1. U.S. Empire Manufacturing Survey
2. Canadian Manufacturing Shipments
3. U.S. Net Foreign Securities Purchases

US Empire Manufacturing Survey (MAR) (13:30 GMT; 08:30 EST)
Consensus:   18.9
Previous:  20.3

Outlook:  Manufacturing in the New York state region is expected to slow to its most sedate pace since October as the stabilization in retail sales highlights the more important issues of rising input costs and uncertain longer-term consumer confidence.  Input costs, which had eased through February, were back in their uptrend in March.  Probably the most closely eyed resource by managers was crude which settled back above the $60-level.  Costs for these necessary goods will add more pressure to the manufacturer's bottom line and put a kink in many economists and policy makers' expectation that increased business spending will take over for fading consumer spending over coming quarters.  Factory production accounts for some 13 percent of total gross domestic product, while that of the New York area represents almost 5 percent of the economy's growth.  This problem with higher prices is further a problem since their ability to pass it onto their consumers is becoming increasingly difficult.  Business customers have already been shaken by poor earnings in the final quarter of 2005 while consumers found themselves back indoors and their purses closed in March with the onset of colder weather last month.  Consequently, the current prices paid and expected capital expenditure components will gain in importance as these conditions persist.

Previous:   The Empire Manufacturing index unexpectedly rose in February to 20.3 as rising demand from businesses and consumer for factory goods, nudged managers' optimism slightly higher.  The primary donor component to the moderate increase in general sentiment came from a rise in sales and an expected increase in shipments over the coming six months.  Retailers marked the strongest monthly increase in sales in 20 months in June after consumers took advantage of the record-high temperatures in January to open their pocket books.  Factories took this as a sign of increased demand from their retail clientele in the coming months.  However, these two sections of the index showed the only positive areas of optimism for managers.  Aside from the current conditions rise in sales, noticeable reductions in new orders, prices paid and the number of employees, as well as a rise in input prices, provided an overall cautious tone for the coming months.  New orders, an indicator about future business, edged lower to 26.5 from 27.2 in January indicating the ramped up sales at retailers from the month before wasn't necessarily leading businesses to increase their orders with manufacturers.  Significant reductions in the prices received and employment gauge also set up worse outlooks.  The balance of those managers reporting the higher employees fell to 5.2 in February from 11.3, contradicting the general increase in the number of jobs in the economy across the services sector.  Moreover managers' outlook on income had also waned; which, taken in accordance with the drop jump in prices paid, could be a sign that the Fed's reliance on increased business investment in the coming quarters to sustain growth could be ill-placed.

Canadian Manufacturing Shipments (MoM) (JAN) (13:30 GMT; 08:30 EST)
Consensus: 0.4%
Previous: 1.4%

Outlook:  Canadian factory shipments are expected to continue their see-saw changes in January with an expected 0.4 percent increase for deliveries abroad for the month.  If the increase does materialize for the month, it would be first back-to-back rise in orders since August of 2004.  However, there were significant obstacles to even this modest rise.   In January, Canada's trade surplus with the rest of the world narrowed more than expected to C$6.35 billion from December's C$7.69 billion excess as shipments abroad of energy products plunged and a more expensive currency made Canadian products less competitive on the global market.   Energy sales abroad, which have arguably defined Canada's export market over the past year,  shrank in January by a hefty 15 percent led by the continued decline in both crude and natural gas, the latter of which was has been nearly halved since hitting its peak the month before.  Other products have also been feeling the squeeze of the currency's uninterrupted advance to 13-year highs against it US counterpart.  This level was one of the primary factors that led the trade surplus Canada holds over the US to contract in January from the record C$11.6 billion to C$10.7 billion.   Nearly 85 percent of all Canadian exports are destined for America which is equivalent to a third of the Canadian economy.  Furthermore, another preliminary indication that factory exports slowed in January was the measure in the recent trade figure that showed shipments of equipment and manufactured goods dropped 0.4 percent for the month.

Previous:  Shipments from Canadian manufacturers rebounded in December as demand for the country's energy products and autos led the way.  Following Novembers 1.4 percent contraction in shipments, deliveries abroad gained 1.4 percent to C$52.1 billion in December sparking speculation that the dragging manufacturing sector may be looking up.   Car dealers in the United States reported higher sales in the months of November and December consistent with the decline in the average price of unleaded gasoline.  This in turn resulted in a jump in bookings for new autos from Canadian factories.  Most influential booking for the period were shipments of the petroleum products which rose 6.4 percent to C$52.1 billion following two consecutive months of declines.  Demand from foreign consumers found its source in three consecutive months of declining prices and some refineries coming back online after temporary shutdowns for repair.  Despite this month of increasing orders, the back and forth nature of shipments over the last year highlights the looming weakness in the manufacturing sector.  Factories have taken a hefty hit from a currency that has appreciated 30 percent since 2003.  An overall picture of the sector can be gleaned from a glance at the employment record for the month and year.  Manufacturers laid off 1,200 workers in the month alone, for a combined loss of over 140,000 jobs for the year.

US Net Foreign Security Purchases (JAN) (14:00 GMT; 09:00 EST)
Consensus: $64.8B
Previous: $56.6B

Outlook:  Investment in US equities and debt is expected to begin its steady rebound in January after the previous month saw a sudden drop in purchases in treasury paper.  Desire for dollar-denominated equities and bonds was likely stimulated in the opening month of the year as foreign investors moved their money back into what has been called the safest investments in the world.   Whetting appetites for yields over the month specifically were treasury paper which received another boost from the FOMC's decision to hike the overnight lending rate another 25 basis points to 4.50 percent.  However, continued speculation and even some officials' comments to the effect that future rate hikes will be less automatic and more on a wait-and-see basis will probably begin to weigh on investors' minds.  If monetary officials stop their aggressive pace of interest rate hikes, foreign and domestic investment in the assets will slow as the yields level out.   In the more risky end of the portfolio, the net foreign purchase of company shares is likely to reflect the nearly five year high level set in the benchmark S&P 500 index in January.  The index approached the 1,300-level in January as optimism rode off of strong profits gained over the strong year had in 2005.  However, this investment also comes with a disclaimer since the economy's strong 3.0 percent-plus growth pace slowed to 1.6 percent in the final quarter, leaving many companies with slimmer profits.

Previous:  The long-running net purchase of US securities unexpectedly plunged in December suggesting that dwindling investment in the United States may not be able to fund the trade deficit if confidence in the dollar and dollar-denominated assets falters.   US assets seemed to be falling off of investors' portfolios in December following a strong decline in treasury and corporate bond purchases.  International investors bought a net $34.9 billion worth of US companies in December from $35.6 billion the month before; but the real decline was in government securities.  After purchasing a net $50.8 billion worth of treasury bonds and notes in November, a drastically reduced $12.7 billion figure was reported in December suggesting the confidence in the Fed tightening policy was weakening.  This drop in treasury purchases seemed puzzling given the central bank actually raised its benchmark lending rate another quarter point for the month, but it seems more rational given growing speculation that suggests policy makers will make their cap soon with inflation coming back within tolerance levels.   Offsetting this unwelcomed contraction in foreign investment were US investors slowing their investments to other countries.  In December, net US investment in foreign bonds contracted for the first time in three months by $3.7 billion, while those net purchases of equities from overseas companies dropped $13.8 billion.

Richard Lee is a Currency Strategist at FXCM.