1. Japanese Trade Balance
2. German CPI
3. UK ILO Unemployment
4. US Trade Balance
5. Canada International Merchandise Trade

Japanese Trade Balance - BOP (FEB) (23:50 GMT; 19:50 EST)
Consensus:   Ã,Â¥910.0B
Previous:  - Ã,Â¥209.4B

Outlook:  In February, Japan's trade balance is expected to rebound comfortably back to a surplus of Ã,Â¥910.0B after exports rose 20.8% from the previous month, the fastest rate since April 1997.  Rising crude oil prices were overshadowed by strong demand from the US and China. Economists expect that exports to the US will remain healthy through mid-2006, largely on the increase in orders for fuel-efficient vehicles.  The trade balance faces downside risks however as US imports of the country's autos are expected to slow and crude oil prices, which accounts for more than half of total consumption, remain high.  Core prices are anticipated to remain inflationary, but too mild for the Bank of Japan to tighten their monetary policy in the immediate future.

Previous:   The trade balance, which accounts for 70% of the current account, swung to a deficit in January to -Ã,Â¥209.4B from a surplus of Ã,Â¥1059.9B, as Japan's import prices continued to inflate with high oil prices.  Economists discounted the swing as exports remained steady, and trade conditions were under control.  The abundance of jobs, and record income levels, have stimulated consumer spending and domestic demand.  Meanwhile, the gross domestic product annualized beat expectations of 5.0% growth in March, at 5.4%, indicating that the economy is keeping pace toward recovery.   The positive flow of data led the Bank of Japan to end their quantitative easing policy, which will reduce the amount of money the government has pumped into the financial system within the next few months.  However, BoJ Governor Fukui has continued to stress that the board will only raise interest rates from near zero once they are confronted with consistently healthy inflationary reports.

German Consumer Price Index (MAR F) (06:00 GMT; 02:00 EST)
                     (MoM)    (YoY)
Consensus:    0.1%      1.9%
Previous:        0.4%      2.1%

Outlook:   Consumer prices are expected to have increased by 0.1% on a month to month basis and by 1.9% on an annual basis in March.  To no surprise, energy price increases are anticipated to have the biggest impact on annual price increases for the month.  With dramatic increases in gas and heating oil costs pushing producer prices higher in late February, input price inflation over previous months may have trickled down into consumer prices in March.  The European Central Bank will have to be cautious of companies increasing wages in response to demands made by Germany's formidable labor unions as they could encourage further inflation.  In addition, a 3 percentage point increase in the nation's value added tax next year makes it even more critical that inflation be tamed in 2006.  As such, interest rate futures suggest the ECB will increase rates to as high as 3.25% before the end of the year. 

Previous:  Inflation in Germany maintained a rate of 2.1% on an annual basis in February.  From the previous month, consumer prices increased 0.4%.  In a twelve-month period, fuel costs have surged 13.3%, making steeper energy prices the biggest reason for the year over year inflation in consumer prices.  Excluding volatile energy products, the annual inflation rate was only 1.3% as prices for electronic equipment, namely telephones and fax machines, fell dramatically.  February marked the sixth straight month of annual inflation rates coming in higher than the ECB's policy-setting ceiling of 2.0%.  Because steep energy prices have made it harder to meet personal budgets, Germany's largest labor union has demanded pay increases for 3.4 million engineering workers.  Wary that high energy costs could move workers to demand higher wages and push inflation rates even higher, the ECB has maintained its
inclination towards steeper rates.   

UK ILO Unemployment Rate (3M) (FEB) (08:30 GMT; 04:30 EST)
Consensus: 5.0%
Previous:  5.0%

Outlook:  Analysts expect that unemployment will remain constant at 5.0% in February as job gains are offset by layoffs.  A government report on March 31 revealed that jobless claims gained the most in more than 13 years.  Likely a result of the high number of sacked workers, retail sales contracted for the first time this year.  Likewise, manufacturing declined in February and business investments dropped in the fourth quarter of last year.  However, expansion was seen in the services industry that drives two-thirds of the economy.  This, combined with rising home prices in the $6 trillion property market, has prevented the Bank of England from making any changes to interest rates.  A deviation from the expected 5.0% unemployment rate may give investors a better picture on the current state of the economy.

