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The Trading Week: July 19 - July 23

July 16, 2010 ( – The week ahead will bring important housing data from the world’s largest economy coupled with inflation and economic growth reports from major industrialized nations, but all eyes will be focused on the results from the stress tests of EU banks as uncertainty and speculation about the outcome of the tests would be likely to raise the market’s anxiety levels.

In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that every currency trader should pay attention to. 

1.    USD- U.S. Housing Starts, a leading indicator of housing market activity measuring construction of new residential properties, Tues., July 20, 8:30 am, ET. 

After a series of disappointing housing reports last month, the U.S. housing market could continue to show signs of weakness as the housing starts are expected to decrease to 580 K in June from 590 K in May and the building permits could remain flat at 570 K.

2.    CAD- Bank of Canada Interest Rate Announcement, Tues., July 20, 9:00 am, ET.

Recent data from a Credit Suisse AG index based on rate swaps shows 96% probability that the strong Canadian economic growth and labor market would prompt the Bank of Canada to produce another rate hike by 0.25%.

3.    GBP- Bank of England Monetary Policy Committee Meeting Minutes, a comprehensive report of the central bank’s meeting that could provide an outlook on the economy, interest rates and future monetary policy, Wed., July 21, 4:30 am, ET.

The minutes are expected to confirm the Bank of England’s cautiously optimistic outlook on inflation and the economy, along with the policy makers’ approval of the fiscal austerity measures outlined in the annual budget report of the U.K. government. 

4.    GBP- U.K. Retail Sales, an important gauge of consumer spending measuring the total sales at retail establishments, Thurs., July 22, 4:30 am, ET. 

The U.K. consumer spending could see a slight pullback with a smaller increase in retail sales by 0.5% m/m in June, compared with 0.6% m/m in May. 

5.    USD- U.S. Existing Home Sales, the main gauge of the condition of the U.S. housing market measuring the number of closed sales of previously constructed homes, condominiums and co-ops, Thurs., July 22, 10:00 am, ET. 

The report could expose more weakness in the U.S. housing market, with sales of existing homes forecasted to decrease to 5.1 M from 5.66 M in the previous month.

6.     CAD- Bank of Canada Monetary Policy Report of the bank’s outlook on the economy, inflation and monetary policy, Thurs., July 22, 10:30 am, ET. 

With this assessment on monetary policy and economic conditions, the Bank of Canada’s policy makers should offer an insight to whether the central bank’s campaign of interest rate hikes could continue in the months ahead.

7.    EUR- Germany IFO Institute Business Climate and Expectations Index, a leading indicator of economic conditions and business expectations in the Euro-zone’s largest economy, Fri., July 23, 4:00 am, ET.

The report could reveal expectations of future economic slowdown as the German IFO index is forecasted to pull back to 101.5 in June from 101.8 in May.   

8.    GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Fri., July 23, 4:30 am, ET.

The preliminary estimate of the U.K. GDP is expected to show economic growth in the second quarter picking up by 0.6% q/q, compared with 0.3% q/q growth in Q1, and could provide a boost to the GBP.

9.    CAD- Canada CPI- Consumer Price Index, the main measure of inflation, Fri., July 23, 7:00 am, ET.   

With the Bank of Canada already in rate raising mode, subsiding inflationary pressures could lower the odds for future rate hikes as June inflation is forecasted to decline by 0.2% compared with an increase by 0.3% m/m in the previous month.
10.     EUR- Euro-zone Banks Stress Tests Results, the officially disclosed details of the tests to examine the ability of 91 European banks to withstand losses on sovereign-debt holdings, Fri., July 23, expected around 4:00 am, ET.   

The banks tested account for 65 percent of Europe’s banking industry and if the tests fail to assure investors of the resilience of the Euro-zone region’s banking system, the EUR could suffer the consequences.