Japanese Industrial Production (MAY) (23:50 GMT; 19:50 EST)
                         (MoM)        (YoY)
Consensus:       -0.2%         5.0%
Previous:            1.4%         3.6%

Outlook: May Japanese Industrial Production is expected to contract slightly after two months of expansion, despite a cheaper yen that has made the country's goods more competitive.  Recent indicators of confidence and demand have been mixed, with last week's BSI reporting at a shocking 1.8 against an expected reading of 7.0, even as April capacity utilization hit an all-time high of 106.6.  Pull through from domestic demand was mixed evidenced by the continued decline in supermarket sales by -3.4% and the surprise 0.6% rise in the overall retail read.  The forecast decline in production is perhaps most starkly contrasted with the releases of the industrial sector indicators two weeks ago: may machine tool orders reported a whopping 14.8% surge against 1.4% expected, first quarter capital spending picked up 13.6% against 7.0% expected, and overall machine orders for April surged 10.8% against 3.5% expected.  Concern over domestic dema nd appears to be a major cause for concern among industrial decision makers, yet so far, they have responded with sustained factory activity.

Previous:  The final read on April factory output printed a strong growth rate of 1.4%, revised slightly down from an initial 1.5%.  The figure nonetheless stood at an all-time high, surpassing the record set more than a decade ago in 1991.  However, capacity utilization, also at a fourteen-year high, appears to be an issue as some analysts worry about a slowdown in growth and increasing inflation concerns.  While the need for more resources to meet steadily rising demand is good for economic growth and supporting inflation, it could turn off firm leaders who are reluctant to take on new costs in a global market where product competition is already fierce.

Swiss Consumer Price Index (JUN) (23:50 GMT; 19:50 EST)
                       (MoM)         (YoY)
Consensus:     -0.1%          1.5%
Previous:          0.2%          1.4%

Outlook: The consumer price index in Switzerland is expected to have declined by 0.1% from May to June.  Over the period, oil prices eased early in the month and consolidated for the remainder of the month.  This lessened the upward pressure on inflation, as companies had already begun passing on their higher costs to consumers.  Also, though it may be a bit early to have seen an impact of the June 15 interest rate hike, companies may have been more cautious about investing during June in anticipation of the hike and after heavy investment and expansion during May.  Recent figures such as healthy consumer spending and leading indicators imply that the economy is still strengthening quickly which could lead inflation to come in higher than expected.  Regardless, the Swiss National Bank will be watching this figure closely as policy makers have already signaled that another rate hike is likely at next quarter's meeting in order to "normalize" monetary policy and keep economic growth from further catalyzing inflation.

Previous:  Swiss inflation accelerated at a quicker than expected pace during May.  Prices rose 0.2% from April, bringing annual CPI growth up to 1.4% from the 1.1% seen the month prior.  Oil prices held near record highs during May, with the cost of energy products increasing 2.2% during the month.  Furthermore, companies taking advantage of the strengthening Swiss economy and improving burgeoning consumer optimism were able to pass on these higher energy costs to shoppers, putting further upward pressure on prices.  Policy makers at the Swiss National Bank expressed concern over rising inflation after the CPI release.  High inflationary figures in combination with an economy riding on surging export volume and business investment persuaded the SNB to raise rates by 25 basis points at their June 15 meeting.

UK Nationwide House Prices (JUN) (06:10 GMT; 02:10 EST)
                         (MoM)          (YoY)
Consensus:        0.5%            5.2%
Previous:            0.2%            4.7%

Outlook: House prices in the United Kingdom, as measured by the Nationwide Building Society, are expected to have risen a seasonally adjusted 0.5% during June after two months of near stagnation.  The Bank of England did not raise rates at its last meeting, which may have eased buyers' minds for the time being.  Retail sales and consumer confidence also seem to be on the rise, indicating again a stronger consumer, which could be pushing up prices.  Over the past few months, home price growth has come in lower than expected and with a weakening labor market, expectations of a rate hike, and higher energy costs, the prospect of a turn around for the sluggish housing market in the UK is looking rather dim.

Previous: UK house prices rose by a mere 0.2% during May, the second consecutive (albeit muted) rise after a 0.1% gain in April.  The sluggish growth in prices came hand-in-hand with indicators that seeme d to suggest far stronger growth in the housing market, such as high sales to stock ratios by real estate agents and increased purchase approvals.  Buyer enquiries and purchase approvals have begun to slow however, and are expected to cool further through the summer.  Expectations of rate hikes over the next year by the Bank of England, which would push up mortgage costs, may be discouraging buyers.  Consistently high energy costs are also squeezing consumer budgets and dissuading buyers from making large purchases.

