Japanese Overall Household Spending (YoY) (MAY) (23:30 GMT; 19:30 EST)
Consensus:                -2.2%
Previous:                  -2.0%

Outlook: Japanese overall household spending is expected to have been 2.2 percent lower during May than the same month a year ago.  This would be the fifth consecutive month to post a drop in household spending from the year prior.  Household income continues to be less than what it was last year despite improving employment prospects and wage growth.  This eases inflationary pressures in the consumer basket from the buyer side, and in doing so could spoil any chance of repeat rate hikes from the BoJ.  Oil prices are on the rise again as well and may be causing jitters in consumers as they continue to put pressure on household budgets. 

Previous: In line with expectations, overall household spending in Japan fell for the fourth straight month by 2 percent from April 2005.  Despite the improvements in the employment market and the economy as a whole that were seen during the month, household income was down from the same time last year dissuading households from spending as much.  Energy prices shot up considerably during the month as well, also contributing to lower disposable income in households and lowering purchasing confidence for the future.  Spending fell most in the clothing and footwear sector, which saw a 12.1% drop, and home renovation, which was down 12.4%. 

Japanese Jobless Rate (MAY) (23:30 GMT; 19:30 EST)
Consensus:                4.1%
Previous:                  4.1%

Outlook: The Japanese jobless rate is expected to remain, for the fourth month in a row, at 4.1 percent during May.  As the Japanese economy continues to expand, fueled by high export demand as well as healthy domestic spending, companies are still investing in the expansion of their production facilities in order to meet rising levels.  The job to applicant ratio has continuously risen along with wages, allowing Japanese consumers to fuel the economy by ramping up domestic demand and spending.  Officials are continuing to predict that the economy will keep growing at a quick pace and the labor market will continue to improve.

Previous: Unemployment stayed at its 7 year low of 4.1 percent for a third month during April as manufacturers continued to expand their factories, specifically in the automobile and electronics sectors.  As demand for Japanese automobiles and consumer electronics continued to grow in the United States, Japanese companies were prompted to invest in expansion and hire more workers to handle the boosted production requirements.  This has spurred officials to predict that the economy will keep expanding at the highest level post-World War 2.  Surveys showed that the job to applicant ratio continued to rise and companies are showing shortages of workers as the employment market continues to improve.  This competition for workers is pushing up wages, which in turn is further stimulating domestic demand and the economy.

Japanese National Consumer Prices (MoM) (MAY) (23:30 GMT; 19:30 EST)
Consensus:                0.2%
Previous:                  0.1%

Outlook: Japanese national consumer prices are expected to have risen a seasonally adjusted 0.2 percent during May, 0.1 percent point more than in the previous month.  As policy makers at the Bank of Japan are looking to continue to tighten monetary policy, and eventually raise interest rates soon the final key of sustainable inflation will remain the key in doing so.  Any rise in prices brightens the green light to the BoJ that the Japanese economy will be able to handle a move away from the long held zero interest rates and extremely loose monetary policy.  The national core CPI is the most important indicator of inflation for the BoJ and is expected to continue the upward trend. 

Previous: National consumer prices in Japan rose 0.1 percent during April.  With the economy expanding and energy prices rising, inflationary pressures are starting to return to Japan, although not all sectors are seeing price rises quite yet.  The six-year extremely loose monetary policy may now be able to come to an end.  Bank of Japan officials are becoming more and more hawkish and are slowing beginning to tighten money supply.  Policy makers remain cautious however, as they do not want to throw away all the progress made by tightening policy too quickly.  A rising trend in these numbers will reassure officials.

German Retail Sales (MAY) (06:00 GMT; 02:00 EST)
                                (MoM)                    (YoY)
Consensus:                -0.3%                      1.7%
Previous:                   2.8%                      -1.0%

Outlook: German retail sales, after posting an unexpectedly large jump in April, are expected to have fallen 0.3 percent during May.  Part of this fall may be due to a bit of a correction from the large increase seen during April.  Also, as the World Cup was set to start a few weeks after the close of the month, the anticipation of the event may have been buoyed consumers' spending habits especially on expensive items like televisions.  Retail sales are expected to have risen by 1.7 percent from May 2005, indicating that sales are continuing to recover.  Confidence has also held high during May with German's more secure about their employment situation and the economy continuing to recover.

Previous: Retail sales in Germany jumped 2.8 percent in April, the largest rise in almost two years.  This number far outpaced expectations of a 1.5 percent rise.  Sales were still seen to have fallen 1 percent from the same time the year prior.  Spending during the month was fueled by a decline in unemployment in the country and an acceleration of economic growth.  Also boosting the number were sales ahead of the World Cup, which is being held in Germany in June.  In surveys, consumers sited that they were purchasing big-ticket items, such as domestic electronics, appliances and furniture now to avoid the value-added-tax increase set for January 1 of next year.  Officials cited that this indicator signaled that the economic recovery in the largest country of the Euro-zone was finally coming through in hard numbers.

