1. Japanese Industrial Production
2. German & French Consumer Prices
3. French Trade Balance
4. U.K. Consumer and Retail Price Indexes
5. U.S. Producer Price Index
6. U.S. Trade Balance

Japanese Industrial Production (MoM)(JUL)(4:30GMT, 0:30EDT)
Consensus: -1.1%
Previous:  -1.1%

Outlook:  Industrial production looks to have dipped once again in the Japanese economy, as oil and energy prices remained high in the month on average. Reaching an all time high on the last trading day in August crude contracts tested $70.85 a barrel.  As a result, conditions still suggest global demand remains relatively weak as consumer demand remains under pressure by political elections and new tax legislation limiting the amount of disposable income afforded to the average salaried worker.  Household spending declined 3.5 percent in the month of July.  As a result, even with lofty overall optimism expressed by both central bankers and economists, there may still be more time required for individual factors to rise to the occasion.

Previous:  Output for the world's second largest economy fell 1.1 percent for the month of July.  Subsequently, this is the fourth month in the past six that the figure has dipped, prompting manufacturers and producers to cut back on output in order to prevent excess inventory buildup.  Additionally, global demand has remained sluggish, suggestive through a dip in exports by 1 percent in the month of July.  Closely correlated with production figures, the print declined for the second time in three months.  Ultimately adding to woes have been record high oil and energy prices.  Oil continues to be a tax on once strong consumer consumption and producers' bottom lines lending to growing bearish sentiment on the world's second largest economy.  However, a line of hope remains as wages were seen rising 1.7 percent in the quarter with additional pickups in employment adding to consideration of near term increases in consumer spending.  The ultimately test however, will be the results of the upcoming elections.  With financial reform, domestic consumers may be forthcoming in their support for the economy.

German Consumer Price Index (MoM) (AUG F) (06:00 GMT, 02:00 EDT)
Consensus: 0.1%
Previous: 0.5%

French Consumer Price Index (MoM) (AUG) (06:45 GMT, 02:45 EDT)
Consensus: 0.3%
Previous: -0.2%

Outlook:  Inflation for the two largest economies of the dozen sharing the euro are expected to have taken opposite directions for the month of August.  Prices are expected to have picked up in France to 0.3 percent after falling in July for the first time in six months, while forecasts for the final reading of German inflation keep the number at 0.1 percent growth in August, down from the 0.5 percent reading from the month before.  The rebound in price growth for France is likely a result to stimulation by local retailers to increase consumer spending and continuous new highs reached for the price of crude.  The German measure of inflation is expected to have dealt with crude prices a little better.  Annual price growth is expected to have slowed for the first month in four in August, indicating that consumer demand has not responded quite as well as it has in France.  Germans, like the French, have sat on their earnings as the threat of higher energy prices and an unemployment rate, not seen since World War II, depresses consumer confidence. 
 
Previous:  Price growth for France and Germany moved in completely opposing directions for the month of June.  Prices for French goods slipped 0.2 percent from June, while those in Germany grew 0.5 percent.  The short bout of deflation in France comes amid near record prices for crude that have buoyed inflation for the country over the past few months.  The exaggerated effect that oil prices have had on France was offset by lower costs for food and clothing.  French retailers pursued the one viable option to increase sales with the unemployment rate near five and a half year highs: lower prices.  The mixture of weak sales with lower prices resulted in the cost of food 0.7 percent less expensive and prices of clothing and shoes 8.4 percent cheaper.   German retailers had not yet followed the same policy as the French.  With oil prices, combined with a jobless rate near levels not seen since WWII, pressing consumer demand; companies were not willing to reduce prices to encourage sales.  The result, of which, left the German inflation rate at its fastest pace since the end of last year.

French Trade Balance (euros) (JUL) (06:45 GMT, 2:45 EST)
Consensus: -975M
Previous: -1194M

Outlook:  The trade deficit which has loomed over France's head for 13-consecutive months is expected to have narrowed in July to 975 million euros, which would be the closest to par the level has been since July of last year.  The expected slimming of the deficit comes amid pressures that would have suggested a less optimistic outlook.  Trade Minister Christine Lagarde said in a recent statement that the rise in energy prices have accounted for nearly half of France's deficit.  With energy products accounting for such a large portion of the deficit, the new uptrend in crude prices will likely add extra burden for the measure during for the period.  French companies have also encountered unfavorable conditions to increase production and further boost sales to foreign buyers.  Domestic consumption has dried up amid unemployment near five-year lows and economic growth slowed in the second quarter to 0.1 percent from 0.4 percent in the first.  Expectations for a shrinking deficit under such conditions leave a likely pick up in exports the probable cause.  Exports over the past half year have remained weak despite the depreciation in the euro against the U.S. dollar, which would generally increase the attractiveness of French goods.  

Previous: The balance of exports to imports fell further in favor of domestic consumption of foreign goods for the month of June.  Europe's third largest economy saw its eleven-month trade deficit expand to 1.19 billion euros far less than the expected 1.9 billion euro consensus among economists.  Inching further into deficit, sales to foreign countries seem to still be giving ground to lofty energy prices.  The depreciation in the euro following the failure of the French referendum was expected to benefit France by making their goods cheaper to foreign buyers and therefore more attractive, but this macroeconomic prospect has yet to materialize.  Instead the estimated 5 percent of French companies that export their goods has experienced another month of weak sales, further eroding business confidence that has seen record unemployment and waning consumer confidence at
home.

