• Japanese Machine Tool Orders
• German IFO Business Confidence
• U.S. Consumer Confidence

Japanese Machine Tool Orders (YoY) (SEP) (6:00 GMT, 2:00 EDT)
Consensus:  N/A
Previous:  5.2%

Outlook: There is no consensus for machine tool orders for the month of September, but demand through business investment will teeter between higher energy prices weighing on companies' bottom lines and bolstered confidence following the victory of economic-friendly, interim Prime Minister Junichiro Koizumi in the recent snap elections.  Crude prices soared past $70 per barrel on August 30 following the halt to production of a large portion of the U.S. capacity in preparation for damages.  The preliminary effects of crude have already been made apparent evidenced by the narrowing of the trade surplus to 116.3 billion yen, more than twice expectations. On the other hand, according to the Asian Development bank, Japan is among the world's most efficient countries, using half the amount of oil to produce a unit of GDP compared with the U.S.  Exports of machine orders could be less hard hit than expected though as Japanese car-manufacturers benefit from auto retailer's tactics to sell cars and increasing demand from China and Southeast Asia.  Manufacturers of tools used in car production are taking advantage of the situation by strengthening their sites in these locations hoping to get in on the growing demand for their products. Furthermore, business investment was likely bolstered by the outcome of the general election.  Prime Minister Koizumi's plan to publicize the postal and insurance system is expected to partially revitalize the second largest economy in the world and return inflation to the economy that has drifted in and out of deflation for the past 10 years.  So far this year tool orders have been strong despite the steady rise in crude.  Between January and June of this year, machine orders were at 672.8 billion yen, just shy of hitting the record set in the early part of 1990, where orders rose to 705.3 billion yen. According to forecasts for the year, orders are already right in line to exceed past the 1.3 trillion yen, which is considerably above initial expectations for the year.

Previous: Japanese machine tool orders saw a 5.2 percent increase in August to 109.69 billion yen from the year before, representing the 35th straight increase starting in October of 2002.  Month over month, machine tool orders were up 4.4 percent in August, an increase from July and June where manufacturers experienced only a 1.9 percent rise.  Domestic orders over the period were up 10.9 percent at 60.6 billion yen.  Conversely, foreign orders, especially to the US, were down 6.3 percent at 49.0 billion yen.  Orders from abroad have been trimmed as global slowdowns have depressed businesses' bottom lines with steeper energy bills and faltering demand.  Domestic demand has remained robust with the subsequent strength in growth.  The economy has averaged 4.6 percent growth in the first six-months, the fastest in 15 years.

German IFO Business Confidence (SEP) (08:00 GMT, 04:00 EST)
Consensus: 94.2
Previous: 94.6

Outlook:  Business confidence for Europe's largest economy is expected to have fallen to 94.2 in September following the stalemate voting results of the general election that took place two weeks ago.  The outcome of the recent election has left former Chancellor Gerhard Schroeder and Christian Democratic Union leader Angela Merkel with nearly equal proportions of the vote and a near identical number of seats for both of their representative parties.  This economically unfavorable outcome leaves hopes of economic reform nearly impossible to accomplish as a majority on any issue will be difficult to come by.   Running into the election, Chancellor Schroeder campaigned for policies that would have reduced the liberal welfare system and allowed companies to fire employees faster.  Current regulation leaves employers unable to lay off a worker without lengthy paper work and difficult rules.  Confidence was already battered with problems before the election.  Unemployment has hovered near record lows at 11.6 percent causing growth to slow in the second quarter to 0.6 percent.  Further reducing confidence is the fact that growth over the coming quarters remains suspect as oil prices continue to take their toll on businesses' bottom lines and demand for exports looks soft.

Previous:  Confidence among business leaders fell for the first month in three in August to 94.6 from 95.0 in July as high oil prices depress both business profits and consumer demand.  Businesses have been hard hit by the cost of the volatile commodity eats away at bottom lines.  The possibility of passing on some of the burden to the consumer is not a viable option either, as consumer demand remains burdened by an 11.6 percent unemployment rate in August, not far from the post-WWII record 12.0 percent.  Spending by consumers is poised to drop for the fourth straight year as consumers sit on their euros.  As it stands, business confidence does not look bright for the coming quarters as crude prices are expected to remain above $60 per barrel for the foreseeable future and consumer demand remains stagnant as unemployment and heating bills bleed German's pockets.

U.S. Consumer Confidence (SEP) (14:00 GMT, 10:00 EST)
Consensus: 95.0
Previous: 105.6

Outlook:  Consumer's optimism for the month of September is expected to drop to its lowest level since November as the after effects of Hurricanes Katrina and Rita dim citizens' outlooks on the business and employment markets in the months ahead.  Earlier reads on confidence have posted even more pessimistic numbers than economists project for the Conference Board's upcoming release.  Over the period, the University of Michigan's index fell to 76.9, the lowest read in nearly 13 years, while the ABC consumer confidence indicator dipped to -23 last week, its lowest level since May of 2002.  Confidence has dropped off of recently strong levels as the fallout of both hurricanes takes its toll on the average consumer.  Leading the assault on optimism has been gasoline and other energy products' prices.  Gasoline peaked at a record $3.057 per gallon on September 2nd.  Since then, the price at the pump has fallen to an average $2.755 last week, but these prices are still nearly 50 percent higher than a year before and will prove efficient at curtailing consumer spending.  Economists have reduced their expectations for economic growth from the third quarter to 3.6 percent at an annual rate from forecasts of 4.1 percent growth only a month earlier.  The last bastion for optimism could come from the job market.  If the improving labor market and rising incomes that have buoyed optimism for the past few months can weather the effects of the two recent natural disasters, then optimism could be in the cards for near future.  But the short-term future of the labor market is murky at best.  While expectations for incomes are still measuring August, economists forecast 172,000 jobs to have been lost in September due to the displacement of such a significant portion of the population.  This will be the first posted net loss of jobs since May of 2003.

Previous:  The Conference Board's survey of 5,000 households measuring sentiment for economic conditions, employment outlook and spending plans rose unexpectedly in August to 105.6.  The boost in optimism came on the back of strong job creation and rising incomes that have outpaced the pessimism concerning volatile gasoline prices.  Businesses added 169,000 new jobs in August while incomes rose at least 0.3 percent each month for the five months ending with July.  All of the major components of the index have shown improvements.  The percentage of consumers who believe jobs were hard to come by decreased from 23.8 to 23.2, while those whom feel jobs are plentiful rose from 22.9 to 23.5 percent.  At the same time, the gauge of optimism for the next six months rose to 93.7, while that over the present situation jumped to the highest read in four years to 123.6.

Richard Lee is a Currency Strategist at FXCM.