Trading Week Outlook: May 9 - 14, 2010

As the world’s financial markets continue to focus on the sovereign debt crisis in Europe and “digest” the outcome of the U.K. elections, the main gauges of economic growth and industrial activity in the euro-zone, the U.S. and the U.K., coupled with the Bank of England’s interest rate announcement and inflation report, promise to deliver another exciting week ahead.

In preparation for the new trading week, here is a quick look at the most important economic events that every currency trader should pay attention to.

Sunday, May 9 will begin the trading session with the Bank of Japan Meeting Minutes from the banks’ last monetary policy meeting that may provide an outlook on the economy and future monetary policy, at 7:50 pm, ET.

Monday, May 10 will start with the German Trade Balance of the difference between imports and exports, at 2:00 am, ET, and the French Industrial Production, the main gauge of industrial activity in the euro-zone’s second largest economy, at 2:45 am, ET.

Economic data from the euro-zone will bring the closely watched Sentix Investor Confidence Index of investors’ outlook on the economy, at 4:30 am, ET.

The first spotlight event of the week will follow with the Bank of England Interest Rate Announcement at 7:00 am, ET. The bank is expected to maintain interest rates at their record low level of 0.50% and to keep the lid on the GBP 200 B Asset Purchase Program.

News from Canada will deliver the Canadian Housing Starts, a leading indicator of housing market activity measuring new residential construction, at 8:30 am, ET.

The day will conclude with several notable reports, beginning with the U.K. RICS- Royal Institution of Chartered Surveyors House Price Balance of changes in home prices, at 7:00 pm, ET, and the British Retail Consortium Retail Sales Monitor, a gauge of consumer spending measuring weekly changes in retail sales, also at 7:00 pm, ET.

The Australian Business Confidence, a monthly survey on the economic outlook of businesses, conducted by National Australia Bank, will follow at 9:30 pm, ET.

A sequence of important economic data from the world’s fastest-growing economy will bring the Chinese Industrial Production, the main gauge of industrial activity, the Chinese CPI- Consumer Price Index, the main measure of inflation, and the Chinese Retail Sales, the main gauge of consumer spending, all scheduled at 10:00 pm, ET.

Traders will watch for signs of lower inflationary pressures and a slowdown in Chinese economic activity that could have a negative impact on commodities and the AUD, as China is Australia’s main trading partner and the largest consumer of Australian-produced raw materials.

Tuesday, May 11 will start with the final reading of the German CPI- Consumer Price Index, the main measure of inflation in the euro-zone’s largest economy, at 2:00 am, ET.

A spotlight economic event will come with the release of the U.K. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, at 4:30 am, ET. An increase in manufacturing output above 1.3% could signal stronger economic recovery in the U.K. and could lend some support for the GBP.

The Australian Government’s Annual Budget Report, a statement of income and spending by the government, will hit the newswires at 5:30 am, ET, followed by the preliminary estimate by the National Institute of Economic and Social Research of the U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, expected around 7:00 am, ET.

The only notable U.S. economic report that morning will be the U.S. Wholesale Trade, a leading indicator of economic conditions measuring the number of sales and inventories held by wholesalers, at 10:00 am, ET.

The Australian Home Loans, a leading indicator of housing market activity measuring new loans issued for home purchases, will end the day at 9:30 pm, ET.

Wednesday, May 12 will bring a trading session filled with important economic data, starting with a spotlight event- the preliminary estimate of the German GDP- Gross Domestic Product, the main measure of economic activity and growth in the Euro-zone’s largest economy, at 2:00 am, ET, and the French GDP- Gross Domestic Product, the main measure of economic activity and growth in the euro-zone’s second largest economy, at 2:45 am, ET.

The German economy did not grow in Q4 2009, but any reading above 0.0% for the Q1 2010 estimate could be a positive sign of recovery in the Euro-zone and its largest economy.

The Swiss PPI- Producer Price Index, the main measure of wholesale inflation experienced by manufacturers and a leading indicator of consumer inflation, will follow at 3:15 am, ET.

Another spotlight economic event will come with the release of the U.K. Jobless Claims, an important gauge of labor market conditions measuring new unemployment claims, and the U.K. Unemployment Rate, at 4:30 am, ET.

The jobs data from the U.K. last month was worst-than-expected, but lesser amount of people claiming unemployment in the U.K. in April, along with forecasts for the unemployment rate to remain steady at 8.0% could signal improvement in the jobs market and the overall U.K. economy.

