Fewer Economic Indicators To Judge The Upcoming Week

A better-than-expected US third-quarter GDP figure and strong October US non-farm payrolls reinforced the possibility of the Fed tapering sooner rather than later, driving the US Dollar higher to register a second straight week of strong gains against other major currencies. Also, a surprise interest rate cut by ECB and a downgrade to France’s sovereign credit rating by S&P, indirectly supported the overall strength for the US Dollar strength.

There is a very little in terms of key US economic data coming out this week from the US, with only US trade balance data, market will be focusing on inflation and employment data from the UK and quarterly GDP figures from Euro-zone and Japan.

Here is a brief outlook on the important market-moving events in the week ahead.

US Trade Balance – This week’s key US economic data features September Trade Balance data, scheduled for release on Thursday. The US August trade deficit was little changed at $38.8 billion, after it had widened to $39.1 billion in July following a $34.2 billion deficit recorded in the month of June. For the month of September, trade deficit is expected to remain stable at $38.7 billion. A lower trade deficit number, accompanying the recent relatively healthy economic data, could result the US Dollar strengthening further.

Key economic releases featuring the upcoming UK economic calendar features inflation data and labor market report for the month of October.

UK Inflation Data – UK inflation, measured by Consumer Price Index (CPI) a key economic indicator, has held above the BoE’s target of 2% through 2013. For the month of October CPI, scheduled for release on Tuesday, is forecast to drop and come-in at 2.5%. Also, watch out for the BoE’s inflation report that reveals central bank’s inflation projection and economic growth over the next 2 years, scheduled for release on Wednesday.

UK Labor Market Reports – The BoE has already said that it is unlikely to raise interest rate before the unemployment rate falls below 7% threshold and hence labor market reports (claimant count change and unemployment rate), scheduled for release on Wednesday, will be keenly watched by market participants. Consensus estimates UK unemployment rate to remain elevated at 7.7%, where as the number of people claiming unemployment benefits is expected to drop further by 30,200, following a 41,700 decline in the previous month.

Euro-zone GDP Data – On Thursday, third-quarter GDP prints from Euro-zone’s three largest economies, Germany, France and Italy along with the composite Euro-zone GDP figure are scheduled for release. After contracting for four consecutive quarters, Euro-zone composite GDP in the second quarter of 2013 registered a growth of 0.3%. During the third-quarter of 2013 the flash version of the 17-nation composite GDP is expected to show a growth of 0.2%. Meanwhile, Euro-zone’s two largest economies, Germany and France are expected to have expanded by 0.3% and 0.1% respectively in Q3 2013. Whereas Italy, region’s third largest economy, is still not seen to have officially exited recession and is expected to continue contracting for ninth consecutive quarter by 0.2% in the third quarter of 2013. A weaker GDP reading would lead to continued selling pressure for the Euro.

Japanese GDP Data – The upcoming week’s Japanese economic calendar features the release of preliminary GDP data, scheduled on Thursday. In the second quarter of 2012, Japanese economy registered a growth of 0.9%, meeting economists estimates. This time around, markets expectations are looking for a weaker reading of 0.4% growth in the third-quarter.

• In the past two weeks, the US Dollar Index (I.USDX) had reversed sharply, erasing all of its losses since mid-September when the Fed surprised markets by not tapering the pace of its $85 billion-a-month massive stimulus program.
• Last week’s economic reports from the US turned out to be a pleasant surprise for the market, renewing speculations over timing of the Fed slowing the pace of its bond-buying program. Additional signs of strong US economic recovery would support Fed scaling back its monetary measures sooner rather than later, paving a way for a broad US Dollar rally in the medium to longer-term.

Original Article: Admiral Markets and hyper link Admiral Markets with http://www.admiralmarkets.com/