Top 10 Forex Events Outlook: October 15-19, 2012

Following the Eurogroup, the IMF and the G7 meetings, in the week ahead traders will focus on the EU Summit as leaders from the euro-area convene to discuss measures to deal with the debt crisis and look for ways to create economic growth.

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. Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Mon., Oct. 15, 8:30 am, ET.

Consumer spending in the U.S. is forecast to increase for another month, but at a slower pace, by 0.6% m/m in September compared with 0.9% m/m in August.

2. GBP- U.K. CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of England, Tues., Oct. 16, 4:30 am, ET.

In line with the Bank of England’s forecast, inflationary pressures in the U.K. have been subsiding in recent months and this trend is expected to continue with the consumer price index pulling back to 2.3% y/y in September from 2.5% y/y in August. Lower inflation would not be an obstacle to additional easing by the Bank of England.

3. EUR- Eurozone ZEW Economic Sentiment Index, a leading indicator of economic conditions measuring the outlook of financial experts, Tues., Oct. 16, 5:00 am, ET.

The ZEW institute survey is expected to show some improvement in economic outlook with a reading of -16.0 in October compared with -18.2 in the previous month.

4. USD- U.S. CPI- Consumer Price Index, the main measure of inflation in the world’s largest economy, Tues., Oct. 16, 8:30 am, ET.

Inflationary pressures in the U.S. are expected to inch slightly higher with the core CPI (excluding food and energy costs) rising by 1.8 y/y in September from 1.7% y/y in August. However, the increase will not be sufficient enough to stop the Fed’s open-ended QE.

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., Oct. 17, 4:30 am, ET.

The Bank of England sat on the sidelines at their October meeting and the minutes would probably confirm that policy makers did not feel that a change in monetary policy was necessary. On the other hand, the report would also serve as a reminder that the Monetary Policy Committee is standing ready to expand the size of its Asset Purchases Program if economic conditions deteriorate. The GBP could see pressures mounting, especially if the minutes reveal willingness by the Bank of England to cut rates to supplement its quantitative easing efforts.

6. USD- U.S. Housing Starts, a leading indicator of housing market activity measuring construction of new residential properties, Wed., Oct. 17, 8:30 am, ET.

The first of the two housing market reports for the week is not expected to show anything spectacular. Housing starts are forecast to register a small increase to 770K in September from 750K in August.

7. CNY- China GDP- Gross Domestic Product, the main measure of economic activity and growth, Wed., Oct. 17, 10:00 pm, ET.

As signs of a global slowdown continue to be on display in all parts of the world, the Chinese GDP report would not be likely to instill much optimism. The world’s second-largest economy is forecast to grow at a slower pace by 7.4% q/a in the third quarter of 2012, compared with 7.6% q/a in Q2. With the economy of the biggest consumer of Australian raw material exports slowing, the AUD could feel the pressure on expectations of reduced demand from China.

8. EUR- EU Summit, Thurs. and Fri., Oct. 18 and 19, two-day event.

Given the outcome of summits past, although it has been branded as yet another EU Summit to “save the euro”, traders would be best served to approach this event with a healthy dose of skepticism. There is no doubt that the meeting of EU leaders will deliver big promises but if there will be any concrete solutions remains to be seen. The progress of the Troika negotiations in Greece, Spain and economic growth will be the main topics on the meeting’s agenda. However, with the Greek finance minister calling a deal with the Troika before the summit “unlikely”, with the Spanish government not in a hurry to request a bailout, and with growth in the euro-area nowhere to be seen, there might not be much that could be accomplished at this meeting. The EUR could come under pressure, especially if the EU Summit fails to convince investors that the debt crisis has been contained.

9. USD- U.S. Jobless Claims, an important gauge of labor market conditions measuring first-time claims for unemployment benefits, Thurs., Oct. 18, 8:30 am, ET.

Last week’s report delivered the largest drop since February 2008. Jobless claims declined by 30K to 339K, but are expected to see a bounce higher to 367K. Only a consistent trend of improvement in the U.S. labor market would be able to convince the Fed to halt its plans for unlimited quantitative easing.

10. 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, Fri., Oct. 19, 10:00 am, ET.

After the better than expected 7.8% monthly increase to 4.82 million in August, sales of previously-owned homes are forecast to pull back to 4.75 million in September.