Top 10 Forex Events Outlook: November 12-16, 2012

With another Eurogroup meeting to ponder the next tranche of aid for Greece as the country runs out of cash and a GDP report that could confirm the market’s expectations of a double dip recession in the euro-area, the week ahead could prove pivotal for the future direction of the euro.

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. JPY- Japan GDP- Gross Domestic Product, the main measure of economic activity and growth, Sun., Nov. 11, 6:50 pm, ET.

The world’s third-largest economy is forecast to contract by 0.7% q/q in the third quarter of 2012 compared with the 0.2% q/q expansion in Q2. As the threat of recession once again looms over Japan, the yen could begin another leg lower on expectations that the Bank of Japan will be forced to announce more easing on November 19 and will continue to look for additional measures to weaken its currency and to stimulate the economy.

2. EUR- Eurogroup Meeting, Mon., Nov. 12, all day event.

Finance ministers from the euro-area are scheduled to review the report from the “Troika” of inspectors and to make a decision on whether Greece should receive its next installment of bailout funding. However, the meeting could raise uncertainty levels and could spook investor sentiment as several major newswires reported last week that the 31.5 billion euro financial aid payment to Greece could be delayed. With Greece estimated to run out of cash by Friday, November 16, the euro could see selling pressures intensifying if further delay is the end result of the Eurogroup meeting.

3. GBP- U.K. CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of England, Tues., Nov. 13, 4:30 am, ET.

Inflationary pressures in the U.K. could see a slight increase with the consumer price index inching higher to 2.3% y/y in October from 2.2% y/y in September. The GBP could benefit from the report as the Bank of England would be less likely to expand the size of its Asset Purchase Program if rising inflation becomes a trend.

4. EUR- Germany ZEW Economic Sentiment Index, a leading indicator of economic conditions measuring the outlook of financial experts, Tues., Nov. 13, 5:00 am, ET.

Although not likely to instill much optimism, the ZEW institute survey is forecast to show somewhat brighter economic outlook with a reading of -10.0 in November compared with -11.5 in the previous month.

5. GBP- U.K. Jobless Claims and Unemployment Rate, the main gauges of labor market conditions measuring claims for unemployment benefits and rate of unemployment, Wed., Nov. 14, 4:30 am, ET.

The trend of improvement in the U.K. labor market is expected to continue with another 5,100 jobless claims decline in October following the 4,000 drop in September, while the unemployment rate remains at 7.9%. An upbeat jobs report could give the GBP a boost on hopes that the U.K. economy continues to recover from the recession.

6. GBP- Bank of England Inflation Report, the central bank’s official analysis and outlook on inflation and the economy, Wed., Nov. 14, 5:30 am, ET.

After the Bank of England decided last week to refrain from doing more quantitative easing, it will be important to find out the projections on future inflation and economic conditions in order to gauge the bank’s next move on monetary policy. Low inflation expectations and a more optimistic economic outlook for 2013 should be supportive for the GBP.

7. USD- U.S. Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Wed., Nov. 14, 8:30 am, ET.

Consumer spending in the U.S. is forecast to increase for another month, but at a significantly slower pace, by 0.2% m/m in October compared with 1.1% m/m in September.

8. USD- U.S. FOMC Meeting Minutes, a comprehensive report of the Fed’s latest meeting offering outlook on the economy and monetary policy, Wed., Nov. 14, 2:00 pm, ET.

The minutes from the Federal Open Markets Committee meeting in October will reassure the markets of the central bank’s commitment to stay the course despite of the firmer economy. The report could weigh on the USD as the minutes offer a reminder that the Fed’s open-ended quantitative easing is here to stay.

9. EUR- Eurozone GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., Nov. 15, 5:00 am, ET.

Many forecasters anticipate that a double dip recession in the eurozone will be confirmed officially with a GDP estimate which is expected to show a second consecutive quarter of contraction in Q3 by 0.2% q/q, after the economy shrank by 0.2% q/q in the second quarter of 2012. The report would be likely to raise the odds of more easing by the European Central Bank, including a potential rate cut in upcoming months, and should keep the euro under pressure.

10. USD- U.S. Jobless Claims, an important gauge of labor market conditions measuring first-time claims for unemployment benefits, and CPI-Consumer Price Index, the main measure of inflation, Thurs., Nov. 15, 8:30 am, ET.

Applications for jobless benefits are forecast to bounce higher to 362K, following last week’s better than expected drop by 8,000 to 355K, while the inflation gauge rises slightly by 2.1 y/y in October from 2.0% y/y in September.