1. French Consumer Spending 
2. Bank of England Minutes Release
3. Canadian Retail Sales
4. Japanese Merchandise Trade Balance
5. Japanese Tertiary Industry Index

French Consumer Spending (AUG) (MoM) (6:45 GMT, 2:45 EDT)
Consensus: 0.3%
Previous: 0.5%

Outlook: French consumer spending is expected to grow only 0.3 percent in August, still not bringing it back to the level before May's drop. Consumers continue to be hurt by high energy prices as they dip into their savings more and more. Consumer confidence in France is at a 9 year low with almost three quarters of consumer pessimism. Many consumers are also unsatisfied with Prime Minister de Villepin's efforts to restore confidence, commenting that he has been ineffective since he took his post on May 31 despite his promise of raising confidence within 100 days of that date. Unemployment has continued to plague the country, rising to a five and a half year high. Wages in the non-governmental sector have stayed stagnant in the second quarter, not moving even slightly to offset higher prices. According to French polls, 91 percent of consumers believe that their purchasing power will deteriorate within the next few months, a belief that will certainly curb spending.

Previous: Consumer spending in France rose 0.5 percent, missing a 0.8 percent expectation, in July due to price incentives around the country. Consumers' budgets in France, and around the world, were being squeezed by high energy costs, hurting the ability to spend in the retail sector. France is also facing its highest unemployment numbers in five and a half years. Retail outlets in France, in order to boost sales and keep profits, lowered prices and ran incentives to draw consumers into their stores. This strategy successfully kept consumer spending up slightly, rising from a 1.5 percent drop in May, however the loss from the previous month still has not been recovered. Retailers cannot continue to keep prices low forever and as soon as prices go back up, consumers will be less willing to come out and spend.
 
Bank of England Minutes Release (SEP) (8:30 GMT, 4:30 EDT)

Outlook: The minutes for the September meeting are expected to show that all nine monetary policy makers were unanimous in voting to keep interest rates at 4.5 percent.  Worries of rising inflation and a continuing assessment of the impact of last month's rate cut are what led to the stay of interest rates in September. Since the August rate cut, commentary by the committee has been more hawkish signaling agreement among the members. There is however uncertainty on whether there will be any more rate cuts this year with consumer spending looking to disappoint and the economy still lagging. In the days before the release, members have been hinting that rate cuts may be coming before the end of the year if economic growth falls lower than bank forecasts as expected. There is still worry over rising inflation, however, possibly spurring disagreement on rate cuts in the next few months.

Previous: The release of the August minutes showed a 5-4 vote to cut interest rates for first time in two years to 4.5 percent from 4.75 percent. This vote put the bank's Governor Mervyn King on the losing side for the first time since the Monetary Policy Committee was founded in 1997. The rate cut, made to respond to an economic slowdown, has helped revive confidence in the housing market as intended although the economy and consumer spending are still in a lull. The minutes indicated that the MPC was looking to fine-tune the economy, not enter into a policy of successive rate cuts. The losing side expressed concern over inflation being that a main task of the Bank of England is to keep the 12-month inflation rate around 2 percent and it has climbed to 2.3 percent this year due to rising oil prices.

Canadian Retail Sales (July) (MoM) (12:30 GMT, 8:30 EDT)

Headline
Consensus: 1.1%
Previous: 1.1%

Ex-Autos
Consensus: 0.4%
Previous: 0.4%

Outlook: Retail sales likely posted a second round of moderately strong gains. According to Statistics Canada's reort on Monday, large retailers reported a 0.8 percent increase in July sales. While large retailers only account for 27 percent of the retail sector, their sales tend to be a good indication of how all retailers will do. A category of consumer non-durables called "other goods and services", which includes auto fuels and additives, led the pack with a 1.8 percent increase over June. Sporting and leisure along with food and beverage checked in with 1.6 percent increases. If large retailers are indeed representative of overall retailers, retail sales less autos have upside potential since the 0.8 percent figure does not include vehicle dealerships. US July auto sales increased 6.3 percent on heavy discounting, the effects of which likely trickled into Canada. When all is said and done, many now expect tomorrow's total retail sales numbers to beat forecasts in light of the large retailer figures.