Previous:   In January, the UK's jobless rate unexpectedly fell for the first time in a year, to 5.0% from 5.1%, indicating that the sharp rises in oil prices have not trickled through to the consumer and other secondary sources.  This reading, combined with a fourth quarter expansion, has reduced expectations of a rate cut this year.  The economy grew 0.6%, led by a 0.9% increase in services.  In lieu of reduced unemployment, consumer spending picked up along with retail sales further suggesting recovery from an economic slowdown.  In addition, there have been robust gains in housing prices, which the Bank of England expects will drive inflation this year.  As the economy seems to be strengthening and inflation remains within targets, the BoE left interest rates unchanged at 4.50% for an eighth month. 

US Trade Balance (FEB) (12:30 GMT; 08:30 EST)
Consensus:  -$67.9B
Previous:   -$68.5B

Outlook: The United States' ever-present trade deficit is expected to have contracted slightly in February as rampant spending by US consumers moderated with the sudden drop in temperatures.  Unusually mild temperatures, which had floated consumer confidence for nearly three months, finally reverted to normal winter levels in February.  Consequently optimism in the world's largest economy fell from a 106.8 read in January to 101.7 according to the Conference Board's measure. Beyond the general dulling of consumer optimism for the period, a 13% decline in crude oil prices further presented a significant reduction to foreign receipts.  Accordingly, the cost of imported goods over the month actually fell 0.5%.  Other contributors to the drop were the largest decline in food prices in four years as well as softer chemical prices.  Demand for US exports on the other hand was likely well supported as global business and consumer optimism continued to drive higher.  The disturbingly high trade shortfall has become one of the largest draws on US dollar strength over the last few quarters and will continue to be until either fiscal policy or natural market functions are able to moderate it.

Previous:  The US's trade deficit with the rest of the world widened to a record $68.5 billion in January as exuberant domestic consumer demand benefited cheaper goods from abroad.  While the value of exports over the month accelerated 2.5% to $114 billion, its highest level on record, imports easily exceeded it with a 3.5% rise to $182.9 billion.  As retail sales at home jumped 2.3%, demand for foreign-made consumer goods rose to a value of $36.2 billion while those for autos climbed to $22.7 billion.   Another weighty issue for the trade value was purchases of overseas energy products.  Though demand for crude slimmed 8.2 million barrels over the month, the total cost of petroleum imports actually rose to $24.6 billion from $23.6 billion in December.  Finally, the most alarming feature of an already alarming shortfall came from the US deficit held with China.  After accounting for nearly a quarter of the United State's deficit through 2005, China leg up began the year by growing 9.9% to $17.9 billion.

Canadian International Merchandise Trade (FEB) (12:30 GMT; 08:30 EST)
Consensus: C$6.2B  
Previous:  C$6.3B 

Outlook:   Canada's trade surplus is expected to contract for a second month in a row in February to C$6.2 billion as key energy exports plunge over the month.  In February, crude oil, which actually rose in the previous period, plummeted 14% as global demand cooled on the heels of unseasonably warm weather.  The more prominent subtraction from exports however was likely from a hefty 30% decline in the price of natural gas.  Canada is the world's largest exporter of natural gas in the world.   Potentially another problematic situation for Canadian exports over the period was the exchange rate.  In February, the Canadian dollar pushed to a new 13-year low against the US dollar, marking a 30% appreciation against the benchmark currency in four years.  Trade between Canada and its neighbor to the South is particularly important since nearly 85% of its exports are destined for the US.  With many components lining up against the balance, there are an equal amount lining up in their favor - mainly new highs in precious and industrial metals.   The Bank of Canada monetary policy circle will keep an eye on the trade number as subsequent revenues and capacity constraints that result are inflationary.

Previous:  Canada's trade surplus dropped from a five-year high C$7.69 billion in January to C$6.35 billion as prices for key commodity exports pared back huge gains obtained in the previous few months. Declines in energy exports were the largest detractor from Canada's trade excess after falling 15% to C$7.9 billion.  Whereas prices for crude were in the midst of a resurgence from December lows that eventually capped out at $70 per barrel, those of natural gas proceeded to extend its decline with another 17% drop to nearly half of its December high.  Another emerging drain on exports came in the form of manufacturing shipments.  Manufacturers who up to that point were enjoying phenomenal revenues from raw material sales abroad, actually saw foreign sales fall 0.4% in the month to C$8.4 billion suggesting the high Canadian dollar-based exchange rate was finally taking its toll on sales.  Despite this contraction in the balance, economists and policy-makers alike believe the underlying strength in the measure will continue to make a healthy contribution for months to come.

Richard Lee is a Currency Strategist at FXCM.