UK RICS House Price Balance (MAY) (23:30 GMT; 19:30 EST)

Consensus:                 14.0%
Previous:                     15.0%

Outlook: Higher inflation in Britain is not likely to leave housing prices untouched in May, with the Royal Institute of Chartered Surveyors housing survey predicted to fall only two percentage points below its two year high in February. The RICS survey shows the proportion of surveyors expecting housing prices to increase as opposed to those expecting housing prices to fall, with those expecting a rise in housing prices outnumbering those predicting a drop by a net 14%. Subsidizing the expected RICS survey level, the Nationwide Housing Prices survey showed 0.2% growth in the price level for the same month. Housing prices in England are therefore likely to continue their slow but steady growth, as the Bank of England avoids interest rate hikes to with inflation within tolerance levels. Indeed, many people could be attempting to lock in mortgage rates before the BoE does raise rates, which it is expected to do before the end of the year. Economists are hoping that a strong housing market could help spur consumer spending, which was the weakest component of Britainâ�,��"�s first quarter GDP numbers, expanding only 2.2% from the year before.

Previous:  In April, realtors expecting a housing price increase outnumbered those expecting a fall by 15%. Their prediction seemed vindicated, with housing prices rising only slightly, with an increase of 0.1% over the month before in the HBOS survey. At that time, speculation arose as to whether these numbers did actually indicate a slowdown in the housing market, as other numbers came in positive. The ODPM survey, one of the most reliable measurements of housing prices, showed a 3.3% price increase from the same period a year ago. In addition, one of the best performing subcomponents of the indicator was that of larger homes, rather than smaller properties like apartments, which economists believed indicated greater confidence in the economy thanks to increased wealth. These numbers, along with other housing market indicators, have led many economists predict more housing growth in the future. However, with a 0.3% drop in April retail sales from the previous month, the dip in the housing market could actually be just a component in a more general economic slowdown, which could dissuade the BoE from raising interest rates.

Japanese Tertiary Industry Index (APR) (12:50 GMT; 19:50 EST)

Consensus:             1.0%
Previous:                 -0.6%

Outlook: The tertiary index, a measure of spending in the services sector in Japan, is expected to have improved during the month of April with economists expecting a 1.0 percent increase versus the 0.6 percent decline the month prior.  Supporting the consensus were April consumer confidence numbers, which reached a 15-year high on rising wages, and a seven-year low in unemployment.  With more income available to consumers therefore, consumer spending, which accounts for more than half of the Japanese economy and is a crucial contributor to the index, should supply some increase for the month to the specific sector.  A strong gain in the index could boost the Yen, as it would likely give more reason to speed up the monetary tightening policy process recently initiated by the Bank of Japan.
 
Previous:  The Japanese service sector index declined 0.6 percent in March, in line with a slowdown in overall economic activity.  The Ministry of Economy, Trade and Industry said that activity in the services sector, which includes auto maintenance, fell 2.9 percent from the previous month.  This complimented the 1.9 percent drop in wholesale and retail sector activity, and a 2.9 percent easing in the financial and insurance area.  The tertiary data was the latest in a series of indicators showing that economic growth was breaking after a robust performance in the final quarter of 2005.  Considering the activity data, the Cabinet Office reported that the economy grew 0.5 percent in the first three months of the year, which marked an annualized pace of 1.9 percent growth, about half the previous quarter's pace, as costlier petroleum products weighed on corporate and consumer spending habits.

SNB Rate Decision (12:30 GMT; 08:30 EST)

Consensus:           1.50%
Previous:               1.25%

Outlook: The Swiss National Bank is heavily favored to hike the overnight refinancing rate by 25 basis points to bring it to 1.50 percent at their June, quarterly meeting.  Improvements in the labor market, as well as the 3.5 percent GDP growth seen in the first quarter from last year, have added more coal to the economic engine of the Swiss economy, which has also benefit from expansion across Europe, the largest consumer of Swiss made exports. While still tame, inflation will certainly be another consideration for policy makers, along with the sustainability of growth.  Inflation has not exceeded the SNBâ�,��"�s 2 percent inflation target in a decade while that of the European Union has consistently held above its bank-defined 2 percent objective. Furthermore, the KOF leading indicator of business expectations for May reached a two-year high of 2.3 from 2.12 the previous month, granting the central bank greater scope to raise rates.  Should the SNB decide to follow through as expected, the tightening could lend some strength to the Swissie, especially against the euro, whose own policy regime had stalled in April and have drawn more neutral commentary at the most recent policy meeting.

