1. Tokyo Department Store Sales
2. US Industrial Production

Tokyo Department Store Sales (YoY) (MAR) (05:30 GMT; 01:30 EST)
Consensus: n/a
Previous:  -0.9%

Outlook:  No official estimates have yet been released in expectation of March's Tokyo department store sales.  Given strong consumer confidence readings and employment conditions of late, however, March's sales are likely to fare far better than the previous month's.  Japan's Eco Watcher's survey of current conditions jumped to 57.3 over the month on an improving employment situation. Bank lending also increased in March, suggesting that businesses and consumers have maintained their inclination towards spending, which could help bolster department store sales.  Finally, and perhaps most indicative of spending patterns in Tokyo, condominium sales skyrocketed by 13.4% over the month after a 16.7% retraction in sales in February. In 2005, Mitsukoshi, Ltd., the nation's largest department store chain, realized profits of 19.9B yen as opposed to an anticipated 15.6B yen.  If March brings an improvement in sales over February, department stores like Mitsukoshi will continue to profit from the domestic consumption frenzy that has begun to fuel Japan's economic expansion.

Previous: Sales at Tokyo's department stores retracted by 0.9% in February, matching the overall trend in retail sales throughout Japan. Comparatively, on a nationwide level, general retail sales fell 1.5%. The month's decline in sales volume followed a 2.4% increase in retail sales across Japan-the biggest gain in a year.  As a result of white-hot domestic demand in January, Japan's trade balance came in at a monthly deficit for the first time in many years.  To no surprise, February's drop in sales volume marked a return to a positive trade balance. Plummeting sales over the month are most likely a reflection of Japanese consumers' attempts to make up for indulgent spending on post-holiday clearances in January.  Therefore, the decline should not be construed as a softening of domestic demand but rather should be placed in the context of Japan's consumption rebound. 

US Industrial Production (MAR) (13:15 GMT; 09:15 EST)
Consensus: 0.5%
Previous: 0.7%

Outlook: U.S. industrial production is likely to realize a 0.5% increase in output volume over March, extending the industrial sector's recent rebound from a retraction earlier in the year.  As consumer spending and capital investment fail to let up in spite of the Federal Reserve's persistent tightening of borrowing costs, factories and mines will have to rev up production even further to meet product and energy demands.  With increasingly less available capacity to tap into, producers may soon resort to increasing prices.  Along with stepping up employment levels, such action could drive concerns over higher inflation.  From mid-February to mid-March, manufacturers added 41,000 workers to their payrolls.  Furthermore, February's average workweek was half an hour longer than the average of the previous 5 years.  Stronger overall employment would give producers even more reason to start charging higher prices.  Following February's increase in industrial production, the Federal Reserve raised interest rates another quarter point to fight inflation.  Given March's capacity utilization and employment scenario, it is likely that the Fed will
continue in its pursuit to keep inflation in check.      

Previous: Industrial production bounced back in February gaining 0.7% in output volume after a 0.3% decline the previous month.  Much of the gain came from a jump in utility output of 7.9% as consumers used more electricity and natural gas to heat their homes.  Apart from utilities; computers, semiconductors, and communications equipment saw more rapid production, reflecting an increase in business equipment investment that could help drive economic growth.  Production of automobiles and auto parts on the other hand, retracted by 0.8% as factories scaled back to match waning consumer demand for those products.  In February, weak purchasing of autos severely hurt overall retail sales.  Manufacturers have therefore limited output in this area to avoid a build up of inventories. On the whole, an increase in capacity utilization to 81.2%, which matches December's 5-year high, allowed factories and mines to produce more.

Richard Lee is a Currency Strategist at FXCM.