1. German Industrial Production
2. BOE Rate Decision
3. Japanese Gross Domestic Product

German Industrial Production (MoM) (OCT P) (06:00 GMT; 11:00 EST)
Consensus:    0.5%
Previous:      1.5%

Outlook: Industrial production in Europe's biggest economy is expected to grow for the second month in a row in October, yet at a slower pace than September.  German production is expected to have grown 0.5 percent for the month supported by record business confidence and healthy factory orders.  According to the Ifo survey of business confidence, optimism among German business leaders is at its highest level in five years with a subsequent indicator read of 98.7.  Declines in the prices of energy products from record highs as well as hope of economic reform from the newly positioned Christian Democratic Party headed by Angela Merkel have played their part in fueling optimism.  Additionally, factory orders for the period rose 2.0 percent for the fifth increase in the past six months.  Possibly offering trouble to production for October will be demand from consumers and speculation in the market of an increase to the benchmark lending rate.  Consumer spending continued to flounder, as evidenced by a 0.8 percent year-over-year decline in retail sales, in the face of staggering unemployment.  Investors and consumers have also cast a cautious eye to the ECB with scattered comments of an expected rate hike in the near future.
   
Previous:  German industrial production rose 1.5 percent in September, it highest level since April; while the annualized read climbed to a yearly high 3.5 percent.  Production made its distinct turn for the month as a booming export market relieves some of the weakness in domestic consumption.  The euro has slipped 11 percent against the U.S. dollar making German goods more appealing on the global market.  Orders from abroad have helped to push orders for German manufactured goods 2.9 percent in September, which has effectively offset higher energy prices and weak domestic sales.   Consumers have shied away being more liberal with their euros as petrol prices continue to cut into disposable income that had already been cropped from a jobless rate near a WWII high.

BOE Rate Decision (12:00GMT; 07:00 EST)
Consensus:    4.50%
Previous:      4.50%

Outlook:  Recent reductions in both growth and inflation forecasts from the Bank of England are likely to put the Monetary Policy Committee in a state of wait-and-see.  The United Kingdom's central bank halved its 2005 growth expectations while the newly revised estimate of inflation for the coming years keeps the price fluctuations within the governing bodies' 2 to 3 percent tolerance band.  Some speculation of a possible rate cut has drifted through the market as economic expansion slowed to a twelve-year low with expectations of flat growth in the years to come.  Europe's second largest economy has stalled with producers and consumers leading the way.  Industrial production has contracted at an annual pace for 10 consecutive months, while manufacturing has fallen 6 of the previous 8 months.   Consumers has also faired just as poorly.  Confidence among the spending public fell to an 18 month low in October and November despite employment holding to a record low 4.7 percent.  While these are rousing arguments for a rate cut, this action seems unlikely.  The dovish move made in August to cut the overnight lending rate to 4.5 percent found Governor Mervyn King in the minority.  He produced a statement afterwards that he would be against any rate hikes in the future since the bank's focus is inflation and not growth, and price growth still dictates a hawkish stance.  Inflation fell back to 2.3 percent in October after reaching a recent historical high 2.5 percent the month before with the large fluctuations in the price of imported crude oil.  Despite this ease in price growth however, inflation remains well above the bank's 2 percent target.

Previous:  On November 10th, the Bank of England held interest rates at 4.50 percent for the third month in a row after a rate cut in August. Just a few weeks ago, the market was still flirting with the idea that this rate cut was temporary and that rates would go back up as the UK economy recovers in 2006. However, at this point, it is rather clear that this is not the case. Not only is unemployment growing as seen by the past two consecutive monthly increases in the claimant count, wage growth is also stagnant. As consumer prices increase across the spectrum, the gap between wage and price growth is quickly closing, which leads to a reduction in consumer purchasing power. Though domestic demand has already been weaker-than-expected for the past year, the Bank of England has made it clear in their latest inflation report that they are expecting it to remain below average rates in their forecast period, which is the next two years. This of course, will be the root of economic weakness on many other fronts including inflation, which is now forecast to drop sharply in 2006. Despite all this, the monetary policy committee is still expecting output to improve gradually from the lows seen in 2005.

Japanese Gross Domestic Product (QoQ) (3Q F) (23:50GMT, 18:50 EST)
                     Quarterly    Annually
Consensus:    0.5%            2.3%
Previous:      0.4%            1.7%

Outlook:  Higher corporate investment is expected to offer a 0.1 percent boost to Japan's third quarter GDP revision and 0.6 percent on an annual basis.  Economists predict the Cabinet Office's release of the updated growth figures will reveal a 0.5 percent quarterly pace for the three months ending in September; while the year-over-year rate will increase to 2.3 percent.   Preliminary reports of GDP had already predicted a greater than expected 1.7 percent pace of expansion with firmer domestic consumption the driving factor.  Consumer spending which makes up more than half of the world's second largest economy was stoked by improving optimism and higher incomes.  Confidence among households rose in September to a read 47.9 from 45.5 with wages growing picking up 0.3 percent for the quarter.  As a result spending received an equivalent 0.3 percent increase.  Capital spending, which accounts for nearly 15 percent of the economy, has also added strength with a 0.7 percent jump for the same period.  This final report from the government will reflect not only these factors but also a 9.6 percent increase for the quarter.  Japan's economy is on track to witness its fourth year of expansion and inflation is expected to be close behind.  As long as the economy holds its healthy pace, the Bank of Japan has only to wait for positive price growth before a rate increase becomes realistic.

Previous:  Japan's economy grew 3.3 percent over the three months ending in June, triple the initial consensus among economists.  Though the quarter's growth slowed significantly from the first quarter's 6.3 percent growth, components of the measure may be indicating a shift in reliance on exports for growth to a more desired dependence on domestic spending.  The foreign market for Japanese goods remained a pillar for strength.  Net exports ticked in at 1.4 percent for the second quarter with exports rising a strong 2.9 percent.  The shift towards self-sustaining growth was apparent in increases in both business and consumer spending.  Capital expenditures, which accounted for an estimated 50 percent of the first-half expansion, rose 3.6 percent.  Consumer spending had also risen a 0.6 percent, though a downward revision form an initial report of 0.7 percent. 

Richard Lee is a Currency Strategist at FXCM.