Top 10 Forex Events: Week Of May 6

May 5, 2013 (Allthingsforex.com) – In the week ahead, traders will keep an eye on the monetary policy decisions of the Reserve Bank of Australia and the Bank of England, while a sequence of data from “down under”, the euro-zone, Japan, and Canada paints a picture of economic conditions in some of the world’s biggest industrialized nations.

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- Euro-zone Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Mon., May 6, 5:00 am, ET.

Consumer spending in the euro-area is forecast to register a bit smaller decline of 0.1% m/m in April compared with the 0.3% m/m drop in the previous month. However, this report may not be able to change expectations that, after cutting rates to a record low last week, the European Central Bank might need to resort to additional unconventional monetary policy easing measures. Considering the market’s reaction following the ECB announcement, more easing could prove supportive for the euro.

2. AUD- Reserve Bank of Australia Interest Rate Announcement, Tues., May 7, 12:30 am, ET.

The inconsistency of the Australian employment reports in recent months, the jump in the unemployment rate, and some signs of a slowdown in China, Australia’s largest trading partner, have increased the odds of a rate cut by the Reserve Bank of Australia. While a 0.25% rate cut at this meeting would not be a surprise, we might actually see such decision being delayed by RBA policy makers until additional data in upcoming months provides a clearer picture of the need for additional easing. The Australian dollar could regain strength if the Reserve Bank of Australia refrains from cutting rates.

3. EUR- Germany Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Wed., May 8, 6:00 am, ET.

Recent data has shown that the euro-zone’s largest economy is cooling off and this report could confirm these suspicions with industrial activity in Germany forecast to drop by 0.3% m/m in March after rising by 0.5% m/m in February.

4. NZD- New Zealand Employment and Unemployment Rate, the two main gauges of labor market conditions measuring job creation and unemployment, Wed., May 8, 6:45 pm, ET.

Employment in New Zealand was down by 1.0% q/q in the previous quarter but is expected to recover with a 1.1% q/q increase. The unemployment rate is forecast to decline to 6.8% from 6.9%. A strong employment report should reduce the odds of monetary policy easing by the Reserve Bank of New Zealand, giving the Kiwi dollar a boost.

5. AUD- Australia Employment and Unemployment Rate, the two main gauges of labor market conditions measuring job creation and unemployment, Wed., May 8, 9:30 pm, ET.

February’s blockbuster jobs report which showed a record job creation of 71,500 new jobs was followed by bigger than expected loss of 36,100 jobs in March. In April, the Australian economy is forecast to add up to 12,000 new jobs, while the unemployment rate stays at 5.6%. Another volatile employment report could raise the odds of a rate cut by the Reserve Bank of Australia and could weigh on the Australian dollar.

6. GBP- U.K. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Thurs., May 9, 4:30 am, ET.

The recent improvement in the Services and Manufacturing purchasing managers indexes has shown promising signs that the U.K. may be on a path to recovery. This report could do the same with industrial production forecast to increase for another month by 0.3% m/m in March after rising by 1.0% m/m in February. The GBP should be able to maintain its strength if the U.K. economic data continues to boost optimism and reduces the odds of additional easing by the Bank of England.

7. GBP- Bank of England Interest Rate Announcement, Thurs., May 9, 7:00 am, ET.

With the U.K. economy managing to avoid an unprecedented triple dip recession, there is no urgency for the Bank of England policy makers to do more QE. The Monetary Policy Committee will maintain the existing monetary policy and will keep the size of the Asset Purchase Program unchanged at their May meeting and probably in the next few months until the new Governor Carney takes his seat in July. The pound could continue to attract bids as an alternative to currencies of central banks that are committed to aggressive monetary policy easing.

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

In the aftermath of last week’s four-year low reading of 324K, the U.S. jobless claims are forecast to stay within range, rising slightly to 333K. The unexpected jump to 385K a few weeks ago can now be dismissed as a one-off event and, with the non-farm payrolls beating the forecasts, the USD could continue to benefit from the improvement in U.S. labor market conditions.

9. JPY- Japan Current Account, an important gauge of economic activity measuring foreign trade, Thurs., May 9, 7:50 pm, ET.

The current account deficit in Japan was on the rise in the final quarter of last year, but the significant decline of the yen, which has been helping exporters, could finally begin to produce the desired results. The economy is forecast to register a surplus of 480 billion yen in March after a flat reading in the previous month. This could become one of the reports that confirm that the Bank of Japan may be on the right track with their open-ended QE program. On the other hand, a return to current account surplus could strengthen the yen on expectations that the Japanese government and the Bank of Japan might not need to become even more aggressive with their measures to weaken the currency and to stimulate the economy.

10. CAD- Canada Employment and Unemployment Rate, the two main gauges of labor market conditions measuring job creation and unemployment, Fri., May 10, 8:30 am, ET.

After unexpectedly losing 54.5K jobs in March, the Canadian economy is expected to add up to 14K jobs in April. The unemployment rate is forecast to remain unchanged at 7.2%. The inability to offset the previous month’s job losses could signal that the economy may be losing momentum and could weigh on the Canadian dollar.