Top 10 Forex Events Outlook: November 19-23, 2012

Although shortened by the Thanksgiving holiday in the U.S., the week ahead will be no less intriguing as euro-area finance ministers reconvene for another Eurogroup meeting to make a decision on the next installment of financial aid for Greece and heads of state get together to discuss a trillion-euro budget at the EU Summit.

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

1. 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, Mon., Nov. 19, 10:00 am, ET.

The first report in the weekly sequence of housing market data is not expected to deliver anything spectacular. Sales of existing homes in the U.S. are forecast to register a small increase to 4.76 million in October, compared with 4.75 million in September.

2. JPY- Bank of Japan Interest Rate Announcement, Mon., Nov. 19, around 11:00 am, ET.

In the midst of an economy on the brink of another recession and political uncertainty with an unpopular government and a parliament that has been dissolved, the Bank of Japan once again finds itself with the difficult task to do more easing in an effort to weaken its currency and to jump start activity in the world’s third largest economy.

A “shock and awe” announcement of another 15 to 20 trillion yen of QE should give further impetus to the recent decline of the yen. However, the Japanese currency could strengthen if its central bank decides to opt for a small QE expansion or if it simply sits on the sidelines in November.

3. EUR- Eurogroup Meeting, Tues., Nov. 20, all day event.

Last week, 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 20 meeting. Citing 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.

4. USD- U.S. Housing Starts, a leading indicator of housing market activity measuring construction of new residential properties, Tues., Nov. 20, 8:30 am, ET.

Unimpressive existing home sales could be followed by even more unimpressive housing starts report as builders break ground on 850K units in October from 870K in September.

5. GBP- Bank of England Meeting Minutes, a detailed report of the bank’s latest meeting containing an outlook on economic policy and economic conditions, Wed., Nov. 21, 4:30 am, ET.

Despite of the fact that the Bank of England did not expand the size of its Asset Purchase Program, a dovish quarterly inflation and economic outlook report disproved expectations that the bank has reached the end of its quantitative easing road. The minutes would probably confirm that policy makers did not think that a change in monetary policy in November was necessary.

However, this doesn’t mean that the Monetary Policy Committee is not standing ready to expand the size of its QE operations if economic conditions deteriorate. The GBP could see pressures mounting, especially if the minutes remind the markets that the Bank of England’s QE door is wide open.

6. USD- U.S. Jobless Claims, an important gauge of labor market conditions measuring first-time claims for unemployment benefits, Wed., Nov. 21, 8:30 am, ET.

Feeling the effects of the “super storm” Sandy, jobless claims jumped by 78K to 439K, but are forecast to pull back to 397K. Experts agree that other economic indicators will also reflect the impact of the storm and it will take a few months before they return to normal levels.

7. USD- U.S. Consumer Sentiment, the University of Michigan's monthly survey of 500 households on their financial conditions and outlook of the economy, Wed., Nov. 21, 9:55 am, ET.

The final estimate for November is forecast to keep the consumer sentiment index at its highest level in five years with a reading of 84.9.

8. EUR- EU Summit, Thurs., Nov. 22 and Fri., Nov. 23, two-day event.

Skepticism is the predominant mood in the days leading to this special summit to discuss a trillion-euro EU budget as reports of division between members of the 27-nation union continue to hit the newswires. It doesn’t seem like anybody is expecting a clear agreement to be reached during the two days of the summit and some experts are even warning that the event could be a failure. With one diplomat calling it a “lose-lose summit,” the EUR could come under pressure as a result of yet another disappointing gathering of EU heads of state.

9. EUR- Euro-zone Composite PMI- Purchasing Managers Index, a leading indicator of economic conditions measuring activity in the manufacturing and services sectors, Thurs., Nov. 22, 4:00 am, ET.

Both, the eurozone manufacturing and services indexes are forecast to stay in contraction territory below the 50 boom/bust line for another month with manufacturing activity at 45.5 in November from 45.4 in October and services at 46.1 in November compared with 46.0 in the month before. The report could weigh on the EUR by raising the odds of more easing by the European Central Bank as early as its next meeting on December 6.

10. EUR- Germany IFO Business Climate Index, a leading indicator of economic conditions measuring the outlook of businesses, Fri., Nov. 23, 4:00 am, ET.

Serving as another potential sign of weakness, the business outlook in the eurozone’s largest economy is forecast to deteriorate with a decline in the Ifo index to 99.5 in November compared with a reading of 100.0 in the previous month.