Previous:  Switzerland's central bank raised its benchmark interest rate for the second time since December and said further increases may follow as the economy strengthens.  Swiss National Bank policy makers, led by President Jean-Pierre Roth, lifted the three-month Libor target range by a quarter-point to 0.75 -- 1.75 percent -- from which the 1.25% middle is often quoted.  Leading into the decision, consumer prices accelerated only 1.4 percent in February from a year earlier following a 1.3 percent pace in January, which though was well below the bank's 2 percent limit, resulted in policy tightening nonetheless.  Forcing the issue perhaps for the central bank were indicators suggesting sustained inflation for the long-term.  Unemployment fell to 3.5 percent last month, the lowest since March 2003, as companies were prompted by rising earnings to hire and invest in order to keep up with growing demand.

UK Retail Sales (MAY) (08:30 GMT; 04:30 EST)
                             (MoM)                     (YoY)
Consensus:             0.5%                       3.6%
Previous:                 0.6%                       3.0%

Outlook: Sales at retailers are likely to have slowed 0.5 percent in May on the heels of a 6-month low reading in the UK consumer confidence.  Pessimism regarding job prospects, along with stagnating disposable incomes, will do little to help power growth in Europeâ�,��"�s second-biggest economy.  Moreover, UK house prices advanced in May at the slowest pace in four months, signaling a potential stalling in the countryâ�,��"�s $6 trillion property market and cutting into consumersâ�,��"� net worth.  Central bank data has also shown mortgage approvals falling to a seven-month low in April, suggesting that the resurgence in housing may have peaked.  A sales slowdown may only hurt the Pound further, as the likelihood of future Bank of England rate increases would diminish significantly.

Previous:  Retail sales in the UK rose for a third month in April by 0.6 percent as a spurt in the value of homes encouraged spending.  HBOS house prices surged 2 percent in April, the most in two years, and wage gains outpaced inflation in March, giving shoppers more money to spend. The BoE predicts that economic expansion will accelerate this year after a rate cut last August bolstered consumer spending, which accounts for roughly two-thirds of the economy.  According to the sales report, retailers were also stepping incentives such as unseasonal discounts to lure shoppers.  The implied sales deflator fell for the third consecutive month, by 1.2 percent in April from a year earlier.  Brits also had more money in their pockets to put towards purchases despite higher energy prices, as annual wage growth, including bonuses, was 4.2 percent in the first quarter, the highest since August.  That compares with a 1.8 percent inflation rate in March and 2 percent in April.

Euro-Zone CPI (MAY) (08:30 GMT; 04:30 EST)
                      (MoM)                    (YoY)
Consensus:      0.3%                     2.5%
Previous:          0.7%                     2.4%

Outlook: The Euro-zoneâ�,��"�s consumer price index, the average price change of a â�,��"basket of goodsâ�,�, is expected to rise another 0.3 percent in May.  This forecast would put the year over year gauge up to 2.5 percent on the year and keep inflationary worries at the forefront.  EZ memberâ�,��"�s reads have not erred since last November, but the French may cause an upset.  German and Italian CPI figures yesterday were on target with expectations, but the French numbers came in surprisingly high, blamed on recent growth and energy prices.  Higher than expected results may put more pressure on the ECB as pricey fuel and commodities continue to take their toll on the European economy as a whole.  The CPI has become focal for the ECB as it is used to ensure that the regionâ�,��"�s workers will be able to afford the cost of living going forward.  In response to price growth consistently above the 2 percent target, the bank began its series of rate hikes this past December, with the most recent action a 25 basis point hike to 2.75 percent on June 8th.  While the bank makes efforts to ensure its â�,�˜vigilanceâ�,��"� in monitoring and responding to inflation, the markets seem to believe this pace will not match the aggressive Fedâ�,��"�s across the pond.  Governor Trichetâ�,��"�s hawkish comments last week did not seem to help the Euro as it has dropped up to 300 pips until that was only cut off today.

Previous:  Euro-zone inflation rose 2.4 percent in April for its first acceleration since January.  This was undoubtedly a primary contributor to the ECBâ�,��"�s decision to hike the overnight repo rate at its June meeting after passing on a shift the month before.  Amongst individual economies, price growth was substaintial.  Annual inflation in France, Europeâ�,��"�s third-largest economy, rose to 2 percent from 1.7 percent with the recent resurgence in energy prices.  Germany, the regionâ�,��"�s biggest economy, reported a similar jump of 0.7 percent in April, putting it up 1.9 percent on the year.  Like France, much of this gain was blamed on a jump in heating bills, as crude reached a record high north of $75 per barrel and other petroleum products like heating oil and unleaded gas followed suit. 

