FOREX Trading Week Outlook: Jun. 6 - Jun. 10

(Allthingsforex.com) – After the daunting reminder of the lack of significant improvement in the U.S. jobs market has accelerated QE3 speculation and the U.S. dollar’s decline, the week ahead will bring the monetary policy meetings of four major central banks as the euro takes the center stage in anticipation of whether the European Central Bank will maintain its hawkish inflation-fighting stance despite of the EU debt crisis.

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., Jun. 7, 12:30 am, ET.

With the Australian economy registering its largest contraction in 20 years in the first quarter of 2011 as a result of the massive floods in Queensland, the Reserve Bank of Australia is forecast to keep the benchmark rate unchanged at 4.75%. However, if the central bank views the shrinking of Q1 GDP as temporary and expresses concerns about the inflation thread from rising wages and commodity prices, the market could continue to price expectations of future interest rate hikes.

2. EUR- Euro-zone GDP- Gross Domestic Product, the main measure of economic activity and growth, Wed., Jun. 8, 5:00 am, ET.

The revised reading of the Euro-zone GDP is forecast to confirm the preliminary estimate that the economy accelerated by 0.8% q/q in the first quarter of 2011, faster than the 0.3% q/q growth in Q4 2010.

3. NZD- Reserve Bank of New Zealand Interest Rate Announcement, Wed., Jun. 8, 5:00 pm, ET.

Speculation has recently increased that the Reserve Bank of New Zealand may need to undo the aggressive 50 bps interest rate cut made in an effort to assist in the recovery efforts after the February earthquake in Christchurch. With exports climbing to a record in April and other data showing resilience in the economy, any hints of a possible rate hike in the near future could continue to support the Kiwi as the preferred choice for high yield seekers.

4. JPY- Japan GDP- Gross Domestic Product, the main measure of economic activity and growth, Wed., Jun. 8, 7:50 pm, ET.

Japan’s economy registered its third recession in a decade and contracted more than expected by 0.9% q/q in the first quarter of 2011. The revised GDP estimate is forecast to show the economy shrinking a bit less by 0.8% q/q in Q1 2011, same as the 0.8% q/q contraction in the fourth quarter of 2010.

5. AUD- Australia Employment Situation and Unemployment Rate, the main gauge of employment trends and labor market conditions, Wed., Jun. 8, 9:30 pm, ET.

The Australian economy is forecast to add up to 25,000 new jobs in May, recovering from the 22,100 jobs lost in the month before, while the unemployment rate remains unchanged at the low 4.9% level.

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

After the BoE Inflation Report and the April CPI spike, the market is back to pricing a Bank of England rate hike sooner rather than later, but probably not in June or July, considering the recent soft U.K. economic data. Only a 2008-style risk aversion could send the GBP below its $1.60's range, while QE3 by the Fed could propel the GBP/USD exchange rate into the $1.70's.

7. EUR- European Central Bank Interest Rate Announcement, Thurs., Jun. 9, 7:45 am, ET.

Even though the European Central Bank is expected to raise rates another time or two this year, with the deadline for a new bailout for Greece approaching at the end of June, policy makers could decide to prudently sit on the sidelines and keep the benchmark interest rate at 1.25%. As the U.S. economic data disappoints and speculation of QE3 increases, the euro's direction will be driven by risk and will depend on whether the ECB would continue to fuel rate hike expectations.

8. USD- U.S. Jobless Claims, an important gauge of employment trends and labor market conditions, Thurs., Jun. 9, 8:30 am, ET.

The lackluster performance of the U.S. job market could continue with first-time applications for unemployment benefits forecast to reach 419K from 422K in the previous week. To indicate a significant decline in unemployment, economists estimate that jobless applications would need to fall to 375K or below.

9. GBP- U.K. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Fri., Jun. 10, 4:30 am, ET.

In the aftermath of a sequence of week data from the manufacturing and services sectors, the U.K. industrial activity is expected to increase by 1.3% m/m in April from 0.7% in March.

10. CAD- Canada Employment Situation and Unemployment Rate, the main gauge of employment trends and labor market conditions, Fri., Jun. 10, 7:00 am, ET.

Following the stronger than expected 58,300 jobs created in April, the Canadian economy is forecast to add up to 23,400 new jobs in May, while the unemployment rate stays unchanged at 7.6%.