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US retail sales, Japan’s rate decision, US and UK’s employment data are the highlight this week. Here’s an outlook for the major market-moving events.

The Euro-zone is heading for a rate hike in July according to Jean-Cluade Trichet’s phrasing at the press conference last week after using the code words “strong vigilance” hinting this event. The Euro is decreased against the USD following the Greek burden on leading European countries and indications of a slowdown from Germany and France.  Will this slowdown deepen? Let’s Start:

  1. Japan Rate Decision: Tuesday. In its last meeting the BOJ board members decided to maintain interest rate at 0.1% as the economy attempts to recover from the effects of the earthquake.  However the bank members issued a recovery forecast for the 2nd half of 2011. No change in rates is expected.
  2. US Retail Sales: Tuesday, 13:30.  A negligible rise in Retail sales followed by a drop in consumer confidence demonstrates the peril in rising gasoline prices. Retail sales gained 0.5% after 0.9% increase in March and Core Retail sales increased by 0.6% after 1.2% gain in March. Core sales are expected to gain 0.3% while Retail sales is predicted to decline by 0.3%.
  3. UK Inflation data: Tuesday, 9:30. Inflation increased more than expected in April reaching 4.5% from 4.0% in the previous month. BoE Governor Mervyn King stated there could be major risks in trying to quickly restrain inflation back to target but is aware of the danger of not raising rates with upward price in a slowly recovering economy. The same inflation rate of 4.5% is predicted.
  4. US PPI: Tuesday, 13:30. Producer price index rose by 0.8% in April after increasing 0.7% in the previous month above 0.6% forecasted while   Core PPI increased by 0.3% also above 0.2% expected. Higher  gasoline  prices  also contributed to the increase. A small increase of 0.1% is expected now.
  5. UK employment data: Wednesday, 9:30. The number of Britain filing unemployment claims increased unexpectedly in April by 12,000 following 6,400 in the previous month. The number contrasts with the ILO unemployment   data while the private sector adds jobs the public sector cuts positions.
  6. US Inflation data: Wednesday, 13:30. Oil and food prices were to blame for the inflation rate increase in April of 0.4% and Core inflation rate of 0.2% raising concern among Americans who try to keep pace with the rising prices while keeping their wages unchanged. CPI and Core CPI are expected to rise by 0.2%.
  7. US TIC Long-Term Purchases: Wednesday, 14:00. U.S. Treasury International Capital purchases dropped unexpectedly to USD 24.0 billion in March revised from USD 26.9 billion.  Economists expected TIC to increase to USD 57.7 billion. An increase to 45.3 billion is forecasted.
  8. US Building Permits: Thursday, 13:30. New building permits for future home construction dropped in April to 551,000 from 574,000 in March. Analysts expected the number to remain the same but forecast a weakening in the building market in the next 6 months. Another drop to 550,000 is forecasted.
  9. US Unemployment Claims: Thursday, 13:30. The number of Americans filing first time claims for unemployment benefits increased by 1,000 to 427,000 the unexpected rise was in contrasted forecasts of dropping to 415,000 from a previous reading of 422,000. This is the ninth consecutive week that claims reach above 400,000 indicating a slowdown in the US market recovery. A drop to 421,000 is predicted.
  10. US Philly Fed Manufacturing Index; Thursday, 15:00. The Philadelphia Federal Reserve Bank index plunged to 3.9 from 18.5 in April the lowest level since October 2010. Analysts had predicted a reading of 20. Nevertheless economists believe it is not as bad as it looks and see improvement in case employment picks up. An increase to 7.3 is forecasted now.
  11. US Prelim UoM Consumer Sentiment: Friday, 14:55. Consumer confidence  increased more than expected in May reaching 72.4 following improvements in the job market following 69.8 in April. Consumer spending is forecasted to continue growing but Consumer Sentiment may be restrained by the sharp increase in oil prices. Another rise to 74.7 is expected.

That’s it for the major events this week. Stay tuned for coverage on specific currencies.

*All times are GMT.

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