UK GfK Consumer Confidence (JUN) (09:30 GMT; 05:30 EST)
Consensus:                -4
Previous:                   -5

Outlook: The UK GfK Consumer Confidence, which takes sentiment from consumers at an attempt to determine their short-term outlook, is expected to have improved this month.  For June the survey is forecasted to recover from last month's unexpected drop, advancing to April's level of -4.  Even amid high and forward-looking interest rates, the anticipated rebound does not come unfounded.  The real estate market, which is a prime engine of consumer confidence as it increases homeowner wealth, has been visibly improving in the UK. HBOS House Price in the first quarter rose to 9.1 percent annually, from the previous 8.0 percent.  BBA Mortgage Lending figures also displayed a solid rebound in House-purchases, erasing nearly all of April's decline.  For detractors however the positive downside again lies within the labor market.  Just as in the month prior, the ILO unemployment rate was expected to remain flat , but it actually rose according to its last posting from 5.2 to 5.3 percent.

Previous: While expected to remain unchanged at -4, British Consumer Confidence fell down to -5, chipping away at the indicator's first gain in three months.  The -5 was the year's second-worst reading but was still promising compared to the levels in mid to late 2005, as it has been struggling in negative territory for over a year now.  The drop came primarily from higher utility bills, due to higher energy costs, and uncertainty over job security.  This lead to people being more frugal as they are not yet confident that real estate is out of its slump despite advancing house prices in May.  Rightmove House Prices came in at 2.0 percent on the month, a hefty climb from the prior 1.1 percent.  Mortgage approvals also rose from 114K to 116K but missed the forecast of 117K. The worst news for the consumer was in the labor market, which saw jobless claims reporting above expectations and the ILO unemployment rate, projected to remain flat at 5.1 percent, rising to 5.2 percent.  All in all, this unexpected decline made the more-than-expected decline in private consumption less of a surprise.

US Personal Income (MAY) (12:30 GMT; 08:30 EST)
Consensus:                0.2%
Previous:                   0.5%

Outlook: Personal incomes are expected to have risen only 0.2 percent in May from April.  This is 0.3 percent points less than the gain seen over the previous months.  The employment market is beginning to falter with jobless claims up on the rise and business having to cut pay raises to compensate for rising energy and commodity bills.  Sustained high-energy costs are already squeezing consumer's budgets.  If incomes do not grow quickly enough to at least partly cover these changes, the US may begin to see an even greater slowdown in spending.  Factoring into this lower figure as well is a fall in wages during May, which leaves inflation to far outpace wage growth.  A consumer sentiment survey in fact found that few Americans expect incomes to increase over the next few months.

Previous: Personal incomes in the US rose by 0.5 percent for the second month in a row in April.  This rise reflected a 0.9 percent jump in wages and salaries, the largest jump since July 2005.  As productivity climbed during the first quarter of the year, wages rose.  However employment fell along with a slowing in other parts of the economy so wage growth may not be able to be sustained.  The rise in personal spending actually outpaced the income gain though, leaving the savings rate to fall to the lowest since August 2005.  This could partly be due to the huge rise in oil and gas prices during April, which shrunk consumer's disposable incomes. 

US Personal Consumption Expenditure (MAY) (12:30 GMT; 08:30 EST)
                                (MoM)                    (YoY)
Consensus:                0.2%                       2.1%
Previous:                   0.2%                       2.1%

Outlook: The annual gauge of personal consumption expenditure, which was ex-Fed chair Greenspan's primary measure of inflation, is expected to have risen 2.1% after last month's increase to 2.1%.  This threatens to hold the inflation measure above the Fed's target 2.0% rate.  Additionally nominal GDP growth has held at 6.5% over the past year and a half, which most experts agree is too fast and driving up inflation.  A PCE number on target with expectations furthers expectations of further rate hikes.  With rates freshly 25 bp higher at 5.25%, hawkish rate speculators and unbiased economists alike will keep their attention trained on all the inflationary data they can to divine rate hikes going into the third quarter.

Previous:   Year over year PCE in April rose to 2.1% from 2.0% in March, increasing inflation concerns among US stock traders and furthering rate hike expectations among dollar bulls.  Inflation concerns in the US reflect world-wide policy questions, with some bank heads criticizing overly accommodative rates across borders.  US inflation remains a concern especially with hawkish comments from Fed leader Bernanke, even as some other members remain slightly less verbal.

US Chicago Manufacturing PMI (JUN) (14:00 GMT; 10:00 EST)
Consensus:                58.0
Previous:                   61.5

Outlook: The Chicago purchasing managers' index is expected to have contracted a bit from the extraordinary rise seen in June.  Despite the predicted fall, the expected reading of 58 is well above the expansionary level and signals that the manufacturing sector is continuing to be strong despite higher energy costs and interest rates.  The FOMC watches the Chicago PMI release closely as it reveals clues about the health of the entire US manufacturing sector, which accounts for 13 percent of GDP.  With other areas of the US economy starting to slow, the FOMC is specifically going to take note of these regional numbers to see whether they can continue raising rates to curb inflation without pushing the economy or any of its large territories into a slowdown.

Previous: Manufacturing in the Chicago area unexpectedly accelerated in May with a PMI reading of 61.5, the highest posting in 7 months.  Orders placed with factories rose to a one-year high, which signaled that further strengthening in the manufacturing sector may be to come.  Domestic demand and spending in the US was muted during the month, but heavy corporate investment and economic growth abroad, specifically in Germany, India, and Japan, kept orders flowing into the Chicago area factories.  A measure of prices paid by manufacturers for raw materials that is included in this survey eased a bit showing less inflationary pressure.  The FOMC will most like focus on the healthy strength of manufacturing in its next decision, not the slightly lighter inflation figure.

Richard Lee is a Currency Strategist at FXCM.