1. Japanese Retail Sales
2. UK GDP
3. Swiss KOF Leading Indicator

Japanese Retail Sales (FEB) (23:50 GMT; 18:50 EST)
                  (MoM)  (YoY)
Consensus: 2.0%   0.7%
Previous:     2.4%  -0.4%

Outlook:  Sales of consumer goods in February are expected to decelerate from the previous month's year-high pace as shoppers had to pay less for fuel products allowing more disposable income to be directed to other finished goods.  Expectations of 2.0 percent growth in sales last month lies in expectations of spending habits following the shift in the weather.  After a January of temperatures well below the average, February's weather returned to normal.  Prices of gasoline and heating oil plummeted over the month reducing its stress on consumers' wallets and leaving more to be spent in other areas, and sentiment over the same month may signal that spending was on still on many a mind.  The government's measure of consumer confidence rose to 49.9, the highest level in recent history.  Though the 50.0-level, denoting an equal number of optimist and pessimists, was not reached; it likely still translated into more liberal spending habits and therefore sales.  Other declines in component gauges from the previous month were likely contributors in February.  Sales of clothing and accessories probably cheered with the rising mercury, bringing into view more practical purchases of spring clothing lines.  The same is probably true for food and beverages as well.  Though a less important indicator in the past, purchases by consumers on retail goods as gleaned a new importance after the BoJ's announcement that it is abandoning its ultra-accommodative monetary policy and has actually provided inflation tolerance limits.  With each indicator that lends itself to rising inflation, the closer the central bank moves to a rate hike.

Previous:  Retail sales in the world's second largest industrialized economy slowed 0.4 percent on an annual basis in January as unseasonably cold weather kept Japanese shoppers at home, an interesting contradiction to the country's global counterparts.  With the temperature dropping, so did purchases of food and beverages as well as clothing.  With the chilly weather, consumers were inclined to make fewer trips to the grocery story and rein in their spending on cold beverages stemming spending on the goods by 1.4%.  Barren streets were more a burden for clothing stores.  Sales at retailers of clothing and accessories plunged 3.3% on the combined effects of a seasonal contraction in spending habits after the holiday season and spring clothing lines that were introduced to early in the year.  In other areas, moving inventory in equipment and vehicles also proved difficult.  Sales of autos dipped slightly by 0.2% as frugal Japanese considered the ever-looming effects of higher gasoline prices.  Purchases of home appliances and other consumer goods dropped 2.9 percent in a natural rebound from December's spendthrift, holiday shopping season.  Of the components in the overall index, sales of fuel were among the only to actually print a positive number.  On the back of rising commodity prices, such as crude oil, natural gas and gasoline, receipts for energy products surged 11.1 percent.

UK Gross Domestic Product (4Q F) (8:30 GMT; 3:30 EST)
                       (QoQ)  (YoY)
Consensus:      0.6%   1.8%
Previous:          0.5%   1.8%

Outlook:   Europe's second largest economy is anticipated to have expanded by 0.6%, a slight increase from February's estimates. Household demand should have increase 0.9% from 0.7% over the same quarter, with government spending followed pace at 0.8% according to estimates.  Demand from the consumer sector encountered some hurdles over the period however with wage growth slowing to its most restrained pace since the final three months of the 2003 and consumer confidence consequently falling to its worst level since March of 2003.  The lack of confidence however was surprisingly not reflected in retail sales figures for the quarter, with monthly growth in the measure averaging above 0.6%.   Further a burden on spending habits, core consumer prices have increased faster than expected, and stronger than previous data suggested.  The increases in oil prices at the end of last year has also placed pressure on manufacturing growth, economists expect a contraction of 1%.  In fact, industrial production cooled a hefty 1.4% in September on the surge in energy costs.  Finally, housing inflation and strong mortgage demand have reduced downside risks to the economy associated with household demand.  Nationwide housing prices reportedly expanded at a moderate yet, admirable pace in the final three months of the year. With this smattering of data on hand, traders have continued to reduce expectations of a rate cut by the Bank of England, and increased speculation of a rate hike by the end of the year.

Previous:  The gross domestic product for the UK only expanded 0.5% in the final quarter of last year according to the preliminary estimates from the government.  Last quarter's growth is attributed to the fastest increase in household spending in over a year as well as a hearty rise in government spending.  The Bank of England forecasts consumer spending, accounting for nearly two thirds of the economy, will continue to be the driving factor behind growth for 2006. Consumption among households rose 0.8% over the period.  For the year, the economy grew 1.8%, the slowest pace in thirteen years and tame in comparision to the 3.2% increase in 2004. Detracting from the otherwise positive numbers in the consumer and government arena were the three quarters of contraction, of the four last year, in manufacturing - especially marked by the recession in the sector in the first half of the year. Investment by businesses and government entities was also a leak in growth with companies restraining their investment in factories and equipment. The recent stream of strong economic releases, including data indicating a recovery in the England's $6 trillion housing market, combined with the optimism from the Bank about a strong recovery for the year has significantly reduced analysts' expectations of an interest rate cut in the near term.  The BoE left borrowing costs unchanged at 4.50% this month.

KOF Swiss Leading Indicator (MAR) (9:30 GMT, 4:30 EST)
Consensus:   1.35
Previous:       1.30

Consensus:  Switzerland's leading indicator is likely to rise for the tenth consecutive month to 1.35 in March.  The KOF research institute approximates that a continuation of export growth coupled with a recent surge in domestic consumption will result in acceleration of GDP growth later this year.  In February, business confidence in Germany, Switzerland's largest trade partner, rose to the highest level in over 14 years.  Export demand, therefore, is expected to remain healthy for months to come.  Adding healthier consumer spending to this maintenance of foreign demand could push GDP growth up to as much as 2% this year in contrast to last year's average growth of 1.5%.  With such strong growth potential on the horizon, the Swiss National Bank can afford to be less cautious in pursuing their adoption of a stricter monetary policy. 

Previous: The KOF Leading Indicator jumped up to 1.30 in February from 1.26 in January.  Signs that Switzerland's export-led expansion may be broadening into the domestic consumption and investing scenes have improved economists' expectations of the nation's economic performance for coming six months.  In the three months ending last year, employment levels increased by the most in 3 years.  Furthermore, retail sales posted their largest gains in four years over that same quarter.  The Swiss National Bank's decision to raise interest rates to 1.00% in December suggested that consumer spending may be heading in a direction that calls for stricter monetary policy.  As such, economic growth in Switzerland is expected to be supported not only by exports but by expenditures and investment on the domestic front as well.  If indeed growth at home can compare to expansion resulting from foreign demand, the SNB will have plenty of room to continue their pursuit of higher interest rates.

Richard Lee is a Currency Strategist at FXCM.