UK Core CPI (YoY) (AUG) (08:30 GMT, 04:30 EDT)
Consensus: 2.4%
Previous: 2.3%

UK RPI (YoY) (AUG) (08:30 GMT, 04:30 EDT)
Consensus: 2.9%
Previous: 2.9%

Outlook:  Consumer prices are expected to accelerate 0.4 percent in August from the month before, while growing 2.4 percent from the same period a year ago.  The expected figure for the measure of CPI would be the highest level since the Office for National Statistics started following the index.  The retail price index, the favored measure of inflation by the Bank of England until 2003 when Chancellor of the Exchequer Gordon Brown made the switch, is expected to remain at 2.9 percent.  Inflation was an important factor when the Bank decided to lower the benchmark-lending rate on August 4th.  While inflation continued to hover above the bank's 2 percent target rate, policy makers decided that the slowdown in aggregate output was the more important issue.  Chancellor Brown has remained adamantly against cutting the short-term lending rate in the near future, with consumer prices under pressure from higher fuel costs.  In addition, consumer demand may begin to contribute more momentum to inflation.  The recent HBOS indicator number for the month of August rose 1.6 percent suggesting that the down turn in the housing market could be leveling off.  Last months decision to cut the borrowing level will also lend itself to more optimism from the consumer.  However, the tremendous amount of consumer debt in the market could thwart any recovery in confidence and further halt what could otherwise materialize into a new round of strong domestic spending.

Previous:  Inflation accelerated to its fastest pace in at least eight years in July.   The year-over-year measure of CPI rose to 2.3 percent as higher energy prices paced costs for transportation and home utilities.  Crude prices for the period continued to push their way towards making new highs over the month after relaxing in May and June.  Subsequently, transportation and home utilities companies looked to pass the added costs from higher energy prices onto consumers by both sectors raising their prices the most since 1997.  The measure of price growth was deemed to be a large factor for those in the Bank of England calling to keep the overnight lending rate unchanged at 4.75 percent at the August monetary policy meeting.  Leading the call was Chancellor Brown, who made a statement after the bank decided to cut the rate that said inflation would dip shortly in 2006 but quickly return.

U.S. Producer Price Index (MoM)(AUG)(12:30GMT, 8:30EDT)
Consensus:  0.8%
Previous:  1.0%

Ex Food and Energy
Consensus:  0.1%
Previous:  0.4%

Outlook:  Prices at the producer level are expected to rise once again prompting further speculation that interest rates in the United States will likely rise after Fed policy officials convene later this month.  Record high oil prices, even priced before Katrina, looked to have contributed to prices rising for a second straight month with producers unable to cushion the blow to consumers any longer.  However, excluding the volatile energy and food components, prices are merely to have moved higher by 0.1 percent.  Subsequently, Federal Reserve officials may be focusing on labor costs that have risen in the second quarter to add to an inflationary bias.  Labor costs, according to the U.S. Labor Department, increased 2.5 percent in the quarter, but rose 4.2 percent on the annual comparison.  Additionally, increased output ultimately decreased first quarter increases in comparison, lifting the results of the second quarter even higher.

Previous:  Expected to rise 0.5 percent in the month, producer prices soared double the consensus, by 1 percent, on higher energy costs and wholesale prices in automobiles and drugs according to the Labor Department report.  Vaulting higher by the most in nine months, the core figure, excluding energy and food, rose a paltry 0.4 percent.  Subsequently, removing auto costs, the core figure would have increased by only 0.2 percent, rather tame compared to benchmark targets.  As a result, expectations now remain high for a subsequent increase in short-term interest rate by Fed policy officials in order to curb inflation.  However, with most of the rise attributed to energy, central bankers may hesitate and watch the extent of the current "shock" rather than act to move.

U.S. Trade Balance (JUL)(12:30GMT, 8:30EDT)
Consensus:  -$59.7B
Previous:  -$58.8B

Outlook:  Expected to widen to a total of $59.7 billion, the U.S. trade gap looks to have been adversely affected by a strengthening dollar and increasing costs of energy and crude oil.  The current estimate, a 1.7 percent increase on the $58.8 billion gap witnessed in July, nears the record gap set back in February of $60.1 billion.  With consumers back on the prowl, volume of imports additionally looks to contribute to the overall figure as an appreciated domestic currency will inflate the value of such factors.  Notably, the increasing balance with China will garner plenty of attention as a record $17.6 billion in trade was witnessed in the month June.  Ultimately, with a widening balance, selling pressure may enter the foray once again as investors continue to price in the effects of continually increasing short term rates.  Once suggestions of tightening end, global and foreign investors may have to reassess their perspectives of the U.S. economy.

Previous:  The U.S. trade deficit widened more than forecasted to $58.8 billion in the month of June as an expanding economy prompted companies to increase their importing of rising crude oil.  Additionally contributing to the higher release was a record trade deficit with China.  As a result, the figure rose 6.1 percent above the previous $55.4 billion sum in the month of May with imports increasing to an all time high of $165.7 billion compared to paltry exports which rose 0.1 percent.  Mainly attributed to the rise, imports from the Organization of Petroleum Exporting Countries vaulted $7.7 billion, a record amid a strengthening dollar, increasing its overall value.

Richard Lee is a Currency Strategist at FXCM.