Previous: Canadian retail sales rose 1.1 percent in June as consumers bought durables such as vehicles to lock in low interest rates in the midst of a robust economy. Not including autos, retail sales grew 0.4 percent. While auto sales surged 4.3 percent, retail sales estimates fell short of the 1.4 percent analysts had anticipated. With central bank lending rates locked at 2.50% since last October (it was not until 9/7 that they raised rates 25-bp to 2.75%), consumer spending likely bolstered the economy over this past year as export growth weakened due to a strong Canadian Dollar.

Japanese Merchandise Trade Balance Total (AUG) (23:50 GMT, 19:50 EDT)
Consensus: 384.6 billion yen
Previous: 873.6 billion yen

Outlook: Japan's trade surplus is likely to shrink 56 percent to 384.6 billion yen according to median estimates. The major factor contributing to this shrinkage is the effect of the rising cost of oil is on imports. The country's imports will likely increase by 14.5 percent, largely because crude oil prices surged to a new high of $70.85 per barrel in the month. Exports on the other hand will probably grow by approximately 10 percent based on reports released by the Ministry of Finance earlier this month. As a highly energy efficient economy, Japan will be able to absorb some of the impact of rising crude prices. However, a persistent rise in the cost of oil could pose a risk to the Japanese economy, largely because the country's trade partners, including the U.S., will be adversely affected by soaring energy costs as well.

Previous: Japan's trade surplus fell to 873.6 billion yen in July, making this period of month over month surplus shrinkage the longest the country has experienced since 2002. Exports rose 4.3 percent on the month with the strongest contributors being LCD screens and automobiles. Automobile exports have risen for four of the past five months. Japan can attribute much of its export growth to Chinese exports, which reached a record high of 765 billion yen. Domestic demand, not exports, has become the major source of Japanese economic growth during this period of the declining trade surplus. Monthly import growth was much greater at 11.6 percent. Oil and aircrafts were the strongest contributors to import growth. Oil accounted for more than half of the country's increase in imports as crude rose to a record $61.28 per barrel.

Japanese Tertiary Industry Index (July) (MoM) (23:50 GMT, 19:50 EDT)
Consensus: -0.7%
Previous: 1.0%

Outlook: The tertiary index, a gauge of demand for services, which makes up 60 percent of the economy, likely declined after strong gains in June. However any surprise should be on the upside if the rest of July's economic data is an omen for the tertiary index figures. The Nikkei closed last night at a four year high as the Japanese economy continues to improve, brightening the outlook and raising yields. Tokyo department store sales increased 1.2 percent in July as nationwide department sales edged up 1.1 percent after a 1.4 percent gain in June. While the jobless rate unexpectedly rose to 4.4 percent from June's record lows of 4.2 percent, labor cash earnings rose 1.7 percent, much better than the 0.8 percent consensus. The higher salaries provided the means for consumers to spend more. Additionally, it seems that consumers probably also had the desire to spend as seen in consumer confidence's rise to 48.2 in July from 46.8 in June.

Previous: The tertiary index rose 1.0 percent for June, beating expectations of 0.9 percent, as income rose and job prospects improved. The unemployment rate fell to a seven-year low of 4.2 percent in June as wages gained 1.1 percent. The retail and wholesale portion, which represents 25 percent of the index, rose 0.9 percent as clothing sales got a boost from the government's "Cool Biz" campaign. The government has been urging office workers to wear short sleeves to work to cut back on air conditioning usage and reduce carbon dioxide emissions, sending businessmen shopping for new attire. The transportation and transport services industries shrugged off higher oil prices with increased sales. Lastly, the telecommunications industry also saw an increase in demand, mostly on data services.

Richard Lee is a Currency Strategist at FXCM.