/q in the third quarter, as shown by the preliminary estimates, down from 1.2% in Q2 2010.   

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

This is the main spotlight economic event of the trading week bringing the final reading of the U.S. Q3 GDP which could be revised higher to show even faster U.S. economic growth by 2.8% q/q in the third quarter, compared with a previous estimate of 2.5%; up from 1.7% in Q2 2010.

6.    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, Wed., Dec. 22, 10:00 am, ET.  

Following the increase in housing starts, this report could bring another glimpse of hope from the U.S. housing market as sales of existing homes inch higher to 4.72 M from 4.43 M in the previous month.   

7.     NZD- New Zealand GDP- Gross Domestic Product, the main measure of economic activity and growth, Wed., Dec. 22, 4:45 pm, ET.  

There has been weakness in the recent economic data from New Zealand and we could see it reflected in the GDP numbers as the economic growth in the third quarter is expected to be lower at 0.1% q/q, compared with 0.2% q/q in Q2 2010. 

8.    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, Thurs., Dec. 23, 8:30 am, ET.

The Fed’s preferred inflation gauge, the core PCE Index, is expected to show subdued inflationary pressures with a slight increase by 0.1% m/m from the flat reading in October, while personal spending registers a small increase by 0.5% m/m in November from 0.4% m/m in the previous month.

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

Optimistic U.S. consumers could send the index even higher with consensus forecasts pointing to a reading of 74.6, up from the preliminary estimate of 74.2.    
10.     USD- U.S. New Home Sales, an important gauge of housing market conditions measuring the number of newly constructed homes with a committed sale during the previous month, Thurs., Dec. 23, 10:00 am, ET.    

The U.S. new home sales are forecast to register a small increase to 301 K in November compared with 283 K in the previous month.