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The Trading Week: Mar. 28 - Apr. 1

|Includes: SPDR Dow Jones Industrial Average ETF (DIA), EEA, GBB, GOLD, JYN, UDN, USD
Mar. 26, 2011 ( – On the verge of a potential new phase of the EU debt crisis, in the week ahead traders will focus on the U.S. Non-Farm Payrolls and Employment Situation report for signs of consistent improvement in the U.S. labor market, while keeping an eye on Portugal as the next likely candidate for a bailout.

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.    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, Mon., Mar. 28, 8:30 am, ET.

Consumer spending in the U.S. is forecast to rise by 0.6% m/m in February from 0.2% m/m in January, while the Fed’s preferred inflation gauge, the core PCE Index, is expected to continue to show subdued inflationary pressures with a slight increase by 0.2% m/m, compared with the 0.1% reading in the previous month.

2.    USD- U.S. Pending Home Sales, a gauge of housing market conditions measuring the amount of homes under contract to be sold, Mon., Mar. 28, 10:00 am, ET.

Following the disappointing existing and new home sales reports, the pending home sales index is forecast to remain flat at 0% in February, compared with a 2.8% drop in January.  
3.    GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Tues., Mar. 29, 4:30 am, ET. 

The final reading of the Q4 GDP could offer a daunting reminder about the lack of economic growth in the final quarter of last year, confirming that the U.K. economy contracted by 0.6% q/q in the fourth quarter of 2010.

4.    USD- U.S. Consumer Confidence Index of consumers’ outlook on present and future economic conditions, Tues., Mar. 29, 10:00 am, ET.

The trend of improvement in the confidence of U.S. consumers could come to a halt with the index forecast to decline to 65.0 in March from 70.4 in February.

5.    USD- U.S. ADP-Automatic Data Processing Employment Report, a measure of jobs lost or added to the private sector of the economy, also serving as a leading indicator for the outcome of the monthly non-farm payrolls, Wed., Mar. 30, 8:15 am, ET.

After adding 217K new jobs in February, the private sector payrolls are forecast to register a smaller increase by up to 210K in March, still below the strong December reading of 247K.

6.    EUR- Euro-zone Flash HICP- Harmonized Index of Consumer Prices, the main measure of inflation, Thurs., Mar. 31, 5:00 am, ET.

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

7.    USD- U.S. Jobless Claims, an important gauge of employment trends and labor market conditions, Thurs., Mar. 31, 8:30 am, ET.

First-time applications for unemployment benefits are forecast to reach 379K, slightly lower that the reading of 382K in the previous week. To indicate a significant decline in unemployment, economists estimate that jobless applications would need to fall to 375K or below.

8.    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, Thurs., Mar. 31, 7:50 pm, ET. 

This benchmark survey is expected to signal an improvement in the Japanese economic activity in Q1 2011 with a manufacturing sector index reading of 6 from 5 and a services sector reading of 2 from 1 in the previous quarter.

9.    USD- U.S. Non-Farm Payrolls and Employment Situation Report, one of the most important indicators of economic health, measuring the number of new jobs created or lost in the world’s largest economy, Fri., Apr. 1, 8:30 am, ET.   

February’s better-than-expected job creation could be followed by another positive U.S. Non-Farm Payrolls report with forecasts expecting the U.S. economy to add up to 190K jobs in March, compared with 192K in the previous month. Private sector payrolls are forecast to reach 203K from 222K in February, while the unemployment rate remains unchanged at 8.9%. Consistent improvement in the U.S. labor market could lend support to the USD on expectations for future tightening of the Fed’s ultra-accommodative monetary policy.

10.    USD- U.S. ISM Manufacturing Index, a leading indicator of industrial activity, where a reading above or below 50 is the dividing line between economic expansion and contraction, Fri., Apr. 1, 10:00 am, ET.

The U.S. manufacturing sector is forecast to register another month of expansion with an ISM index reading of 61.2 in March, slightly lower than 61.4 in February.