Market Overview

Trading Week Outlook: Oct. 17 - Oct. 21


Oct. 15, 2011 ( – Although it would be interesting to see what a couple of forward-looking sentiment indexes from the Euro-zone and the U.S. housing, industrial activity and inflation reports might have to add to the current global economic backdrop, the trading week ahead will be all about Sunday's EU Summit as traders anxiously await to find out more details on the promised by European leaders new plans to put out the fire from the EU sovereign debt crisis.

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

1. USD- U.S. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Mon., Oct. 17, 9:15 am, ET.

Despite of the unexpected increase in the ISM Manufacturing PMI, the U.S. industrial production could lose some momentum in September with a reading of 0.1% m/m, down from 0.2% m/m in August.

2. CNY- China GDP- Gross Domestic Product, the main measure of economic activity and growth, Mon., Oct. 17, 10:00 pm, ET.

As a result of the global slump, the world's second-largest economy China is expected to slow, although not dramatically, to 9.2% q/y from 9.5% q/y in Q2 2011.

3. GBP- U.K. CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of England, Tues., Oct. 18, 4:30 am, ET.

Inflationary pressures in the U.K. are forecast to stay stubbornly high and even spike up to 4.9% y/y in September, compared with 4.5% y/y in August. Even though it might be a long shot, the GBP could attract some bids on expectations that, in light of rising inflation, the Bank of England could decide to limit the size of the recently-announced additional asset purchases.

4. EUR- Euro-zone ZEW Economic Sentiment Index, a leading indicator of economic conditions and business expectations, Tues., Oct. 18, 5:00 am, ET.

The ZEW institute's survey is expected to deliver another indicator of the deteriorating economic conditions in the Euro-zone with the economic sentiment index forecast to register a larger -45.0 decline in October, compared with -43.3 in August.

5. GBP- Bank of England Monetary Policy Committee Meeting Minutes, a comprehensive report of the central bank's meeting that could provide an outlook on the economy, interest rates and future monetary policy, Wed., Oct. 19, 4:30 am, ET.

The minutes should serve as a reminder of the fears of contagion from the EU debt crisis and the threat of a double dip for the U.K. economy which were the main reasons behind the Bank of England's decision to offer more quantitative easing and to expand the bank's Asset Purchase Program by another 75 billion pounds. In other words, heightened event risk for the GBP…

6. USD- U.S. U.S. Housing Starts, a leading indicator of housing market activity measuring construction of new residential properties, and U.S. CPI- Consumer Price Index, the main measure of inflation, Wed., Oct. 19, 8:30 am, ET.

While the U.S. housing starts are forecast to increase up to 590K in September from 571K in August, the building permits are expected to decline to 610K in September from 630K in the previous month.

Still not large enough of an increase to cause the Fed to reconsider its promise to keep rates “exceptionally low through 2013”, the core consumer price index, which excludes food and energy costs, is expected to rise to 2.1% y/y in September from 2.0% y/y in August.

7. GBP- U.K. Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Thurs., Oct. 20, 4:30 am, ET.

The U.K. consumer spending is forecast to increase by 0.1% m/m in September, compared with the 0.2% m/m drop in August.

8. 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, Thurs., Oct. 20, 10:00 am, ET.

After rising to 5.03M in August, the sales of existing homes in the U.S. are forecast to slow to 4.91M in September, confirming the lack of significant improvement in the U.S. housing market.

9. 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, Fri., Oct. 21, 4:00 am, ET.

In the aftermath of the anticipated drop in the ZEW economic sentiment index, the German IFO index is forecast to follow suit with a reading of 106.5 in October from 107.5 in the previous month.

10. EUR- EU Summit of leaders of the 27 countries in the European Union, Sun., Oct. 23, all day.

Without a doubt, the main event of the trading week, the EU Summit is when the markets around the world expect to see the promised “comprehensive strategy on the euro-area sovereign debt crisis”. The summit was postponed because EU leaders needed more time to finalize their new plans on how to prevent further contagion, recapitalize banks, and conclude discussions on the next bailout installment for Greece. “Better late than never” optimism that EU leaders have finally realized the seriousness of the situation after about 18 months since the beginning of the crisis, has helped investor sentiment and risk appetite, with the euro registering its biggest rally since March, 2009. A lot is riding on this summit and if the EU leaders deliver anything short of spectacular, disappointment and risk aversion could quickly set back in, renewing the pressure on the single currency.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Forex Global Markets Trading Ideas


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