1. UK Consumer Price Index
2. US Producer Price Index
3. Canadian Retail Sales

UK Consumer Price Index (Feb) (09:30 GMT; 04:30 EST) (MoM)  (YoY)
Consensus:   0.3%    2.0%
Previous:      -0.5%    1.9%

Outlook:   Consumer prices are expected to have rebounded in February with a pick up in domestic spending and housing prices.  Analysts expect that inflation reached the Bank of England's target of 2.0% in February, fueled by better than expected retail sales of 0.5% growth from January.  In addition, there has been a recent revival in UK housing prices.  According to the Rightmove measure, prices of residences have risen 4.3% from a year earlier, while monthly growth of 0.9% was the fastest in over a year and a half.  Given these expectations, the market has lowered its expectations of a rate cut this year despite a strong recovery in growth gauges.  The Bank is expected to maintain overnight borrowing costs at 4.5% until inflationary data shows some follow through from a domestically driven rebound that would call for a more hawkish position.

Previous:  Inflation in the UK unexpectedly slowed to 1.9%, falling far short of the expected 2.3% growth for the year through January, as retailers continued to slash prices to compensate for tight consumer budgets.  Meanwhile, consumer prices actually contracted 0.5% from December's index.  Furniture and household equipment costs took the lead by sinking 4.8%, clothing and footwear prices were slashed 4.1%, and food receipts dipped 0.3%.  Retailers were forced to lower profit margins in the opening month of the year as consumers continued to face record debt levels and increased energy prices that left purses light. In addition, unemployment has been increasing while wages growth has been subdued.  The country has struggled to recapture the strong pace of growth experienced before the fourth quarter of 2005.  Since the strong slowdown, the Bank of England has kept its benchmark interest rates at 4.50% in hopes that the economy will expand 2.5% for the current year, and beyond 3.0% next year, without having to further lower borrowing costs.

U.S. Producer Price Index (FEB) (13:30 GMT, 8:30 EST) (MoM)  (YoY)
Consensus:  -0.2%   4.8%
Previous:       0.3%   5.7%

Consensus: For the first time in three months, economists are predicting producer prices to fall as the U.S. Producer Price Index is estimated to decline by 0.2% in February.  Although the PPI is expected to reflect a fall in input prices, producer price deflation over the month of February is not likely to illicit an immediate abandoning of the Federal Reserve's tightening policy.  While prices on the whole may very well have declined through the month, much of the drop resulted from a downturn in crude oil input costs.  Core producer price inflation, on the other hand, is still lurking and will require the Fed to maintain its firmness for a bit longer.  Eventually, U.S. manufacturers will have to start cutting prices regardless of fuel costs if they wish to remain competitive in the global marketplace.  This will prove true especially in the automotive and electronic industries.
Until such price discounts taking shape, the Fed is unlikely to step away from its stringent monetary policy in too great of a hurry. 

Previous: Prices paid for goods at the wholesale level increased by 0.3% in January on more than just fuel costs.  A 0.4% rise in the core PPI indicated that January's surge in crude oil prices was only an additional factor affecting producer prices over the month.  Higher vehicle and machinery costs were the largest contributors, aside from energy products, to the wholesale level inflation.  Some machinery manufacturers estimate quarterly profits to improve by as much as 50% on higher prices alone.  Such price inflation warrants the Fed's attention because the production environment in which it takes places suggests that the U.S. economy may be nearing a point of maximum capacity utilization.  Manufacturers have recently begun to reveal huge order backlogs and delayed shipments to retailers, exposing hot demand for industrial products.  Rising prices in the face of such rapidly increasing demand may result in intense inflationary pressure, pushing the Fed to hold on to its tightening policy for a little while longer.

Canadian Retail Sales (MoM) (Jan) (13:30 GMT; 08:30 EST)
Consensus: 1.0%       
Previous: 0.3%      

Outlook:  Sales at Canadian retailers are expected to have accelerated for the fourth straight month in January as the labor market remains relatively tight and wages are continuing to rise.  In addition, the redemption of gift cards bought during the holiday, which are not tallied until they are actually redeemed, is expected to lend a helping hand to inventory movement.  However, recent drops in energy prices may have put additional pressure on gasoline stations to maintain performance.  While consumer spending remains strong, the Bank of Canada is anticipated to leave interest rates unchanged at 3.75% as inflation declined in February, down -0.2%, and core consumer prices held below the Bank's benchmark of 2.0% for the year.  Since consumer spending accounts for 57% of the gross domestic product, this additional data set is expected to help the economy to maintain its strong pace of growth.

Previous:  Canadian retail sales expanded for the third straight month in December, up 0.3% against expectations of 0.2%.  Consumers were seen spending more on home electronics, furniture, and appliances during the holiday season as sales increased 1.0% from November, while food and beverage stores saw a gain of 0.6% in purchases.  In other component areas, vehicle and body part sales dropped 1% with car sales in a precarious position for most of North America.  While spending remained robust, consumer prices responded by rising to 0.5% from -0.1% in December, while the current account grew to C$13.3 billion from C$9.3billion over the same period.  Wages were also seen increasing while the unemployment rate dropped from 6.6% to 6.4% pumping more capital cash into consumers' pockets.  For comparison, Canadian gross domestic product expanded a better than expected 0.4%, suggesting consumer spending will continue to contribute to growth in the current quarter.  These combined factors led the Bank of Canada to raise interest rates to 3.75% from 3.50% at their March 7th meeting in order to prevent capacity restraints from catalyzing price growth beyond control while also keeping the economy growing at a controlled pace.

Richard Lee is a Currency Strategist at FXCM.