U.S. Advance GDP, US Employment Cost and Canada’s GDP are the major event at the end of another trading week. Here is an outlook on today’s events.

In the US, Advance Gross Domestic Product, the main measure of economic activity and growth in the world’s largest economy will bring the preliminary estimate of the U.S. GDP, which is forecasted to be in line with the market’s expectations of slower 2.5% economic growth in Q2 2010, compared with 2.7% in the first quarter while Advance GDP Price Index is expected the same growth rate of 1.1% as in the previous quarter.

More in the US, Employment Cost Index measuring the change in the price businesses and the government pay for civilian labor is forecasted 0.5% rise following 0.6% rise in the previous month.

Finally in the US, Chicago PMI predicted to drop 3 points from June to 56.1 points while Revised UoM Consumer Sentiment based on a survey of about 500 consumers which asks respondents to rate the relative level of current and future economic conditions is foreseen a 1 point rise from 66.5 points and Revised UoM Inflation Expectations expected to remain around 2.9% as in the previous month.

In Canada, Gross Domestic Product, the main measure of economic activity and growth expected to pick up slightly by 0.1% in June from the flat reading of 0% in May.
For more on USD/CAD, read the Canadian dollar forecast.

In Europe, Consumer Prices, the main measure of inflation in the Euro-zone and the European Union’s equivalent expecting inflationary pressures following a brief pullback, estimated to rise by 1.8% y/y in July from 1.4% y/y in the previous month.
More in Europe, German Retail Sales expected to remain flat this month following 0.4% rise in June. Italian Prelim CPI is foreseen a 0.2% rise after no rise in June and Italian Monthly Unemployment Rate predicted 8.8% rise 0.1% more than in June.

Finally in Europe, Unemployment Rate in the Euro-Zone is expected to remain 10%.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs’ latest analysis.

In Switzerland, KOF Economic Barometer index based on 12 economic indicators expected to rise by additional 0.07 points to 2.32 points may have significant impact on the market.

In Australia, Private Sector Credit forecasted a 0.4% rise following 0.5% rise in the previous month indicating consumer’s continue borrowing and spending.

For more on the Aussie, read the AUD/USD forecast.

In Japan, Housing Starts predicted a positive 1.7% increase following 4.6% dip in the previous month.

That’s it for today. Happy forex trading!

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

Moderate changes in the major indexes are foreseen in the U.S. and European markets. The GDP and Employment Cost Index in the U.S. open today’s report. Let’s see what awaits us today.

In the US, Advance Gross Domestic Product (GDP), is the earliest GDP release, measuring the annualized change in the inflation-adjusted value of all goods and services produced by the economy, giving us a glimpse into the state of the U.S. economy, is expected to drop from 5.6% to 3.4% while the Advance GDP Price Index, measuring annualized change in the price of all goods and services included in GDP is expected to rise from 0.5% to 0.9% and might increase interest rates.

Later in the US, Employment Cost Index released quarterly, show a small expected increase form 0.5% to 0.6% in labor costs indicating consumer inflation.

More from the US, Chicago Purchasing Managers’ Index, measuring the level of a diffusion index based on surveyed purchasing managers in the Chicago area, is expected a welcome rise of 1.2 points from 58.8 to 60 points indicating a healthy expansion in the market and Federal Reserve Governor Elizabeth Duke delivers a speech titled “Woman and Money: Challenging the Myths” at the Consumer Credit Counseling Services of, in Philadelphia This could affect key interest rates.

Finally in the US, Revised University of Michigan Consumer Sentiment is expected to go up from 69.5 points to 71.2 points and their Inflation Expectations would probably remain around 2.9%.

In Canada, Gross Domestic Product, released monthly, measuring the change in the inflation-adjusted value of all goods and services is expected to drop from 0.6% to 0.5%.

Although Raw Materials Price Index is expected to edge up from 0.4% to 0.9% an indicator of consumer inflation.

More in Canada, Industrial Product Price Index for domestic products, is anticipated a hopeful rise 0.2%, from 0.0% to 0.2%.

For more on USD/CAD, read the Canadian dollar forecast.

