1. U.K. Gross Domestic Product
2. Canadian Retail Sales

U.K. Gross Domestic Product (QoQ) (3Q) (8:30 GMT, 4:30 EDT)
Consensus: 0.4%
Previous: 0.5%

Outlook: The growth rate of Britain's Gross Domestic Product (GDP) is expected to have dwindled to a meager rate of 0.4 percent in the 3rd quarter. Weak industrial output, which fell by a larger than expected 0.9 percent in August after falling 0.4 percent in July, is a likely cause for the slow growth in spite of healthy gains in the services industry. Bolstering the likelihood of weak growth in the 3rd quarter is the negative data collected in the British Chambers of Commerce's quarterly survey. The survey reveals declines in manufacturing and business confidence across all sectors in addition to a drop in the country's export balances. In addition to this survey, the latest round of revised growth forecasts from the European Commission, IMF, and OECD contain downgraded expectations for UK growth in 2005. Poor GDP growth extending from the 2nd quarter may warrant further interest rate cuts by the Bank of England as economic indicators continue to weaken. On the other hand, the Bank must remain on the lookout for inflationary pressure imposed by high energy prices in formulating its decision on whether or not to adjust rates in November.

Previous: Britain's second quarter growth rate in GDP slid to its slowest point in 12 years. The slowdown was so dramatic that the British Chambers of Commerce have begun contemplating a revision of their growth forecasts for the year. Economic trends such as a tapering housing boom and rising energy costs and unemployment have piled up and weighed down growth significantly. Although real households' disposable income in Britain increased 1.1 percent on the quarter, consumption only grew 0.9 percent as a larger portion of income was allocated to household savings. According to the CBI Distributive Trades Survey, half of the surveyed firms reported that sales declined from the previous year, keeping manufacturing sector output unchanged for the quarter. The service sector fared better with 0.6 percent growth, though this number still seems low in light of positive survey results.

Canadian Retail Sales (MoM) (AUG) (12:30 GMT, 8:30 EDT)
Consensus: -0.5%
Previous: 1.5%

Outlook: Canadian retail sales for August are expected to have dropped by 0.5 percent after rising 1.5 percent in July. Consumer spending slowed in the month with energy prices reaching record highs in the region. Gasoline and fuel sales rose 3.3 percent in August on record prices, but looks be overcome by greater relative declines in sporting goods, books, clothing and accessories. Auto sales, which bolstered retail sales figures in July, also dropped off as companies ended heavy price incentives. Already released numbers support a half percent drop expectation as sales at large Canadian retailers, which represent about 27 percent of total sales, fell 0.5 percent. Though large retailers are less than a third of the entire sector, they tend to follow the same sales trends as the entire sector.

Previous: Retail sales rose faster than expected in July, by 1.5 percent, led by new automobile and gasoline purchases. DaimlerChrysler and Ford following GM's lead offered “employee discount” sales to the public spurring a 4.3 percent rise in new car and truck sales. Receipts at gas stations were lifted higher up by 2.9 percent on account of rising prices. Subsequently, this announcement strengthened expectations that the Bank of Canada would raise rates at its meeting in October to keep heavy consumer spending from triggering inflation. Not including autos and auto parts, retail sales rose 0.7 percent, which was still higher than analysts expected. Consumer spending in the country is riding high with the economy strong and unemployment low.

Richard Lee is a Currency Strategist at FXCM.