Jun. 23, 2013 (Allthingsforex.com) - A sequence of notable economic data from the United States will offer traders an opportunity to assess economic conditions in the world's largest economy and to gauge the odds of tapering of the Fed's monthly asset purchases.
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. EUR- Germany IFO Business Climate Index, a leading indicator of economic conditions measuring the outlook of businesses, Mon., Jun. 24, 4:00 am, ET.
The report could confirm that Germany is gaining momentum with the business outlook in the euro-zone's largest economy forecast to be more optimistic at 106.0 in June, compared with a reading of 105.7 in the previous month.
2. USD- U.S. Durable Goods Orders, a gauge of industrial activity measuring orders for durable goods placed with domestic manufacturers, Tues., Jun. 25, 8:30 am, ET.
Durable goods orders are expected to rise for another month by 3.0% m/m in May, slightly lower than the 3.5% m/m increase in April.
3. USD- U.S. Consumer Confidence and New Home Sales, an important gauge of housing market conditions measuring sales of newly-constructed homes, Tues., Jun. 25, 10:00 am, ET.
A small pullback in consumer confidence could bring the index lower to 75. 6 in May from 76.2 in April, while the U.S. new home sales are forecast to increase 462K in May compared with 454K in the previous month.
4. USD- U.S. GDP- Gross Domestic Product, the main measure of economic activity and growth, Wed., Jun. 26, 8:30 am, ET.
The final reading of the U.S. Q1 GDP is expected to show the economy growing at a faster pace by 2.4% q/a in the first quarter after managing to avoid contraction and expanding by 0.4% q/a in the final quarter of last year. The USD could benefit from accelerating U.S. economic growth report which could raise the odds that the Fed might take the first step toward monetary policy tightening sooner rather than later.
5. GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., Jun. 27, 4:30 am, ET.
Following three consecutive quarters of contraction, the U.K. returned to growth in Q3 2012, only to see its economy contracting again by 0.3% q/q in the final quarter of last year. Luckily, the economy averted an unprecedented triple-dip recession and expanded by 0.3% q/q the first quarter of 2013. The final reading should be in line with the preliminary estimates and should confirm the 0.3% q/q growth in Q1. However, if this number is revised lower, the GBP could come under pressure on expectations of more easing by the Bank of England.
6. EUR- EU Summit, Thurs., Jun. 27, and Fri., Jun. 28, all day event.
EU leaders are due to meet for a special economic summit to discuss measures to spur growth in the region. With pro- and anti-austerity views creating divisions between the members of the 27-nation union on how to get the economy growing, it would not be a surprise to see the two-day event resulting in a deadlock. The EUR would not be likely to benefit from another unproductive EU Summit.
7. USD- U.S. Personal Income and Outlays, a measure of consumer income and spending, released along with the PCE Price Index- the Fed's preferred gauge of inflation, Thurs., Jun. 27, 8:30 am, ET.
Consumer spending in the U.S. is forecast to rise by 0.4% m/m in May after the unexpected 0.2% m/m drop in April. The Fed's preferred core PCE Index could show inflation inching slightly higher by 0.1% m/m after staying flat in the previous month, but not enough to prompt the Federal Open Markets Committee to make sudden changes to its current monetary policy.
8. USD- U.S. Pending Home Sales, a leading indicator of housing market activity measuring pending home sale contracts, Thurs., Jun. 27, 10:00 am, ET.
Pending home sales in the United States are expected to register a bigger increase by 1.1% m/m in May, compared with 0.3% m/m in April.
9. JPY- Japan CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of Japan, Thurs., Jun. 27, 7:30 pm, ET.
The massive QE operations of the Bank of Japan could finally begin to create inflationary pressures. The Japanese national core inflation gauge is forecast to rise to 0% y/y in May, up from -0.4% y/y in April. With the index climbing from deflation territory, the report could lend support to the JPY on expectations that the Bank of Japan might not need to become even more aggressive with further measures to fight deflation.
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., Jun. 28, 9:55 am, ET.
The final reading of the U.S. consumer sentiment index for June is forecast to be revised higher to 83.1 from a preliminary estimate of 82.7. The report will wrap up what is expected to be a week of decent U.S. economic data that could boost the USD as the market prices expectations that the Fed could start reducing its monthly asset purchases this fall.