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Top 10 Forex Events Outlook: May 21-25

May 20, 2012 (Allthingsforex.com) - The euro will retain its center stage spot next week as traders anxiously watch the latest polls from Greece and the headlines from the euro-area as EU inspectors visit Portugal on Monday, the ECB President speaks on Thursday and the EU Council meets on Friday, while several important economic reports from the Euro-zone will be likely to expose May as another month of economic weakness in the region.

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. GBP- U.K. CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of England, Tues., May 22, 4:30 am, ET.

The main measure of inflation preferred by the Bank of England is forecast to see inflationary pressures falling significantly lower to 3.0% y/y in April from 3.5% y/y in March. If it heads back to the bank's desired 2% to 3% range, inflation should not be an obstacle to more QE by the Bank of England in the near future.

2. USD- U.S. Existing Home Sales, the main gauge of housing market conditions measuring sales of previously constructed homes, Tues., May 22, 10:00 am, ET.

The U.S. housing data in the last few years has been nothing to brag about, but in the "new normal" even the slightest increase in home sales could be considered as a hopeful sign. Sales of existing homes in the U.S. are forecast to remain unimpressive with a small rise to 4.6 million in April from 4.48 million in March.

3. JPY- Japan Trade Balance of the difference between imports and exports, Tues., May 22, 7:50 pm, ET.

The Japanese economy is expected to see the trade deficit shrinking with a reading to 600 billion yen in April compared with 621.3 billion yen in March. A contributing factor to the deficit reduction will be an estimated increase in exports by 11.8% y/y in April from 5.9% y/y in March. Released, a few hours ahead of the Bank of Japan's interest rate announcement, a positive trade balance report could lend support to the yen.

4. JPY- Bank of Japan Interest Rate Announcement, Wed., May 23, around 12:00 am, ET.

Make or break decision for the yen, the direction of the Bank of Japan's monetary policy will be an important driving force for the future trend of the Japanese currency. Whether policy makers like it or not, we do anticipate that the Bank of Japan will be forced to do more easing, but if the central bank stops short of announcing it next week, the yen's recent rally could extend further.

5. GBP- Bank of England Meeting Minutes, a detailed outline of the Bank of England's most recent meeting offering outlook on economic conditions and monetary policy, Wed., May 23, 4:30 am, ET.

At its May meeting, the Bank of England decided not to expand the size of its Asset Purchase Program and to maintain the record low 0.5% benchmark rate. However, if the minutes reveal that the Bank of England's "wait and see" stance may be changing soon and that some members of the Monetary Policy Committee are once again calling for additional asset purchases, the GBP could see selling pressures increasing.

6. USD- U.S. New Home Sales, an important gauge of housing market activity measuring sales of newly constructed homes, Wed., May 23, 10:00 am, ET.

Just as the existing home sales, the sales of newly-constructed homes are also forecast to inch higher to 335K in April compared with 328K in the previous month.

7. EUR- Euro-zone Manufacturing and Services PMI- Purchasing Managers Indexes, two leading indicators of economic conditions measuring activity in the manufacturing and services sectors, Thurs., May 24, 4:00 am, ET.

The lack of growth in the Euro-zone manufacturing and services sectors is forecast to continue as both indexes stay in contraction territory for another month. Manufacturing is expected to inch a bit higher to 46.1 in May from 45.9 in April, while the services index also registers a small increase to 47.0 in May compared with 46.9 in April.

8. GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., May 24, 4:30 am, ET.

The second estimate of the U.K. GDP is not expected to bring any upward revisions and will more than likely confirm that the U.K. registered its second recession since 2009 and its first double dip recession in over 30 years with the economy contracting by 0.2% q/q in the first quarter of 2012.

9. USD- U.S. Jobless Claims, an important gauge of labor market conditions measuring first-time claims for unemployment benefits, Thurs., May 23, 8:30 am, ET.

First-time claims for unemployment benefits are expected to stay flat at 370K, same as the 370K reading in the last couple of weeks. As we have noted previously, the overall trend of improvement should continue as long as jobless claims maintain comfortably below 375K. On the other hand, another unexpected increase similar to the three spikes in April would raise a red flag that labor market conditions are worsening.

Orders for durable goods in the U.S. are forecast to increase by 0.5% in April, but not enough to recover completely from the 4.0% drop in March.

10. U.S. Consumer Sentiment, the University of Michigan's survey of consumers' outlook on the economy, Friday, May 25, 9:55 am, ET.

The preliminary estimate of the consumer sentiment index could deliver a slight pullback to 77.7 in May compared with 77.8 in April.