In Europe, Consumer Price Index Flash Estimate based on, Eurostat energy prices and EU member states is expected to remain 1.4%. And Unemployment rate is also stable and expected stay 10%.

Also in Europe, Italian Preliminary Consumer Price Index released monthly is expecting a drop from 0.3% to 0.2% a negligible impact on the Euro.

More from Italy, Italian Monthly Unemployment Rate is expected to rise from 8.5% to 8.6%.

In Switzerland, KOF Economic Barometer measuring the level of a composite index based on 12 economic indicators is foreseen a rise from 1.93 points to 2 points. Due to its predictive nature it can make a favorable impact on the Swiss market.

More from Switzerland, Philipp Hildebrand Governing Board Chairman of the Swiss National Bank speaks at he General Meeting of Shareholders, in Bern could affect the local currency and short term interest rates.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs’ latest analysis.

In Australia, Private Sector Credit measuring the change in the total value of new credit issued to consumers and businesses is expected to remain 0.4 %.

For more on the Aussie, read the AUD/USD forecast.

In Japan, Average Cash Earnings, released monthly measuring the total value of employment income is expected to rise from -0.6% to -0.2% which is encouraging news for the market activity.

More from Japan, Monetary Policy Statement, from the Bank Of Japan (BOJ) and a press conference planned to occur, are likely to reveal its monetary policy and impact the currency. The Overnight Call Rate from BOJ concerning interest rate for financial institutions is foreseen to remain 0.10% and the Outlook Report fro the BOJ will provide insight on the bank’s view of economic conditions and inflation which will impact the Japanese market.

Finally in Japan, Housing Starts concerning new residential buildings that began construction is expected a rise from -9.3% to -5.6%.

That’s it for today. Happy forex trading!

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

Advance GDP for the fourth quarter showed a super-strong growth of 5.7%, much better than expected. The market’s reaction wasn’t strong at first. There are two reasons for this slow initial response.

The highest growth rate in 6 years doesn’t impress the markets at first. EUR/USD (in a lower range) traded at 1.3940, only 30 pips below the price before the release. GBP/USD and other pairs follow the same trend. The dollar is making gains, but not leaping. There was eventually great greenback strength, but it took a lot of time.

This figure was much higher than the 4.6% growth rate that was predicted. So why isn’t there a jump?

Update 15:00 GMT: EUR/USD drops to 1.3900. Other currencies lose ground as well. This happens as two more American figures are better than expected: Chicago PMI jumped to 61.7 points instead of dropping. The revised Consumer Sentiment from the University of Michigan was revised to 74.4 points, more than expected.

Update 23:00 GMT: EUR/USD totally collapsed. Most currencies followed with huge losses. Only the Canadian dollar didn’t lose a trading range.

1. The details

Looking into the details of this release, we see that manufacturers stopped erasing their stockpiles quickly – meaning that they produce more. This contributed most of the growth. This move by manufacturers came after they didn’t have too much of a choice.

But contrary to Germany, Japan, Australia and other countries, the US economy is mostly based on consumers – about 70%. Here the growth is much more moderate – only 2.2%. While this faster than last quarter, it’s already much more moderate.

2. The doubts

Looking back just at Q3, the initial announcement was a growth rate of 3.5% – a strong and joyful end to the recession. But this didn’t last long. The second release was already under 3% and the final release of Q3 GDP showed a more modest growth – 2.2%. More than a third of the growth rate was cut off between the initial and final releases. So how is Q4’s 5.7% going to turn out? Hmmmm

Looking at the job market, there are doubts also there. The last month of 2009 saw a disappointing drop in jobs, although November saw a small gain. The past week’s jobless claims weren’t too hopeful as well. Even if the growth rates stay, a “jobless recovery” isn’t enough for the economy – not enough for a rate hike and not enough for the dollar bulls to rage.

Next week’s Non-Farm Payrolls are super-important now.

Vote for it on Forex Factory!

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

A busy week is ahead of us: rate decision in the US, Japan and New Zealand and GDP releases from the US, UK and Canada are part of an eventful week. Will we see more dollar strength? Here’s an outlook for the last week of January.

