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The Trading Week: Oct. 3 - Oct. 8

|Includes: DIA, EEA, GBB, GOLD, JYN, QQQ, SPDR S&P 500 Trust ETF (SPY), UDN, USD
Oct. 1, 2010 ( – As the market continues to price-in the expectations for additional monetary stimulus by the Fed, next week’s U.S. Non-Farm Payrolls and Employment Situation report will provide an important clue which should help traders in their efforts to solve the quantitative easing riddle.

In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that will move the markets around the globe. 

1.    AUD- Reserve Bank of Australia Interest Rate Announcement, Mon., Oct. 4, 11:30 pm, ET.

Following the Reserve Bank of Australia Meeting Minutes, which confirmed the policy makers’ hawkish stance, it would not be a surprise to witness another rate hike of 0.25% that would bring the benchmark rate to 4.75%, increasing the yield advantage of the Australian dollar and keeping it well bid against the lower-yielding currencies.

2.    JPY- Bank of Japan Interest Rate Announcement, Tues., Oct. 5, expected around 12:00 am, ET.

The Bank of Japan is expected to maintain the benchmark rate at the low 0.10% level, but it will be interesting to see the policy makers’ position on the need for further currency market interventions on behalf of the Japanese Ministry of Finance. In addition, traders could find out the central bank’s response to the mounting political pressure to offer more stimulus and use quantitative easing as a tool to weaken the Japanese yen, which lingers near 15-year highs against the U.S. dollar. 
3.    USD- U.S. ISM Non-Manufacturing Index, a leading indicator of economic conditions in the services industries: agriculture, mining, construction, transportation, communications, wholesale trade and retail trade, Tues., Oct. 5, 10:00 am, ET.

The ISM Non-Manufacturing Index could deliver a welcomed sign that the recovery is gaining traction with activity in the services industries inching higher to 52.0 from a previous reading of 51.5.   

4.    EUR- Euro-zone GDP- Gross Domestic Product, the main measure of economic activity and growth, Wed., Oct. 6, 5:00 am, ET.

The final reading of the Euro-zone GDP is forecasted to confirm the stronger economic growth by 1.0% in the second quarter of 2010.

5.    USD- U.S. ADP-Automatic Data Processing Employment Report, a measure of jobs lost or added to the private sector of the economy, also serving as a preliminary estimate for the outcome of the monthly non-farm payrolls, Wed., Oct. 6, 8:15 am, ET.

Payrolls in the private sector of the U.S. economy are expected to increase by up to 20,000 in September, compared with the reduction of 10,000 in August. Stronger private sector jobs creation could have a positive impact on Friday’s non-farm payrolls report.

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

The Australian “miracle” economy is resilient in the midst of a global slowdown and is forecasted to add up to 20,300 jobs, while the unemployment rate remains unchanged at 5.1%.

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

As the U.K. government takes on the most aggressive spending cuts since WWII, the Bank of England would be likely to keep its monetary policy accommodative and leave the benchmark rate unchanged at the low 0.50% level. Monetary stimulus will be the main theme of the Monetary Policy Committee meeting on October 7, 2010. After the Bank of England’s Minutes report from the September meeting revealed that the discussion for additional quantitative easing was on the table, the odds for expansion of the bank’s Asset Purchases Program have increased exponentially. A new round of quantitative easing by the Bank of England could easily transpire into GBP weakness.

8.    EUR- European Central Bank Interest Rate Announcement, Thurs., Oct. 7, 7:45 am, ET.  

No rate change is expected by the European Central Bank, but it would be important to find out if policy makers would discuss keeping the liquidity in the financial system flowing, along with a possible activation of the European rescue fund to assist the Irish government in its efforts to bail out Anglo Irish Bank Corp. and other troubled financial institutions. Should investors see any prospects for the sovereign debt crisis to enter a new phase, the rally of the EUR against the USD could quickly come to a halt.     

9.    CAD- Canada Employment Situation and Unemployment Rate, the main gauge of employment trends and labor market conditions, Fri., Oct. 8, 7:00 am, ET.    

The Canadian economy could add lesser amount of up to 11,300 K jobs, compared with 35,800 in the previous month, but the unemployment rate is expected to pull back to 8.0% from 8.1%. 

10.    USD- U.S. Non-Farm Payrolls and Employment Situation Report, one of the most important indicators of economic health, measuring the number of new jobs created or lost in the world’s largest economy, Fri., Oct. 8, 8:30 am, ET.    

Although the unemployment rate is forecasted to remain stubbornly high and reach 9.7%, the U.S. Non-Farm Payrolls report would have the potential to instill some optimism with glimpses of hope coming from the possibility for the U.S. economy to stop losing jobs and to start adding up to 5K new jobs in September, helped by a stronger jobs creation in the private sector by up to 75K jobs.