Jul. 7, 2013 (Allthingsforex.com) - Following a better than expected employment report from the world's largest economy, in the week ahead traders will compare economic conditions on both sides of the Atlantic, as a sequence of notable economic data from the U.S., the U.K., and the euro-zone hits the newswires.
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- Japan Current Account, an important measure of foreign trade, Sun., Jul. 7, 7:50 pm, ET.
Compared with a year earlier, the current account surplus in Japan doubled in April to 750 billion yen and is expected to stay in range with 650 billion surplus in May. Further improvement in Japanese economic data could lend temporary support to the yen on reduced odds that the Bank of Japan will need to implement even more aggressive measures to weaken the currency and to stimulate the economy.
2. EUR- Germany Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Mon., Jul. 8, 6:00 am, ET.
After rising by 1.8% m/m in May, industrial activity in the euro-zone's largest economy is forecast to slow with a drop by 0.5% m/m in June. The report could deliver a warning sign that the industrial sector of the largest economy in the euro-zone may be losing momentum.
3. GBP- U.K. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Tues., Jul. 9, 4:30 am, ET.
Recent data from the U.K. has shown signs of improvement and this trend could continue with industrial activity picking up by 0.3% m/m in June, compared with 0.1% m/m in the previous month. The GBP could attract more bids if the U.K. economic data continues to boost optimism and reduces the odds of additional easing by the Bank of England.
4. USD- U.S. FOMC Meeting Minutes, a detailed report of the Fed's latest meeting containing an outlook on monetary policy and the economy, Wed., Jul. 10, 2:00 pm, ET.
This is the minutes of the Fed's meeting that shook the markets as the U.S. central bank made it clear that it is considering taking the first step towards monetary policy tightening by reducing the size of its monthly asset purchases. Series of stronger than expected reports from the U.S., including last Friday's non-farm payrolls, have raised the odds that the Fed might tighten even earlier and by a larger amount than initially estimated. The bullish USD trend could accelerate if the minutes confirm such expectations.
5. AUD- Australia Employment and Unemployment Rate, the two main gauges of labor market conditions measuring job creation and unemployment, Wed., Jul. 10, 9:30 pm, ET.
Last month's job report showed a smaller job creation of 1,100 new jobs in May and the Australian economy is expected to add only 300 jobs in June, while the unemployment rate inches higher to 5.6% from 5.5%. A weak employment report could raise the odds of another rate cut by the Reserve Bank of Australia and could weigh on the Australian dollar.
6. JPY- Bank of Japan Interest Rate Announcement, Thurs., Jul. 11, around 12:00 am, ET.
With economic conditions beginning to improve, the Bank of Japan will not need to get more aggressive at this point but will be likely to reaffirm its commitment to open-ended QE until the 2% inflation target is in sight. As the monetary policies of the Fed and the Bank of Japan continue to diverge, the yen losses could extend further.
7. EUR- Italy 10-year Bond Auction, Thurs., Jul. 11, around 2:00 am, ET.
The Italian Treasury will sell its benchmark 10-year government bonds and traders will watch the auction results closely in order to find out if investors will demand higher premiums to hold the debt of the third-largest economy in the euro area. Rising borrowing costs and weak demand could weigh on the euro.
8. USD- U.S. Jobless Claims, an important gauge of labor market conditions measuring first-time claims for unemployment benefits, Thurs., Jul. 11, 8:30 am, ET.
The U.S. jobless claims are forecast to head even lower to 335K compared with last week's decline to 343K. Another positive report from the U.S. labor market should keep the USD supported on expectations of a Fed tightening sooner rather than later.
9. EUR- Euro-zone Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Fri., Jul. 12, 5:00 am, ET.
Identical to the German data, industrial activity in the Euro-zone is forecast to slow with a 0.2% m/m drop in June after rising by 0.4% m/m in the previous month. The EUR could stay under pressure if the report sparks concerns that the region's economic recovery is fading.
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., Jul. 12, 9:55 am, ET.
The preliminary estimate of the U.S. consumer sentiment index is forecast to show a more optimistic outlook with a reading of 85.3 in July from 84.1 in June. A weekly sequence of upbeat U.S. economic data should keep the bullish USD trend intact.
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