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The Trading Week: July 26 - July 30

July 23, 2010 ( – As the markets continue to “digest” the results of the stress tests on 91 European banks and ponder the future of the euro, the busy trading week ahead will deliver another mix of corporate earnings, inflation and economic growth data from some of the largest economies around the globe.

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. New Home Sales, an important gauge of housing market conditions measuring the number of newly constructed homes with a committed sale during the previous month, Mon., July 26, 10:00 am, ET.

The smaller-than-estimated decline in existing home sales last week is forecasted to be followed by an increase in the sales of new homes by up to 330 K in June from 300 K in May.

2.          USD- U.S. Consumer Confidence Index of consumers’ outlook on present and future economic conditions, Tues., July 27, 10:00 am, ET.

High unemployment and slow jobs creation could undermine the confidence of U.S. consumers as the Conference Board’s index is expected to register a reading of 51.5 compared with 52.9 in the previous month. 

3.          AUD- Australia CPI- Consumer Price Index, the main measure of inflation, Tues., July 27, 9:30 pm, ET.

The Reserve Bank of Australia policy makers recently stated that they will watch very closely the debt crisis in the Euro-zone, along with the latest inflation data from Australia, when making future decisions on interest rates. High inflationary pressures should support the case for further rate hikes from the central bank as the quarterly released inflation gauge rises by 1.0% in Q2 2010 from 0.9% in the first quarter.

4.          USD- U.S. Durable Goods Orders, a leading indicator of economic activity measuring durable goods orders placed with domestic manufacturers, Wed., July 28, 8:30 am, ET.

The U.S. manufacturers may need to speed up production based on the anticipated increase in orders for durable goods by up to 0.9% m/m in June, compared with the 0.6% m/m decline in May.  

5.          USD- U.S. Federal Reserve Beige Book, a report on economic conditions in the 12 Federal Reserve Districts, based on anecdotal evidence considered by the FOMC members when making monetary policy decisions, Wed., July 28, 2:00 pm, ET.

Two weeks ahead of the Fed’s August monetary policy meeting, traders will watch closely if the Beige Book’s assessment on the economy confirms the Fed Chairman’s “unusually uncertain” economic outlook. 

6.          NZD- Reserve Bank of New Zealand Interest Rate Announcement, Wed., July 28, 5:00 pm, ET.

The recent strengthening of the Kiwi against the U.S. dollar and other lower-yielding currencies should not come as a surprise since the Reserve Bank of New Zealand is widely-anticipated to follow the footsteps of the Bank of Canada and deliver another 0.25% interest rate hike, bringing the official cash rate in New Zealand to 3.0%.

7.          JPY- Japan CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of Japan, Thurs., July 29, 7:30 pm, ET. 

With deflation still posing a threat to the Japanese economy, the index is expected to show inflation remaining below the 0% level, down by -1.2% m/m in June from -1.3% in May.  

8.          EUR- Euro-zone HICP- Harmonized Index of Consumer Prices, the main measure of inflation in the Euro-zone and the European Union’s equivalent to the CPI- Consumer Price Index, Fri., July 30, 5:00 am, ET.

After a brief pullback, inflationary pressures in the Euro-zone are forecasted to rise by 1.8% y/y in July from 1.4% y/y in the previous month.

9.          CAD- Canada GDP- Gross Domestic Product, the main measure of economic activity and growth, Fri., July 30, 8:30 am, ET.

Although the Canadian economy may not be immune from the recent global economic slowdown, the monthly GDP growth could pick up slightly by 0.1% in June from the flat reading of 0% in May. 

10.         USD- U.S. GDP- Gross Domestic Product, the main measure of economic activity and growth in the world’s largest economy, Fri., July 30, 8:30 am, ET.   

This main spotlight event of the week will bring the preliminary estimate of the U.S. GDP, which is forecasted to be in line with the market’s expectations of slower 2.5% economic growth in Q2 2010, compared with 2.7% in the first quarter.