German Unemployment Rate (JUN) (07:55 GMT; 03:55 EST)
Consensus:       11.0%
Previous:           11.0%

Outlook: With conflicting confidence indicators and economic surveys, the adjusted German unemployment rate is expected to remain level at 11.0%, which is within the "normal range" of Europe's largest economy.  Despite large drops in recent ZEW surveys, other economic indicators for the country have been improving. Recently, officials forecasted a 2.0% growth rate for the economy, suggesting Germany will lead the zone through a strong run for the year.  Recently, however, proposed additions to the German National Health Care system by Chancellor Merkel threaten a substantial increase in taxes, which could stymie growth.

Previous: While remaining at 11.0% seasonally adjusted, the total number of unemployed German residents fell to 4.53 million in April, further evidence of a recovery in Europe's largest economy.  With a recovery apparently underway and further growth forecast, some analysts have forecast a dip into the lower 10% range for unemployment - heading back to 2003 levels.  Increased job offers and the declining "trend" in job cuts specifically contributed to the massive decline in the number of unemployed persons.

Canadian Gross Domestic Product (MoM) (APR) (12:30 GMT; 08:30 EST)
Consensus:       0.2%
Previous:           0.1%

Outlook: Canadian GDP is expected to have risen 0.2% from March to April, after edging up only 0.1% in the month prior.  Economic gauges have come in mixed for the month of April.  The Canadian dollar strengthened tremendously during the month, throwing a damper on the export market, which was responsible for jump-starting the recent boom in economic growth.   Elsewhere, industrial production for the month came in far better than expected, but manufacturing shipments fell far more than expected.  Home sales and retail sales were very strong during April, continuing to buoy economic growth through the consumer.  However, the economy may finally be starting to feel the effects of the streak of interest rate hikes that the Bank of Canada employed in an attempt to keep the economy from bumping against capacity and fueling high inflation.

Previous:  The Canadian economy grew less than expected over March, only posting a 0.1% gain.  Economists were predicting a rise of 0.4%.  Service, retail and real estate industries all faired well during the month, however production suffered.  The rapidly increasing Canadian dollar hurt export volume and threw on the breaks in the manufacturing sector.  On the other hand, keeping the engine running in positive territory, sustained consumer demand and spending on durable goods and housing have kept economic growth afloat.  Altogether, GDP growth during the first quarter of the year rose more than expected by 0.9 percent from the fourth quarter of 2005, driven primarily by business investment and consumer spending.  The Canadian economy may be slowing after its recent red-hot growth, however, as higher interest rates and a strengthening currency began to take their toll.

Federal Open Market Committee Rate Decision (18:15 GMT; 14:15 EST)
Consensus:        5.25%
Previous:           5.00%

Outlook: All eyes are on the US Federal Reserve Board as traders await the central bank members' decision on the US' key interest rate.  Year over year PCE - the Fed's primary indicator of inflation - inched up to 2.1% in April, while monthly reads of PPI and CPI both increased to 0.3% against 0.2% expected.  Hawkish comments by Fed Chair Bernanke have been toned down slightly since his initial remarks, but most analysts and Fed experts have predicted a 25 point rise.  It has been speculated that the 6.5% nominal growth rate over the past year and a half is simply too fast and that it is driving up inflationary concerns.  Some have suggested higher rates will slow growth to a more acceptable 5.5% rate, which can be absorbed by the economy and allow inflation to pace at acceptable levels.  The market has also seen a small but vocal minority that says a surprise jump of 50 basis points is in store, which could send traders scrambli ng. Many believe that if a half of a percent hike materializes, the Fed will almost assuredly put a halt to the rate regime for at least one meeting.  However, if only a quarter percent hike is used, the doors are left open for further meetings which could keep the momentum of steady hikes intact.

Previous: The Fed raised rates within expectations by 25 basis points to 5.00%.  Although this continued the upward trend established during the closing years of the Greenspan era, many market analysts were predicting an end to Fed rate hikes.  Higher than expected inflation data coupled with Bernanke's unexpectedly hawkish stance on the economy and faster-than-anticipated growth in the US over the year all combined to increase the Fed central rate.  Using now familiar language, the Committee noted that "some further policy firming may yet be needed to address inflation risks but emphasizes that the extent and timing of any such fir ming will depend importantly on the evolution of the economic outlook as implied by incoming information."  It was a hawkish start for the green chairman and a mark of his dedication to battle inflation.

Richard Lee is a Currency Strategist at FXCM.