Sep. 3, 2011 (Allthingsforex.com) ? While the market keeps mulling over the dismal U.S. employment report after the long weekend, the Labor Day holiday-shortened week ahead will spice things up in the currency world with five interest rate announcements from major central banks as traders turn their attention to the euro and gauge the odds for the European Central Bank to abandon its hawkish stance and to discontinue its campaign of rate hikes.
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. AUD- Reserve Bank of Australia Interest Rate Announcement, Tues., Sep. 6, 12:30 am, ET.
Just until a few weeks ago, the market was pricing a Reserve Bank of Australia rate cut, but following the RBA Governor?s recent statement that ?inflation bears careful watching? and that the global economic situation ?is not that bad? these expectations have changed. While the Reserve Bank of Australia would not be likely to make any changes to its current monetary policy and is forecast to keep the benchmark rate at 4.75%, if the statement following the monetary policy meeting echoes the RBA Governor?s optimistic outlook, the Aussie dollar could see an opportunity to resume its upward trend against the greenback.
2. CHF- Swiss CPI- Consumer Price Index, the main measure of inflation preferred by the Swiss National Bank, Tues., Sep. 6, 3:15 am, ET.
The record high Swiss franc is not only bad for the economy but it is also deflationary. Should the inflation gauge head lower again, this could give the Swiss National Bank another reason to step up efforts to curb the strength of its currency. The Swiss CPI declined 0.8% m/m in July bringing the annual rate to 0.5% y/y from 0.6% y/y in June and it is forecast to see another 0.1% m/m drop in August.
3. EUR- Euro-zone GDP- Gross Domestic Product, the main measure of economic activity and growth, Tues., Sep. 6, 5:00 am, ET.
The revised reading of the Euro-zone GDP is expected to confirm the preliminary estimate that economic growth was four times slower at 0.2 % q/q in the second quarter of 2011, compared with 0.8% q/q in Q1 2011.
4. USD- U.S. ISM Non-Manufacturing Index, a leading indicator of economic conditions in the services industries: agriculture, mining, construction, transportation, communications, wholesale trade and retail trade, Tues., Sep. 6, 10:00 am, ET.
As the ISM Manufacturing PMI surprisingly held above 50 in August, activity in the U.S. services industries is forecast to follow suit and expand for another month with an ISM index reading of 51.5 in August, down from 52.7 in July.
5. AUD- Australia GDP- Gross Domestic Product, the main measure of economic activity and growth, Tues., Sep. 6, 9:30 pm, ET.
Hit by massive floods, the Australian economy unexpectedly shrunk by 1.2% q/q in the first quarter of 2011 from 0.8% q/q in Q4 2010, but is expected to recover and grow by 1.0% q/q in the second quarter of 2011. A return to growth could keep the higher-yielding Australian dollar well bid, especially if risk appetite makes a comeback.
6. JPY- Bank of Japan Interest Rate Announcement, Wed., Sep. 7, around 12:00 am, ET.
The Bank of Japan is not expected to make any drastic changes to its monetary policy, keeping the benchmark rate at its record low level of 0.10%. However, with the dollar lingering near post WWII lows against the yen, it would not be surprising to see the Bank of Japan reassuring the markets of its commitment to do whatever is necessary in order to prevent any rapid yen appreciation.
7. CAD- Bank of Canada Interest Rate Announcement, Wed., Sep. 7, 9:00 am, ET.
Perhaps the least interesting of the five central bank announcements next week, the Bank of Canada?s meting could end up being a formality with consensus forecasts anticipating policy makers to maintain the status quo, while expressing concerns about the negative impact of the deteriorating economic conditions in the U.S. which is Canada?s largest trading partner. It would be a shocker (and a Canadian dollar negative), but there might be some chance that the Bank of Canada warns that further U.S., Canadian and global economic slowdown could warrant a rate cut in the near future.
8. AUD- Australia Employment Situation and Unemployment Rate, the main gauge of employment trends and labor market conditions, Wed., Sep. 7, 9:30 pm, ET.
The third major spotlight event from ?down under? next week could give the Aussie dollar an additional boost with the Australian economy forecast to recover from the 100 jobs lost in July by adding up to 10,400 new jobs in August, while the unemployment rate remains unchanged at 5.1%.
9. GBP- Bank of England Interest Rate Announcement, Thurs., Sep. 8, 7:00 am, ET.
The latest unanimous vote by the Monetary Policy Committee to keep the benchmark rate at the low 0.50% level has made it clear that the Bank of England does not see any urgency to raise interest rates and the September meeting is likely to bring more of the same. A passive Bank of England expected to sit on the sidelines for another month could contribute to the case for GBP weakness ahead of the BOE meeting and possibly even after that if the bank announces or opens the door to an expansion of its Asset Purchases Program. On the other hand, if the bank of England refrains from additional quantitative easing, when the market rout and the risk aversion dust settles, the GBP could begin to be viewed as a less ugly alternative to the USD and the EUR.
10. EUR- European Central Bank Interest Rate Announcement, Thurs., Sep. 8, 7:45 am, ET.
With the Euro-zone economy slowing and inflationary pressures subsiding, the EUR could see selling pressures mounting ahead of the European Central Bank's meeting as the market shifts its expectations for another rate hike by the end of the year and begins to more aggressively price a potential rate cut in the near future. A dovish ECB statement, coupled with fears that Greece would miss its budget deficit targets for the year which might move the country one step closer to exiting the monetary union, could continue to weigh on the single currency next week.