US Empire Manufacturing Survey (JUN) (12:30 GMT; 08:30 EST)

Consensus:                 10.9
Previous:                     12.4

Outlook: Manufacturing activity in the Empire State is expected to slow even further in June, with the stateâ�,��"�s survey reading likely to fall to 10.9 from 12.4 in May.  Although still signaling expansion -- with a read above the 0.0 growth/contraction figure * the index has averaged 15.6 throughout 2005.  Whatâ�,��"�s more, the expected figure would represent the lowest value in over a year.  As was occurring in June, skyrocketing energy prices have hammered profit margins, limiting the ability of businesses expand.  Factory production accounts for some 13 percent of total gross domestic product, while that of the New York area represents almost 5 percent of the regionâ�,��"�s growth, highlighting the importance of continued prosperity in this arena.  Although relatively small, Empire Manufacturing often foreshadows results from the broad ISM survey due July 3.

Previous:  Manufacturing growth in New York unexpectedly slowed to a reading of 12.4 in May as costs of energy and raw materials jumped.  Surging prices of crude oil and metals drove up factory costs across the nation, not just in the Empire region. The higher costs were somewhat offset by rising demand, the survey found, as measures of new orders, shipments and unfilled orders all increased; though is partially due to a carry over from previous monthsâ�,��"� demand.  Higher costs havenâ�,��"�t deterred companies from adding new factories and warehouses, the survey also showed. Of the companies in the survey planning new construction, 55 percent said spending this year will be about the same as last year.

US Net Foreign Securities Purchases (TICS) (APR) (13:00 GMT; 09:00 EST)

Consensus:                 $60.0B
Previous:                     $69.8B

Outlook: Net foreign investment in the US is expected to have declined over the month of April, complicating the bloating of the trade deficit to $63.4 billion. The tumble in US securities for the month of April was likely due to decreasing confidence in the US economy, and emerging doubt in the stability of the US dollar.  Treasury bills are expected loose some of their appeal, as some central banks, such as the Riksbank of Sweden, diversified reserves by moving out of US government securities. Equities markets are also likely to shed foreign investments, as the US stock markets moved sluggishly in April, with the Dow dipping 1.75% on the month. In addition, record oil prices shook confidence in the US economy, a major oil importer, and made PPI spike to a 7 month high 0.9% thanks to the sharp rise in manufacturing costs. Foreign investors, particularly those in Asia, sold off over $18 billion in equity and government securities market in March, and Aprilâ�,��"�s economic turmoil probably produced some of the same. With a trade deficit that rose by almost $2 billion in April, the predicted $60 billion foreign investment will leave the US unable to finance its deficit -- further diminishing the currencyâ�,��"�s appeal.

Previous:  March saw a dip in international investment in the US, with net foreign investment plunging over $20 billion from the month before. On the back of Februaryâ�,��"�s net foreign investment coming in over $90 billion, a decline in purchases of Treasury bonds and notes contributed to the significantly smaller surplus in March, with Japan selling off over $14 million in Treasury securities.  Foreign securities purchases reached only $69.8 billion, but were still strong enough to cover the trade deficit, which itself fell to $61 billion. While the balance dropped significantly, investors were still relieved to see that the US would yet again be able to pay for its expensive import habit.

US Industrial Production  (MAY) (13:15 GMT; 09:15 EST)
Consensus:                 0.2%
Previous:                     0.8%

Outlook: Industrial output in the United States is expected to have slowed to 0.2 percent growth last month, the lowest level since January.  This indicator focuses on manufacturing activity, an aggregate of production in factories, mines and utilities.  The projected deceleration should be no surprise as prices received by firms -- measured by the producer price index -- just printed at three-month highs, giving evidence that companies have raised prices to recoup the higher bills paid for commodities, though consumer confidence and spending was looking somewhat fragile.  In addition to the direct burden of higher energy costs, the effects of higher lending rates that are also partially resultant of more expensive crude, will be taxing on industrial production.  This broad measure of factory activity will be compared to the regional measures such as the Empire and Philadelphia manufacturing surveys to produce a more complete picture of the sectorâ�,��"�s health.

Previous:  The 0.8 percent climb in production at US factories, mines and utilities in April beat expectations and expanded beyond Marchâ�,��"�s 0.6 percent increase.  The gain was led by demand for business equipment, which in turn pushed the amount of utilized factory capacity near six-year highs.  More specifically, the proportion of industrial capacity in use rose to 81.9 percent from 81.4 percent, coming in at the highest level since July of 2000.  Breaking down the numbers reveals low amounts of slack in the economy as capacity utilization has been gradually rising since disruptions attributable to Hurricane Katrina.  The sector has also enjoyed higher demand for increased technology.  This has benefited companies like Texas Instruments, Inc., whose production levels grew around 8.4 percent in April.  In turn, however, companies like this are nearing their production limits, which can add to inflationary pressures and thus add one more reason for the Fed to boost lending rates.  Overall these numbers are encouraging and will help to pay off the looming trade deficit as foreign demand for US goods is met.

Richard Lee is a Currency Strategist at FXCM.