Two of the major spotlight events of the week will come with the releases of the euro-zone Flash GDP- Gross Domestic Product, the preliminary estimate of the main measure of economic activity and growth, at 5:00 am, ET, and the euro-zone Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, also at 5:00 am, ET.

Just as the German economy, the economy of the entire euro-zone failed to register any growth in Q4 2009 and traders will watch carefully the GDP estimate for signs of growth in the Q1 2010 and potential pick-up in industrial activity above 0.7%.

The series of spotlight events from the U.K. will continue with the Bank of England Inflation Report, a very important for the central bank’s future monetary policy report which contains detailed analysis and estimates for inflation and economic growth in the U.K., scheduled at 5:30 am, ET.

Rising inflation usually is considered as a positive for a country’s currency because it raises the odds for rate hikes by its central bank, but if Bank of England sees inflationary pressures subsiding significantly below the 3.0% ceiling in the future, the inflation report could bring downward pressure on the GBP.

News from Canada will bring the Canadian Trade Balance of the difference between imports and exports, at 8:30 am, ET.

The U.S. economic reports will begin with the U.S. International Trade Balance of the difference between imports and exports of goods and services, at 8:30 am, ET, followed by the EIA- Energy Information Administration Weekly Oil Inventories, at 10:30 am, ET.

The U.S. economic data will continue with a notable release of the Federal Budget Balance, a U.S. Treasury statement of income and spending by the government, scheduled at 2:00 pm, ET.

The New Zealand Business Manufacturing Index of activity in the manufacturing sector of the economy will be released at 6:30 pm, ET, followed by the U.K. Consumer Confidence, an index based on a survey of consumers’ outlook on the economy, at 7:00 pm, ET.

The Japanese Current Account of goods, services and transfer of payments into and out of the country, will come at 7:50 pm, ET, along with the Japanese Money Supply, a measure of the value of all currency and liquid cash assets held by the public, also at 7:50 pm, ET.

The day will end with a spotlight event- the Australian Employment Situation and Unemployment Rate, the main gauge of employment trends and labor market conditions, at 9:30 pm, ET.

After a “blockbuster” employment report in February and a not-so-strong one in March, traders will want to make sure that the Australian unemployment rate does not move above 5.3% and that the Australian economy adds more than 19.6 K new jobs in April.

Thursday, May 13 will begin with the Japanese Eco Watchers Survey of economic conditions and consumer spending, at 1:00 am, ET.

The European Central Bank’s Monthly Bulletin on monetary policy, inflation and economic conditions in the euro-zone, will come at 4:00 am, ET.

A notable event will follow with the release of the U.K. Trade Balance of the difference between imports and exports, at 4:30 am, ET, along with the U.K. Department for Communities and Local Government House Price Index, a leading indicator of housing market activity measuring changes in home prices, also at 4:30 am, ET.

The U.S. economic data will include the weekly Jobless Claims, an important gauge of labor market conditions measuring new unemployment claims, at 8:30 am, ET, the U.S. Import and Export Prices, a measure of inflation in products traded internationally, also at 8:30 am, ET, and the EIA- Energy Information Administration Weekly Natural Gas Inventories, at 10:30 am, ET.

The day will conclude with a notable economic report- the New Zealand Retail Sales, the main gauge of consumer spending, at 6:45 pm, ET.

Friday, May 14 will start with the U.K. Leading Indicators of economic activity, at 5:00 am, ET, and the Canadian Factory Orders, a leading indicator of economic conditions measuring orders placed with manufacturers, at 8:30 am, ET.

The U.S. data will begin with one of the main spotlight events of the week- the U.S. Retail Sales, the main gauge of consumer spending measuring the total sales at retail establishments, at 8:30 am, ET.

Another major spotlight event- the U.S. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities in the world’s largest economy will be released at 9:15 am, ET.

The U.S. retail purchases and consumer spending could slow down, as the U.S. Retail Sales are forecasted higher by only 0.4% in April compared with the 1.6% increase in March, while industrial activity could remain strong with the U.S. Industrial Production expected to be up by 0.5% m/m from 0.1% in March.

The sequence of spotlight events will continue with the preliminary estimate of the U.S. Consumer Sentiment, the University of Michigan’s monthly survey of 500 households on their financial conditions and outlook of the economy, scheduled at 9:55 am, ET.

The consensus forecasts anticipate that the rising trend in U.S. Consumer Sentiment could continue with the index inching higher to 72.8 from a previous reading of 72.2.

The trading week will end with the U.S. Business Inventories, a leading indicator of economic conditions measuring the total amount of inventories held by manufacturers, wholesalers, and retailers, at 10:00 am, ET.