Beginning on Wednesday, the World Economic Forum meets in Davos, Switzerland. In their 4-day annual meetings, many central bankers, senior politicians and business leaders from all over the world chit-chat with reporters and also make official and moving statements. Their sporadic comments can shake the markets during most of the week.

Monday, January 25th: Australian PPI provides a strong start to the week, as this is a quarterly figure that has a strong impact on the Aussie.

American Existing Home Sales are expected to post a big drop after two strong months, and fall to 6.04 million.

Tuesday, January 26th: The Bank of Japan makes a rate decision. While the Overnight Call Rate isn’t expected to move from 0.1%, but the Monetary Policy Statement could sure shake the Yen, especially if economic forecasts are changed.

German Ifo Business Climate is an important survey for the Euro. It’s expected to continue the steady rising trend and edge up to 95.3 points. Last week’s survey, from ZEW, was bad and sent the Euro down.

Britain probably finished the recession. Prelim GDP for Q1 is expected to show growth of 0.4%. The unofficial number from NIESR talked about 0.3% growth, and they are usually correct, so there’s a good reason to be optimistic. Right after the release, Mervyn King will be speaking.

Last week King weighed on the Pound. A volatile time for the Pound.

In the US, the year-over-year S&P/CS Composite-20 HPI is expected to show a smaller drop in the prices of homes, 4.9%. The more important figure is the CB Consumer Confidence, that recovered from a big fall, and is now expected to climb to 53.7 points.

Wednesday, January 27th: Australian CPI is a quarterly release and has a strong impact on policymakers. After a modest rise of 0.1%, Q4 is expected to show a rise of 0.4%. A tronger rise is necessary to push the Aussie higher.

American New Home Sales are expected to recover from last month’s big fall, and rise to 372K. This will be a warmup for the big event.

Bern Bernanke is expected to leave the interest rate unchanged. The Federal Funds Rate will probably stay at a maximum level of 0.25%, and traders will focus on the usually confusing FOMC Statement. Last month, it took the market 6 hours to digest the statement, which seemed balanced at first. As they focused on the upside of the statement, cautious signs of recovery, the dollar rose. But the message sure was confusing.

Also in New Zealand we have a rate decision. The hot air came out of the balloon with low CPI in New Zealand and China’s tightening measures. So, the  Official Cash Rate will probably remain unchanged at 2.5%. Hints for future policy will be provided in the RBNZ Rate Statement.

Thursday, January 28th: American Durable Goods Orders are expected to jump by 2.1% after remaining almost unchanged last month. Core Durable Goods Orders, no less important, are expected to do the opposite and rise by 0.4% after a leap last month.

Unemployment Claims that disappointed last week, are predicted to go back down to 452K.

In New Zealand, both Building Consents and Trade Balance will impact the kiwi, with the latter expected to show a smaller deficit this time.

Near the end of the day, Japan will be releasing Household Spending which is expected to rise and Tokyo Core CPI which is still expected to show an annual drop in prices – 1.8%.

Friday, January 29th: European Unemployment Rate is expected to be bad once again. After reaching 10% last month, it’s predicted to rise to 10.1%.

In Switzerland, the KOF Economic Barometer will move the Swissy.

Canada releases its monthly GDP, which is expected to show a 0.3% growth, better than the previous month. Last week’s rate decision hurt the loonie. USD/CAD will shake during this time, especially with the next release.

American Advance GDP for Q4 holds high expectations: an annual growth rate of 4.6%. After exiting recession in Q3 with a 2.2% growth rate, things are expected to get better in Q4. This release will shake the markets.

Chicago PMI is predicted to post a small drop, and the Revised UoM Consumer Sentiment is expected to be revised to the upside. Both events will be overshadowed by the Advance GDP release.

That’s it for the major events next week. Stay tuned for specific currency coverages. In the meantime, check out two guest posts I was honored to have on my blog:

• Case for the USD Having Made Its Bottom by John Forman, that writes for Currensee,
• USD/JPY long term outlook by Nick Kanger of ProAct Traders.

Further reading:

• For the Euro, read the EUR USD Forecast.
• For GBP/USD, look into the British Pound forecast.
• For the Australian dollar, read the AUD/USD forecast.
• For USD/CAD, check out the Canadian dollar forecast.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.