International Trading


Aug. 20, 2010 (Allthingsforex.com) – With the Fed, the Bank of Japan and the European Central Bank recently deciding not to withdraw stimulus to their economies, next week’s crucial data from the U.S., Japan and the Euro-zone should help investors to determine whether the economic recovery is faltering. 

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.    EUR- Euro-zone Manufacturing and Services PMI- Purchasing Managers Indexes, two leading indicators of economic conditions measuring the activity of purchasing managers in the manufacturing and services sectors, Mon., Aug. 23, 4:00 am, ET.

The preliminary flash estimate of the Euro-zone Composite PMI could reveal the early signs of a slowdown with the manufacturing index forecasted to pull back slightly to 56.4 from 56.7 and the services index remaining flat at 55.8. 

2.    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, Tues., Aug. 24, 10:00 am, ET.  

Following a disappointing housing starts report, the sales of existing homes are expected to expose more weakness in the U.S. housing market with up to 7.2% drop and 4.63 M homes sold in July from 5.37 M in June.

3.    JPY- Japan Trade Balance of the difference between imported and exported goods, Tues., Aug. 24, 7:50 pm, ET. 

The Japanese trade surplus is forecasted to show a minimal increase to 470 B yen from 460 B in the previous month, but a decline in exports would signal that the Japanese economic recovery could be losing momentum.  

4.    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, Wed., Aug. 25, 4:00 am, ET.  

The ZEW institute survey, which is a leading indicator of the German IFO, registered a larger-than-expected decline and it would not be surprising the see the same outcome for this report as the IFO index is expected to pull back to 105.5 from 106.2.

5.    USD- U.S. Durable Goods Orders, a leading indicator of economic activity measuring durable goods orders placed with domestic manufacturers, Wed., Aug. 25, 8:30 am, ET. 

With the U.S. industrial production rising more that the estimates and the manufacturing sector leading the recovery, the orders for durable goods could confirm the trend with an increase of 3.0% m/m in July from the 1.2% drop in June.  

6.    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, Wed., Aug. 25, 10:00 am, ET. 

The U.S. new home sales are forecasted to rise a bit to 340 K in July from 330 K, but considering the weak housing starts figures, this report could have the potential to disappoint.  

7.    JPY- Japan CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of Japan, Thurs., Aug. 26, 7:30 pm, ET.

Deflation could remain heavy on the minds of Japanese monetary policy makers as the inflation gauge stays below 0% with a reading of -1.1% m/m.   

8.    GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Fri., Aug. 27, 4:30 am, ET.

The U.K. GDP revision is forecasted to confirm the stronger-than-expected 1.1% q/q growth in Q2 2010, as shown by the preliminary estimate.    

9.    USD- U.S. GDP- Gross Domestic Product, the main measure of economic activity and growth in the world’s largest economy, Fri., Aug. 27, 8:30 am, ET.

This will be the main spotlight economic event of the trading week and the market has already been pricing in the potential for a significantly lower revised estimate which could show the U.S. economy growing by only 1.4% q/q in Q2 2010 compared with the preliminary estimate of 2.4% q/q growth.    

10.     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., Aug. 27, 9:55 am, ET.  

In the aftermath of what could be a disappointing GDP report, the U.S. consumer sentiment is not expected to instill much optimism as the consensus forecasts point to a reading of 68.3, down from 69.6 in the previous month.