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The Trading Week: May 9 - May 13

|Includes: SPDR Dow Jones Industrial Average ETF (DIA), EEA, GBB, GOLD, JYN, UDN, USD
May 7, 2011 ( – The week ahead will bring the main gauges of inflationary pressures from some of the world’s largest economies, but traders will pay an even closer attention to the latest news from Greece, as anxiety levels have risen on recent reports that the debt-ridden country may be considering an exit from the Euro-zone and the euro.

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.    CHF- Swiss CPI- Consumer Price Index, the main measure of inflation preferred by the Swiss National Bank, Tues., May 10, 3:15 am, ET. 

Inflation in Switzerland is expected to register a smaller increase by 0.5% m/m in April, compared with the unexpected spike by 0.6% m/m in March from 0.2% m/m in February. With the SNB President Hildenbrand already expressing concerns about inflation, recent strong economic data and rising inflationary pressures could prompt the Swiss National Bank to maintain its hawkish stance.

2.    CNY- China CPI- Consumer Price Index, the main measure of inflation in the world’s second-largest economy, Tues., May 10, 10:00 pm, ET.

China could see another month of elevated inflationary pressures with consumer prices rising by 5.3% y/y in April from 5.4% y/y in March. In order to keep inflation in check, the Chinese government and the PBOC would be likely to continue their efforts to cool things off in the world’s fastest-growing economy.
3.    GBP- Bank of England Inflation Report, the central bank’s official assessment on current inflationary pressures and outlook on future inflation, Wed., May 11, 5:30 am, ET.

In line with the Bank of England’s previous forecast, inflation in the U.K. has risen to 4.4% y/y in February before easing back to 4.0% y/y in March. However, the consumer price index is still well above the bank’s comfort level around 2.0% and its ceiling at 3.0%. The market has been pricing BoE rate hike expectations which have kept the pound sterling supported, but this could change if the report reveals that the Bank of England expects inflationary pressures to subside after peaking above 4%. 

4.    AUD- Australia Employment Situation and Unemployment Rate, the main gauge of employment trends and labor market conditions, Wed., May 11, 9:30 pm, ET.

The Australian economy could experience slower job creation with up to 17,400 new jobs added in April, compared with 37,800 in March, while the unemployment rate remains unchanged at the low 4.9% level. 

5.    GBP- U.K. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Thurs., May 12, 4:30 am, ET.

Industrial activity in the U.K. is forecast to recover from the 1.2% m/m drop in February with an increase by 0.8% m/m in March.   

6.    EUR- Euro-zone Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Thurs., May 12, 5:00 am, ET.

After the 0.4% increase in February, the Euro-zone industrial production could see a small pullback with a reading of 0.3% m/m in March.  

7.    USD- U.S. Retail Sales, an important gauge of consumer spending measuring the total receipts at retail establishments, and U.S. Jobless Claims, an important gauge of employment trends and labor market conditions, Thurs., May 12, 8:30 am, ET.

Consumer spending in the U.S. is forecast to register a slight increase as retail sales rise by 0.5% m/m in April from 0.4% m/m in March, while the core retail sales gauge, which excludes automobile purchases, remains unchanged at 0.7% m/m. Following the disappointing jump to 474K, first-time applications for unemployment benefits are expected to decline to 445K- still well above the 375K level, below which economists estimate that jobless applications would need to fall in order to see a significant decline in unemployment.
8.    EUR- Euro-zone GDP- Gross Domestic Product, the main measure of economic activity and growth, Fri., May 13, 5:00 am, ET.  

Coupled with nervous expectations that another act of the Greek drama might be due to play out in the week ahead, this preliminary estimate of the Euro-zone Q1 2011 GDP would have the potential to be a major market-moving event. The Euro-zone economy is forecast to grow twice as fast by 0.6% q/q in the first quarter of 2011, compared with 0.3% q/q in Q4 2010.

9.    USD- U.S. CPI- Consumer Price Index, the main measure of inflation in the world’s largest economy, Fri., May 13, 8:30 am, ET.

The U.S. core consumer price index, excluding food and energy, is forecast to register a slight increase by 0.2% m/m in April from 0.1% m/m in March, while the overall index of consumer prices pulls back to 0.4% m/m in April from 0.5% m/m in the previous month.

10.    USD- U.S. Consumer Sentiment, the University of Michigan's monthly survey of 500 households on their financial conditions and outlook of the economy, Fri., May 13, 9:55 am, ET. 
Rising food and energy costs could take their toll on the U.S. consumer sentiment with the index forecast to head lower to 69.3 in May from 69.8 in April.