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The Trading Week: Mar. 21 - Mar. 25

|Includes: SPDR Dow Jones Industrial Average ETF (DIA), EEA, GBB, GOLD, JYN, QQQ, UDN, USD
Mar. 19, 2011 (Allthingsforex.com) – Economic growth, consumer and housing market data from the world’s largest economy, coupled with the EU summit, the U.K. inflation gauge and the Bank of England meeting minutes, will place the U.S. dollar, the euro, and the pound in the spotlight throughout the busy week ahead.

In preparation for the new trading week, here is the outlook for the Top 10 economic events that will move the markets around the globe. 

1.    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, Mon., Mar. 21, 10:00 am, ET. 

In light of the worst-than-expected housing starts report, the sales of existing homes could also confirm the weakness in the U.S. housing market with a monthly sales decline to 5.15 M in February from 5.36 M in January.   

2.    GBP- U.K. CPI-Consumer Price Index, the main measure of inflation preferred by the Bank of England, Tues., Mar. 22, 5:30 am, ET.

Inflation in the U.K. is forecast to remain stubbornly high with a reading of 4.2% y/y in February, up from 4.0% in January and well above the Bank of England’s 3.0% ceiling.

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., Mar. 23, 5:30 am, ET.

The minutes are expected to show that the Monetary Policy Committee was not in any hurry to hike interest rates as the majority of policy makers voted against a rate hike. However, rising inflationary pressures could continue to put pressure on the Bank of England to consider a rate hike sooner rather than later. If at upcoming meetings more committee members were to decide to join the camp of the three “rate hawks” Andrew Sentence, Spencer Dale and Martin Weale, the market could continue to price expectations for an interest rate increase in the near future.    

4.    JPY- Japan Trade Balance of the difference between imports and exports, Wed., Mar. 23, 7:50 pm, ET. 

The Japanese export growth is expected to make up for the deficit reported last month with a trade surplus reading of up to 895 B yen in February, compared with the 471 B yen deficit in January.

5.    GBP- U.K. Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Thurs., Mar. 24, 5:30 am, ET. 

Rising fuel and food costs could weigh on the U.K. consumer sentiment and spending with retail sales dropping by 0.5% m/m in February from the 1.9% m/m increase in the previous month.

6.    USD- U.S. Durable Goods Orders, a leading indicator of economic activity measuring durable goods orders placed with domestic manufacturers, and U.S. Jobless Claims, an important gauge of employment trends and labor market conditions, Thurs., Mar. 24, 8:30 am, ET. 

After a sharp 3.2% m/m bounce in January, the U.S. orders for durable goods are expected to pull back with a reading of 1.6% m/m in February. First-time applications for unemployment benefits are forecast to reach 492K, slightly higher that the reading of 385K in the previous week. To indicate a significant decline in unemployment, economists estimate that jobless applications would need to fall to 375K or below.

7.    JPY- Japan CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of Japan, Thurs., Mar. 24, 7:30 pm, ET.

Deflationary pressures in Japan could continue to push the inflation gauge below 0% for another month with the CPI registering a -0.3% y/y reading in February from -0.2% y/y in January.     

8.    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., Mar. 25, 5:00 am, ET.

The German IFO index is forecast to show a small shift lower in the optimistic outlook for the largest economy in the Euro-zone with a reading of 110.5 in March, compared with 111.2 in the previous month.

9.     USD- U.S. GDP- Gross Domestic Product, the main measure of economic activity and growth in the world’s largest economy, Fri., Mar. 25, 8:30 am, ET.   

The main spotlight economic event of the week will bring the third and final reading for the U.S. Q4 GDP which is forecast to revise the U.S. economic growth higher by 3.0% in the fourth quarter of 2010, up from the revised estimate of 2.8% and faster than the 2.5% growth in the third quarter.

10.    EUR- European Union Summit, a meeting of EU leaders to discuss solutions to the debt crisis and other economic issues, Fri., Mar. 25, All Day Event.   

The final day of the March 24th and 25th EU Summit would be the deadline by which EU leaders have promised to deliver concrete measures and “comprehensive solutions” to contain the debt crisis, including possible expansion of the European Financial Stability Facility fund. With some alarming trends re-emerging from the European debt markets and debt obligations coming due for Spain and Portugal, should the EU leaders fail to deliver on their promise, a massive investor disappointment could weigh on the euro.