Focus To Remain On Euro And US Dollar This Week

With the verdict on Greece still pending at the Eurogroup meeting on November 26 and as a sequence of economic growth and housing market data from the world’s largest economy headlines the schedule in the week ahead, currency traders will continue to focus on the euro and the U.S. dollar.

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. EUR- Eurogroup Meeting, Mon., Nov. 26, all day event.

After two weeks of discussions, the finance ministers from the euro-area postponed their judgment on whether Greece should receive its next installment of bailout funding and promised that they will announce their final decision at the November 26 meeting. Citing EU sources, news agencies have reported that the Eurogroup might approve only a partial payment. In other words, they could let Greece kick the can down the road for another couple of years through 2014.

If this ends up being the outcome of the meeting, the question will remain about how Greece will be able to meet its fiscal challenges in the following years 2015 and 2016. But for the time being, buying extra two years might be enough to calm some nerves and might see the euro benefiting from a sigh of relief that a Greek default has been averted and that the debt-ridden nation will stay in the European Monetary Union.

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

The second estimate of the Q3 2012 GDP is forecast to confirm that the U.K. economy returned to growth and expanded by 1.0% q/q following three consecutive quarters of contraction. The report could offer a boost to the GBP on optimism that the U.K. economy is recovering from its first double-dip recession in 30 years and, as a result, the Bank of England may not resort to additional quantitative easing.

3. USD- U.S. Durable Goods Orders, a gauge of industrial activity measuring orders for durable goods placed with domestic manufacturers, Tues., Nov. 27, 8:30 am, ET.

Following a much stronger than expected September report which registered a jump by 9.8% m/m, orders for durable goods in the U.S. are forecast to decline by 0.3% m/m in October.

4. USD- U.S. Consumer Confidence, a measure of consumers’ outlook on the economy, Tues., Nov. 27, 10:00 am, ET.

The outlook of U.S. consumers is forecast to be more optimistic, pushing the consumer confidence index higher to a reading of 73.0 in October from 72.2 in the previous month.

5. USD- U.S. New Home Sales, an important gauge of housing market conditions measuring sales of new homes, Wed., Nov. 28, 10:00 am, ET.

In addition to the upbeat existing home sales and housing starts reports, sales of new homes in the U.S. are forecast to register a slight increase to 390K in October from 389K in September.

6. JPY- Japan Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Wed., Nov. 28, 6:50 pm, ET.

Many economic indicators point to the threat of another recession in Japan with falling domestic consumption being one of the main contributors to the ailing economy. In line with these expectations, retail sales are forecast to drop by 0.7% m/m in October after rising by 0.4% m/m in the previous month.

7. CHF- Swiss GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., Nov. 29, 1:45 am, ET.

Unexpectedly contracting by 0.1% q/q in the second quarter, the Swiss economy is forecast to grow by 0.2% q/q in Q3 2012. However, if there is a negative surprise with a drop in GDP for another consecutive quarter, which will signal a recession, the CHF could come under pressure on expectations that the Swiss National Bank could implement additional measures to weaken its currency in an effort to spur economic growth.

8. USD- U.S. GDP- Gross Domestic Product, the main measure of economic activity and growth in the world’s largest economy, Thurs., Nov. 29, 8:30 am, ET.

Forecasts point to an upward revision of the Q3 GDP with the economy growing at a faster pace by 2.8% q/a compared with a preliminary estimate of 2.0% q/a. The USD could benefit from a stronger U.S. economic growth report which could raise the odds that the Fed may not need to expand the size of its open-ended QE operations.

9. USD- U.S. Pending Home Sales, a leading indicator of housing market activity measuring pending home sale contracts, Thurs., Nov. 29, 10:00 am, ET.

The last report in the two-week sequence of housing market data could end it on a weak note with the pending home sales index forecast to decline by 0.5% m/m in October compared with the 0.3% m/m increase in September.

10. JPY- Japan CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of Japan, Thurs., Nov. 29, 6:30 pm, ET.

Expected to remain in deflation territory, the Japanese national core inflation gauge is forecast to drop by -0.1% y/y in October, same as the -0.1% y/y reading in September. With the index still far from the 1% inflation target and with the economy slowing, the report could weigh on the JPY if the market continues to price expectations that the Bank of Japan might be forced into more aggressive quantitative easing at their next meeting on December 20.