• Australian Westpac Leading
• Bank of England Minutes
• Euro-Zone Trade Balance
• New Zealand Current Account

Westpac MI Leading Index (JAN) (23:30 GMT, 18:30 EST)
Consensus: n/a
Previous:     0.3%

Consensus: Although no official estimates have been made regarding the Westpac Banking Corp. and Melbourne Institute's Leading Index report, recent economic trends in Australia suggest that the indicator will show no drastic improvement in the nation's economy.  Trade, consumption, and employment data all point towards a softer Australian economy entering 2006.  The nation's trade deficit surged over January, suggesting that Australian manufacturers did not produce at levels high enough to make significant contributions to growth on the month.  Additionally, the number of building permits issued over the month and retail sales volume both fell during January, evidencing the negative effect a slowdown in the Australian housing market has had on consumption.  Furthermore, companies have been sluggish in the rate at which they are hiring new workers.  In the context of no significant gains in productivity, such stagnation in the labor market may be another indicator of slowing economic growth.

Previous: In December, the Westpac MI Leading Index increased by 0.3% to a value of 234.6.  After two straight months of 0.6% increases, December provided the weakest gains to the Australian economy in the fourth quarter of 2005.  As a result, fourth quarter gains in GDP came in at a weaker than expected 0.5%.  If not for relatively strong government spending and capital investment on the part of Australian businesses, the nation's economy may very well have reached a point of stagnation.  With such a lethargic pace of growth, inflation was still in check at the end of 2005.  As such, the Reserve Bank of Australia was able to hold interest rates at 5.50% for yet another month.  Although economists feel that an interest rate hike is more likely than a cut, chances that the central bank will take action any time in the near future are minimal given December's economic suppleness. 

Bank of England Minutes (09:30 GMT; 03:30 EST)

Outlook:  Commentary from the Bank of England Monetary Policy Committee's March 9th meeting is expected to echo the beginning stages of revived growth in Europe's second largest economy and price growth that is hovering inline with policy officials' target level.  The market was not surprised at the last policy meeting when the unanimous consensus of a pass on changing the 4.50% overnight lending rate came to fruition.  Putting of any expectations for another rate cut from the central bank this year, growth has shown steady and broad signs of recovery from last years disappointing pace of expansion.  Though the UK economy grew uninterrupted for 53 straight quarters, last year's pace was the slowest in 13 years.  However, looking to available data for the first few months of the current year, the sudden slowdown in growth could just as quickly rebound.  Already, services in February have accelerated to their most productive level in 22 months, while the manufacturing sector has posted three consecutive months of expansion in January after having bottomed out at three-year lows in the previous quarter.  Even consumer spending, which has taken responsibility for last year's slump in growth, is showing promise in the housing market.  According to a recent release by the BoE, mortgage approvals stuck to its highest level since August of 2003.  However, poor retail sales and rising unemployment throw caution into the mix concerning any serious momentum behind a resurgence in consumer spending and, subsequently, inflation in the prices of consumer goods.  The annual measure of CPI, the principal indicator of price growth, has remained held near the BoE's 2.0% target for the past few months.   Furthermore, the bank said in its last revision of its inflation forecast that prices should grow in line with the bank's target for the remainder of the year.

Euro-Zone Trade Balance (JAN) (10:00 GMT; 05:00 EST)
Consensus: -€4.5B
Previous:     -€0.9B

Outlook:  The Euro-Zone's trade deficit with the rest of the world is expected to worsen dramatically to €4.5B euros.  The most obvious culprit for such a remarkable surge in the gap between exports and imports is January's explosion in energy prices.  Imports in the Euro-Zone have been consistently strong since a pick-up in trade activity in the final four months of last year.  Likewise, exports have been growing of late peaking in November to a volume of 113.2B.  In January, however, import growth is likely to obliterate gains in exports due to rising fuel costs, which received a push from political instability in Nigeria, hostilities with Iran and harsh words from Venezuela.  Such fervent demand for energy inputs could prove beneficial for European economies if manufacturers step up production accordingly.  While another monthly trade deficit may hurt GDP figures, a move to accelerate production to meet consumption could counterbalance the effect of a trade gap.  Going forward, more recent revelations of plentiful crude oil inventories may help the Euro-Zone return to a pattern of monthly trade surpluses. 

