1. Japanese Tertiary Index
2. Canadian Retail Sales

Japanese Tertiary Index Industry Index (FEB) (23:50 GMT; 19:50 EST)
Consensus: -1.1%
Previous:   2.2%

Outlook:  Japan's service sector is expected to have taken a hit in February as economists expect the Tertiary Index to undergo a decline of 1.1%.  The decline is a bold estimation on the part of economists considering Japan's employment situation and leading indicators showed significant improvement in February.  The greatest factor supporting the case for a decline is January's massive rally in crude oil prices. Historically, Japanese consumers have been very sensitive to high energy prices.  Last year's post-hurricane highs resulted in poor spending activity in the final quarters of the year.  Many are afraid that January's surge may have had the same effect on spending in the service sector over February.  Given that the Bank of Japan has already adjusted its money supply targets in anticipation of moving away from its loose monetary policy, it is unlikely that the BoJ will now step down from its more hawkish position.  However, any relapses in spending may result in a delay before the Bank can start to tighten rates.  

Previous: The Japanese Tertiary Index made its biggest gain in a year as it rose 2.2% in January from December.  The index benefited largely from a stronger labor market, which in turn, contributed to more rapid increases in spending.  For the fifth month in a row, wages rose in January, marking the longest stretch in wage growth since 1997. Additionally, the country's job-to-applicant ratio was at a 15-year high of 1.03.  These advancements in the labor market resulted in consumer confidence of the highest level in 15 years.  The service sector benefited from this optimism as Japanese consumers sought to travel more and engaged in more leisurely activities.  January's surge in the Tertiary Index adds to evidence that Japan's economy has begun a rebound on consumer consumption. 
 
Canadian Retail Sales (FEB) (12:30 GMT; 08:00 EST)
Consensus:  0.1%
Previous: 1.4%

Outlook: The slew of factors that contributed to strong retail sales in January were notably absent the following month, resulting in a much slower 0.1% growth consensus for the period.  First and foremost for the month of February was the sharp change in temperature.  Canadians, in the month prior, took advantage of the warmest January temperatures in recent history to hit the stores.  Building supply sales likely dropped in tune with the thermometer as developers and expected home homeowner found it less profitable to break ground on a frozen lot.  The same is expected to have happened in clothing and sporting goods sales with the additional effect of waning gift card redemptions hitting bottom lines especially hard.  Conversely, consumers may have found more reason to spend with lower gasoline prices leaving Canadians with more disposable income.  If sales can retain to its current pace, domestic consumption could be the driving force behind economic growth in the current year. Bank of Canada monetary policy officials will watch the retail sales data with particular interest over the coming months to monitor second round inflationary effects from energy prices.

Previous: It was the third year in a row that Canadian retailers have benefit from strong January sales.  Sales for the opening month of the year accelerated 1.4% to mark a record C$31.8 billion as gift card redemptions provided the foundation to rises in purchases of autos, sporting goods and building supplies.  New car dealers sold 1.3% more in January following a weak December with potential buyers taking the plunge despite the fact that it was still considered an expensive investment given the high gasoline prices at the time.  Gift card exchanges proved to be especially beneficial for electronic and sporting goods stores.  The former saw sales rise 4.7% while the latter witnessed a 6.3% increase.  Another explanation for the month's strong sales was the part played by the unseasonably warm weather and the observation of certain holidays, drawing consumers into stores.  Overall, sales rose in seven of the eight general retailer groups.  The food and beverage industry, the exception, experienced a 1.2% drop in purchases.  As domestic consumption continues to bolster economic growth in the Canadian economy, the Bank of Canada continues to see reason to stick to its hawkish rate policy, even as inflation continues to ease within tolerance levels.

Richard Lee is a Currency Strategist at FXCM.