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Trading Week Outlook: Nov. 7 - Nov. 11

|Includes: SPDR Dow Jones Industrial Average ETF (DIA), EEA, GBB, GOLD, JYN, UDN, USD
Nov. 5, 2011 ( – Although much lighter on pivotal economic data, the trading week ahead will not be any less intriguing as headlines from the Euro-zone debt crisis continue to dictate the market’s direction and traders prepare for the next act of the Greek drama, while keeping an eye on the political situation in Italy. 

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, Mon., Nov. 7, 3:15 am, ET. 

The Swiss inflation gauge is forecast to increase by 0.3% m/m in October, same as the 0.3% m/m reading in September, while the yearly CPI measure remains near zero, at 0.5% y/y. With the euro breaking lower towards its recently established “floor” against the Swiss franc, the Swiss National Bank might need to refresh the market’s memory of its promise to do whatever it takes to defend the EUR/CHF 1.20 exchange rate level. Moreover, the SNB could even be prompted to raise the floor up to 1.30, especially if the “massively overvalued” franc and the risk of deflation continue to loom over the economy.

2.    EUR- Euro-zone Retail Sales, an important gauge of consumer spending measuring the total receipts at retail establishments, Mon., Nov. 7, 5:00 am, ET.

In case the market decides to start paying attention to economic data rather than the headlines from Greece and other EU debt-ridden nations, the weakness in the Euro-zone economy is expected to continue with retail sales forecast to decline for another month by 0.2% m/m from the 0.3% m/m drop in the previous month. 

3.    GBP- U.K. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Tues., Nov. 8, 4:30 am, ET.

With the Manufacturing PMI dipping below 50 into contraction territory, the U.K. industrial production is forecast to register an anemic increase by 0.1% m/m in September, compared with 0.2% m/m in August. 

4.    CNY- China CPI- Consumer Price Index, the main measure of inflation, Tues., Nov. 8, 10:00 pm, ET.

Inflationary pressures in China are forecast to stage a larger decline to 5.4% y/y from 6.1% y/y in the previous month. Lower inflation could ease some of the concerns that the Chinese central bank may have lost its grip on inflation and could reduce the odds of more rate hikes by the PBOC. A decision by the Chinese central bank to refrain from raising the benchmark rate further could give the Chinese and the Australian economies a boost, and could lend support to the Australian dollar.   

5.    NZD- Reserve Bank of New Zealand Financial Stability Report on economic conditions, inflation and future monetary policy, Wed., Nov. 9, 4:00 pm, ET.

At its latest monetary policy meeting, the Reserve Bank of New Zealand surprised the markets with its hawkish stance on inflation and the potential for rate hikes in the near future. The bank would probably echo the same sentiment in its financial stability report, which could help the New Zealand dollar attract some bids. 

6.    AUD- Australia Employment Situation and Unemployment Rate, the main gauge of employment trends and labor market conditions, Wed., Nov. 9, 8:30 pm, ET.

The Australian labor market is expected to cool off with slower job creation of up to 10,000 new jobs added in October, compared with the 20,400 jobs in September, while the unemployment rate rises to 5.3% from 5.2% in the previous month. If coupled with more risk aversion, a weak jobs report could become a significant risk event for the Aussie dollar.

7.    GBP- Bank of England Interest Rate Announcement, Thurs., Nov. 10, 7:00 am, ET.

When it comes to the Bank of England’s future monetary policy, the unknown is not whether the bank will change the benchmark rate from its record low 0.5% level, but rather if there will be an expansion or a reduction in the bank’s quantitative easing operations. Policy makers recently decided to expand the Asset Purchase Program beyond the 200 billon-pounds ceiling by another 75 billion pounds, however the latest minutes report stated that “depending on developments in the euro area and financial markets, the size of the stimulus could be adjusted in either direction”. Although it still may be a bit of a long shot, if EU leaders succeed to put out the fire from the debt crisis and the U.K. economy strengthens, the size of the Asset Purchase Program could be reduced, and it would not be surprising to see the GBP benefiting from such scenario.

8.    USD- U.S. Jobless Claims, an important gauge of employment trends and labor market conditions, Thurs., Nov. 10, 8:30 am, ET.  

Breaching below the 400K mark to 397K, first-time applications for unemployment benefits are forecast to inch higher to 402K, still above 375K- the number estimated by economists to signal significant decline in unemployment. 

9.    GBP- U.K. PPI- Producer Price Index, the main measure of wholesale inflation and a leading indicator of consumer price inflation, Fri., Nov. 11, 4:30 am, ET.

Despite of the recent rise in the CPI to 5.2% y/y, producer prices in the U.K. are expected to register a slight pullback with the core PPI forecast to reach 3.7% y/y in October from 3.8% y/y in September.

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., Nov. 11, 9:55 am, ET.
The preliminary consumer sentiment index estimate for November is forecast to bring another month of improvement with a reading of 61.1, compared with 60.9 in October. Should the upcoming U.S. economic reports manage to keep up with the October trend, more optimistic undertones in the U.S. economic data throughout the month of November would help rule out concerns of a double dip and could reduce QE3 odds ahead of the Fed’s next meeting on December 13.