Previous:  The Euro-Zone trade balance came in at €0.9B shortfall in December 2005.  Overall trade volume fell considerably from the previous month as exports totaled 108.0B and imports were valued at 108.9B.  Coincidentally, although total volume was significantly higher in November, the gap between exports and imports was identical.  Notably, December's trade deficit was in stark contrast to a sizable surplus the same time one year earlier, reflecting the impact of higher energy costs and an expiration of trade quotas on Chinese imports in 2005.  Prior to 2005, imports of Chinese textiles were regulated for decades.  December's deficit, however, reveals the Euro-Zone's widening trade gap with China following the expiration of trade restrictions.  While the deficit weighted down fourth quarter GDP growth in the Euro-Zone, heavy imports reveal strong domestic demand that may be leveraged for future growth. 

New Zealand Current Account Balance (4Q) (22:45 GMT; 17:45 EST)
Consensus:  -NZ$3.70B
Previous:      -NZ$5.07B

Outlook:  The New Zealand current account is expected to have shed a significant portion of its record breaking deficit from the previous period in the final quarter of last year.  Contributing to, and perhaps leading, the decline in the broadly measured trade figure was the cooling in aggressive consumer spending.  With employment falling for the first time in three years over the fourth quarter, the ability to make large purchases on equity borrowed from residences became a more risky venture.  Even with a jobless rate that is the lowest among the 27 economies in the OECD and 2.9% fourth quarter wage growth, New Zealanders had more commitments on their paychecks.  Prices for energy products were still near record highs, making it more expensive to fill gas tanks and heat homes.  The other factor working against the incessant spending habits of New Zealand citizens were the two hikes to the benchmark lending rate level to 7.25% over the three months, making adjustable rate mortgages and new fixed mortgages a much more expensive investment.  In response to the higher borrowing rates, retail sales grew at their slowest pace since the first quarter of 2003; indicating that RBNZ Governor Alan Bollard's efforts to stem inflation were working.  Increased foreign investment was likely another beneficial side effect of the higher lending rates that acted as an enticement to foreign investors looking for the highest return with the lowest risk.

Previous:  New Zealand's current account deficit swelled to its largest level ever in the third quarter prompting a warning from Standard & Poor's that the country's outstanding credit rating could be at risk.  Making the large leap from a deficit of NZ$2.8 billion in the three months ending in June to record NZ$5.1 billion was the work of a few key factors.  The issue for the trade shortfall came from a weaning demand for New Zealand-produced goods abroad.  The culprit for slower sales of meat, cheese and other exports that make up fully 30% of GDP was a currency that was 75% more expensive than the low four years ago and 17% higher than just a year ago.   This hit to kiwi businesses didn't seem to translate to hurt consumers at home however.  Consumer spending, financed by a record low unemployment rate and a 15% appreciation in home values from last year, hit a fever pitch.  Citizens used the equity in their home to increase their purchasing power and the object of their spending was imports.  Imports grew a whopping 12 percent in the third quarter on an annual basis paced by an increase rise in purchases of aircraft, trucks and gasoline.  Energy products were furthermore a particular problem for the broadening shortfall.  With crude oil prices hitting all-time highs in September, companies and regular citizens were left little choice but to pay for the higher price and keep their factories and heaters going.  The one factor making a difference in the balance in support of New Zealand were foreign investment into New Zealand.  With the highest overnight lending rate among the majors, yields on the country's debt were an attractive place to park money for global investors.

Richard Lee is a Currency Strategist at FXCM.