Top 10 Forex Events Outlook: July 23-27, 2012

In the week leading to the FOMC meeting on July 31-August 1, traders will focus on the main gauge of economic activity and growth in the world’s largest economy while the markets remain on the side of caution as the EU debt crisis escalates.

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- Eurozone Manufacturing and Services PMI- Purchasing Managers Indexes, two leading indicators of economic conditions measuring activity in the manufacturing and services sectors, Tuesday, July 24, 4:00 am, ET.

Despite of the anticipated improvement, both indexes are forecast to stay below 50, in contraction territory for another month, with a manufacturing index reading of 45.3 from 45.1 and a services index reading of 47.3 from 47.1.

2. JPY- Japan Trade Balance of the difference between imports and exports, Tuesday, July 24, 7:50 pm, ET.

The trend of rising trade deficit in Japan could continue, although by a smaller 0.39 trillion in June, compared with 0.66 trillion yen in May. Risk aversion is once again pushing the yen higher and it would not be surprising to see an increase in verbal intervention attempts by Japanese officials who grow more concerned about the persistent yen strength.

3. AUD- Australia CPI- Consumer Price Index, the main measure of inflation preferred by the Reserve Bank of Australia, Tuesday, July 24, 9:30 pm, ET.

Inflationary pressures in Australia are forecast to increase by 0.6% q/q in Q2 2012 after rising by 0.1% q/q in the first quarter of the year. Higher inflation would reduce the odds of more rate cuts by the Reserve Bank of Australia and could give the Aussie dollar a boost.

4. EUR- Germany IFO Business Climate Index, a leading indicator of economic conditions measuring the outlook of businesses, Wednesday, July 25, 4:00 am, ET.

In line with the slowdown in the euro-area, the German business climate and expectations index is forecast to head lower with a reading of 104.8 in July compared with 105.3 in June.

5. GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Wednesday, July 25, 4:30 am, ET.

The preliminary estimate of the U.K. GDP is forecast to show the economy continuing its first double dip recession in thirty years with another contraction by 0.2% q/q in the second quarter of 2012, following the 0.3% q/q contractions in Q2 2012 and Q4 2011. The report would serve as a reminder of the U.K. economic weakness and could weigh on the GBP on expectations that the Bank of England might have no other choice but to expand its Asset Purchase Program and possibly even to consider an additional rate cut.

6. USD- U.S. New Home Sales, an important gauge of housing market conditions measuring sales of new homes, Wednesday, July 25, 10:00 am, ET.

Following the disappointing drop in existing home sales, new home sales in the U.S. are forecast to register a slight increase to 373K in June from 369K in May.

7. NZD- Reserve Bank of New Zealand Interest Rate Announcement, Wednesday, July 25, 5:00 pm, ET.

The Reserve Bank of New Zealand is not expected to make any changes to its benchmark interest rate and will be likely to keep it at the current 2.50%. However, with most of the major central banks in an easing mode to stimulate global economic growth, the Reserve Bank of New Zealand could open the door to a future rate cut if conditions deteriorate.

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

After rising a bit for a few months, the nationwide Core CPI (excluding food and energy costs) dipped below 0% with a reading of -0.1% in May last month but is forecast to flatten with a reading of 0.0% y/y in June. Deflation could rear its ugly head once again and could prompt the Japanese central bank into additional easing if the index drops below zero and into deflation territory.

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

Even the most optimistic forecasts point to slower economic growth in the second quarter of 2011 for the world’s largest economy. The preliminary estimates for the U.S. GDP range from 1.4% q/a to 1.8% q/a, which would be less than 1.9% q/a in Q1 and much lower than the 3.0% q/a growth in Q4 2011. A disappointing GDP report three days ahead of the Fed’s meeting could see the pressure mounting on the U.S. dollar on signs of U.S. economic slowdown and rising QE3 odds.

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, Friday, July 27, 9:55 am, ET.

The report will wrap up what looks like yet another week of unimpressive U.S. economic data that could add more reasons for the market to expect additional easing by the Fed as early as their next meeting on July 31-August 1. The outlook of U.S. consumers in July is expected to stay at a six-month low with an index reading of 72.0 compared with 73.2 in the previous month.

Editor's Note: For a more comprehensive look at scheduled market-moving events this coming week see Investing.com' weekly Economic Calendar.