Top 10 Forex Events

From the U.S. Q4 2012 GDP estimate, to the Fed’s monetary policy decision and the U.S. Nonfarm Payrolls, the week ahead will be all about gauging the condition of the world’s largest economy, the next move by the U.S. central bank and the future direction of 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. USD: U.S. Pending Home Sales, a leading indicator of housing market activity measuring pending home sale contracts, Mon., Jan. 28, 10:00 am, ET.

Shrinking inventories could lead to a smaller increase in the pending home sales index by 0.5% m/m in December, following 1.6% m/m in November and a record 5.2% m/m jump in October.

2. USD: U.S. Consumer Confidence, a measure of consumers’ outlook on the economy, Tues., Jan. 29, 10:00 am, ET.

The outlook of U.S. consumers is forecast to turn less optimistic, pushing the consumer confidence index lower to a reading of 64.8 in December from 65.1 in the previous month.

3. USD: U.S. ADP Employment Report, a measure of job creation in the private sector of the U.S. economy, Wed., Jan. 30, 8:15 am, ET.

Job creation in the U.S. private sector is forecast to cool off with up to 165K jobs added in January, compared with 215K jobs in December.

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

The preliminary estimate of the Q4 2012 GDP is forecast to show the U.S. economy growing at a much slower pace by 1.2% q/a in the final quarter of last year, compared with 3.1% q/a in the third quarter. Weakening U.S. economic growth could raise a red flag, souring investors’ mood and reducing risk appetite.

5. USD: U.S. FOMC- Federal Open Markets Committee Interest Rate Announcement, Wed., Jan. 30, 2:15 pm, ET.

The Fed has made it very clear that policy makers are committed to an open-ended QE until the unemployment rate falls below 6.5% or inflation exceeds 2.5%, so we know that QE is here to stay and that current conditions still "warrant exceptionally low levels for the federal funds rate at least through late 2014." In other words, the Fed will stay the course at its January meeting and quite possibly for the rest of the year. The greenback could come under pressure if the FOMC statement assures the markets that the Fed's aggressive QE and record low rates are not going away anytime soon.

6. NZD: Reserve Bank of New Zealand Interest Rate Announcement, Wed., Jan. 30, 3:00 pm, ET.

Although not expected to tighten monetary policy at this meeting, the Reserve Bank of New Zealand remains as one of the most likely candidates to hike rates. However, should the central bank sound rather dovish and push further the timeframe of such move, the NZD could suffer the consequences just as the CAD did in the aftermath of the Bank of Canada’s announcement last week.

7. USD: U.S. Personal Income and Outlays, a measure of consumer income and spending, released along with the PCE Price Index- the Fed’s preferred gauge of inflation, Thurs., Jan. 31, 8:30 am, ET.

Consumer spending in the U.S. is forecast to increase by 0.4% m/m in December, same as the 0.4% m/m reading in November. The Fed’s preferred core PCE Index could inch slightly higher by 0.1% m/m after staying flat in the previous month.

8. USD: U.S. Nonfarm Payrolls and Employment Situation, the main indicator of U.S. economic health measuring job creation and unemployment, Fri., Feb. 1, 8:30 am, ET.

Consensus forecasts point to another month of decent job creation in line with the recent trend of improvement in the U.S. labor market. The U.S. economy is expected to add up to 168K jobs in January compared with 155K in December, while the unemployment rate remains unchanged at 7.8%. An upbeat NFP report could boost investor sentiment and risk appetite, and could weigh on the U.S. dollar.

9. 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., Feb. 1, 9:55 am, ET.

The revised reading of the U.S. consumer sentiment index is forecast to confirm the drop to 71.4 in January, compared with 74.9 in the previous month.

10. USD: U.S. ISM Manufacturing Index, a leading indicator of economic conditions measuring activity in the manufacturing sector, Fri., Feb. 1, 10:00 am, ET.

Activity in the U.S. manufacturing sector is forecast to expand for another month with an index reading of 51.0 in January from 50.7 in December.