Japanese Consumer Confidence Households (MAY)(5:00 GMT, 1:00 EST)
Consensus: 49.6
Previous: 50

Outlook:  Rising last month, the consumer confidence report is expected to dip slightly as weakness in near term consumer spending and overall economic prospects was witnessed in the month.  Strengthening with confidence earlier in the year, posting two consecutive 1.1 percent monthly gains, retail trade has dipped slightly according to the most recent report.  The dip looked to be as result of widely felt losses in benchmark equities, with many investors reluctant to spend as losses mount in domestic investments.  The hesitation looks to also be a product of speculation surrounding the final decision to lift rates in the worldââ,¬â"¢s second largest economy.  Nonetheless, expectation remains somewhat positive as employment prospects continue to remain plentiful with an unemployment rate remaining at 15 year highs.  Estimated to decline by 0.4 points, the report should still remain optimistic and add to recent speculation of rate hike considerations by the Bank of Japan.  Current consensus estimates pit a potential hike as early as July.

Previous:  Consumer sentiment has picked up to the fastest pace in almost 15 years as wage increases and positive employment prospects continue to fuel the overall expansion.  According to the Cabinet Office, confidence among domestic households increased to a reading of 50, minimal expansion, as optimists outnumbered national pessimists.  The last time the survey rose to this level was back in 1990.  Attributed to the better than expected figures look to be vastly improved employment prospects as the overall rate of unemployment dipped to a seven year low of 4.1 percent in the month of March as wages climb fueling consumer consumption figures.  The higher figure looks to add to near term currency strength as it heightens the possibility of a near term rate hike by policy officials as it is coupled with nascent inflationary pressures.

UK Producer Price Index Input S.A. (MAY)(MoM)(8:30 GMT, 4:30 EST)
Consensus: 0.1%
Previous: 2.5%

Outlook:  UK Producer prices are expected to abate more than slightly as energy prices and a weaker consumer sentiment looks to have purported producer inability in passing on higher costs to the retail level.  Previously rising 2.5 percent, the figure is expected to have followed up with a 0.1 percent increase in the month of May.  A major contributor to the reversal in sentiment looks to be weaker retail sales figures that were reflective of temporary consumer pessimism.  Even more depressing has been the fact that the most recent reports have indicated a round of layoffs in remaining competitive without the need for raising prices.  This pessimism looks to have kept consumers at bay, creating a difficult situation for manufacturers and retail outlets alike.  Subsequently, the inflationary measure may keep hawks at bay, albeit momentarily, till higher energy costs seep their way back into the survey.

Previous:  Prices at the producer level rose to the highest level in seven months for May as higher economic prospects have boosted the ability by producers and manufacturers to increase prices at the consumer level.  According to the Office for National Statistics prices excluding food, drink and petroleum prices rose 0.4 percent while raw materials ended 2.5 percent higher.  With recent stabilization in the housing sector, a rebound in manufacturing and industrial production and optimism of subsequent consumer spending, the UK economic prospects have spurred on seemingly higher rates of inflation in the near term.  As a result, futures traders continue to purport the notion of two more rate hikes as it becomes increasingly clear that inflation will continue to remain over the economy by pricing a higher probability of the decision.  Subsequently, with energy costs remaining lofty, inflationary pressures are surely to be reflective.  The yield on the three month Libor contract due in December are trading higher at a 5.01 percent. 

Richard Lee is a Currency Strategist at FXCM.