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The Trading Week: Sep. 26 - Oct. 1

|Includes: DIA, EEA, GBB, GOLD, JYN, QQQ, SPDR S&P 500 Trust ETF (SPY), UDN, USD
Sep. 24, 2010 (Allthingsforex.com) – With the Fed and the Bank of Japan pondering the need for more stimulus, a sequence of important economic data from the U.S. and Japan will dominate the financial headlines in the week ahead as the markets assess conditions in two of the world’s largest economies. 

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.    JPY- Japan Trade Balance of the difference between imported and exported goods, Sun., Sep. 26, 7:50 pm, ET.

The Japanese trade surplus is expected to show a smaller increase up to 510 B yen from 610 B in the previous month. A decline in exports would signal that the Japanese economy could be losing momentum.  

2.    GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Tues., Sep. 28, 4:30 am, ET. 

The final reading of the U.K. GDP is forecasted to confirm the stronger-than-expected 1.2% q/q growth in Q2 2010, as shown by the preliminary estimates.

3.    USD- U.S. Consumer Confidence Index of consumers’ outlook on present and future economic conditions, Tues., Sep. 28, 10:00 am, ET. 

      Despite of the high unemployment, the consensus forecasts point to another month of improvement in consumer confidence to 54 from 53.5, but given the current deteriorating economic conditions, a decline in the index would not be a surprise. 

4.    JPY- Japan Tankan Index, Bank of Japan’s quarterly survey of large and small manufacturing and services companies, which serves as the main indicator of economic conditions in Japan, Tues., Sep. 28, 7:50 pm, ET. 

The survey is expected to show the economy improving across the board, with the Japanese manufacturing sector index at 7 from 1 and services at -2, compared with a reading of -5 in the previous quarter.

5.    JPY- Japan Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, and Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Wed., Sep. 29, 7:50 pm, ET.

The Japanese manufacturing activity could remain strong, rising by 1.1% m/m in August from 0.3% m/m in July. The Japanese consumer spending could increase by 4.4% y/y, up from 3.9% y/y in the previous month.

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

This main spotlight economic event of the trading week will bring the final reading of the U.S. Q2 GDP which should confirm the expectations of a slower U.S. economic growth by 1.6% q/q in the second quarter, down from 2.7% in Q1 2010.

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

Although inflationary pressures could pick up to -1.0% y/y from the previous reading of -1.1% y/y, as long as the inflation gauge stays below 0%, deflation will continue to pose a threat to the Japanese economy.   

8.    USD- U.S. Personal Income and Outlays, a measure of the income received and purchases made by consumers, released along with the Personal Consumption and Expenditures Price Index- a leading indicator of inflation preferred by the Fed because it measures a variable basket of goods and services, as opposed to the CPI-Consumer Price Index which measures a fixed basket of goods and services, Fri., Oct. 1, 8:30 am, ET.

The Fed’s preferred inflation gauge, the core PCE Index, is expected to show subdued inflationary pressures with a slight increase by 0.1% m/m in August- same as the 0.1% m/m reading in July, while personal spending registers a smaller increase by 0.3% m/m from 0.4% m/m in the previous month.

9.    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., Oct. 1, 9:55 am, ET.

Optimistic U.S. consumers could send the September index higher with consensus forecasts in a range between 66.9 and 68.3, up from 66.6 in the previous month.   

10.   USD- U.S. ISM Manufacturing Index, a leading indicator of industrial activity, where a reading above or below 50 is the dividing line between economic expansion and contraction, Fri., Oct. 1, 10:00 am, ET.   

The manufacturing sector could register another month of slower growth as the index pulls back to 55.0 in September from 56.3 in August.