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The Trading Week: Mar. 14 - Mar. 18

|Includes: SPDR Dow Jones Industrial Average ETF (DIA), EEA, GBB, GOLD, JYN, QQQ, UDN, USD
Mar. 12, 2011 ( – With fears of the debt crisis in the Euro-zone making a comeback in the midst of a series of dramatic events including the turmoil in North Africa and the Middle East, along with a massive earthquake in Japan, traders will focus on the direction of the Fed’s future monetary policy as the Federal Open Market Committee meeting and interest rate announcement take the center stage in a critical week ahead.   

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.    JPY- Bank of Japan Interest Rate Announcement, Mon., Mar. 14, expected around 12:00 am, ET. 

In the aftermath of the devastating earthquake and tsunami, the Bank of Japan will have even lesser urgency to consider tightening any time soon and is expected to keep the benchmark interest rate in its record low target band between 0% and 0.10%. Moreover, considering the disastrous effects of earthquake, the bank could be prompted to offer more stimulus to the economy and could announce additional quantitative easing. 

2.    EUR- Euro-zone Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Mon., Mar. 14, 6:00 am, ET.

Industrial activity in the Euro-zone is forecast to increase by 0.4% m/m in January compared with the upwardly-revised reading of 0.3% m/m from -0.1% m/m in December.

3.    EUR- Germany ZEW Economic Sentiment Index, a leading indicator of economic conditions and business expectations in the Euro-zone’s largest economy, Tues., Mar. 15, 6:00 am, ET.

The consensus forecasts are pointing to another month of improvement in sentiment with the ZEW index rising to 16.0 from 15.7 in the previous month.

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

Will the Fed echo the same concerns from previous meetings about the “lack of significant improvement in labor market conditions” or will policy makers offer a more optimistic outlook this time? Although the Fed would be more likely to “stay the course” with their current ultra accommodative monetary policy, keeping the benchmark rate near 0% and continuing the quantitative easing program, the U.S. dollar could benefit if the Fed is perceived as willing to open the door to tightening and a potential reduction in the size of its Treasury bond purchases.

5.    GBP- U.K. Jobless Claims and Unemployment Rate, the main gauges of employment trends and labor market conditions, Wed., Mar. 16, 5:30 am, ET.

The U.K. labor market could see the number of people claiming unemployment benefits in February rising by 1,200, a lesser amount than the reading of 2,400 in the previous month, while the unemployment rate remains unchanged at 7.9%. 

6.    EUR- Euro-zone HICP- Harmonized Index of Consumer Prices, the main measure of inflation, Wed., Mar. 16, 6:00 am, ET.

The European Central Bank’s preferred inflation gauge is forecast to confirm the preliminary flash estimate that inflationary pressures in the Euro-zone would remain above the bank’s 2% comfort level, as the HICP rises by 2.4% y/y in March from the 2.3% y/y increase in February. 

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

February could bring another series of mixed U.S. housing data with the housing starts registering a pullback to 578K from 600K in January, while building permits inch higher to 580K from 560K in the previous month.

8.    CHF- Swiss National Bank Interest Rate Announcement, Thurs., Mar. 17, 3:30 am, ET.

With the exception of the People’s Bank of China and the Reserve Bank of New Zealand, all other major central banks have decided to keep the monetary policy status-quo at their recent meetings. The Swiss National Bank would be likely to follow suit, leaving the benchmark rate unchanged at the record low of 0.25%, but reiterating that the current accommodative monetary policy cannot be maintained infinitely.  

9.    USD- U.S. Jobless Claims, an important gauge of employment trends and labor market conditions, and CPI- Consumer Price Index, the main measure of inflation in the world’s largest economy, Thurs., Mar. 17, 8:30 am, ET.

Following the biggest drop in first-time applications for unemployment benefits since May, 2008, last week initial jobless claims jumped up to 397K, but are expected head lower once again with a reading of 388K. The inflation report could confirm the expectations for subdued inflationary pressures in the U.S. as the core month-over-month index of consumer prices registers a smaller increase by 0.1% m/m in February than the 0.2% m/m reading in January, while the overall CPI rises by 0.5% m/m from a previous reading of 0.4% m/m.

10.     USD- U.S. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Thurs., Mar. 17, 9:15 am, ET.

The U.S. industrial activity is expected to recover from the 0.1% m/m drop in January with an increase by 0.6% m/m in February.