Bank of Japan Monetary Policy Announcement (GMT; EST)
Consensus:             0.25%
Previous:                0.00%

Outlook: Heavy speculation has surrounded the yen for the past several months as improving economic conditions have been flagged as the end of deflation in the land of the rising sun.  With the strength returning to the Japanese economy, there has been endless and repeated speculation concerning the lifting of the Zero Interest Rate Policy.  Consensus opinion points to an end of the policy by Friday morning.  Although the most recent inflation number - CGPI released Wednesday - showed a monthly drop of 0.1%, year over year, price growth stuck to a 25-year high 3.3%.  Other recent inflation readings have shown also growth:  the May National CPI reading accelerating 0.6% year over year, and the leading Tokyo CPI for June reporting at 0.6% year over year rise as well.  Further, yen weakened throughout 2005, marking its weakest point against the dollar highest in early December, making Japanese goods cheaper on the global market.  However, the Yen has seen some recovery through the first half of 2006.  The carry-trade value of being anti-yen has been a strong draw in the currency market - but should the BoJ begin raising rates, this could shift some bias from the dollar and provide additional strength for the yen.  Although a 25 basis point rise appears to have been largely priced in to the market, the announcement and subsequent statement are nevertheless expected to generate movement in the currency.  The real question now appears to be whether the Bank will issue a strong statement on the rising rates and inflation, or whether it will temper its response to appease government officials who want ZIRP to continue.  The market should respond more to the tone of the decision rather than the decision itself.

Previous: As expected, the Bank of Japan kept ZIRP in place at the previous monetary policy gathering held over June 14 & 15.  Following that meeting, Governor Toshihiko Fukui noted that Japan's economy continues to grow in all sectors, and that the "economy is likely to achieve sustainable growth under price stability."  He also noted that "the Bank will adjust the level of interest rates gradually in the light of developments in economic activity and prices," due to the fact that "there is the time lag before a monetary policy action influence economic activity and prices."  The Governor's speech on the 20 of June gave further indication that when the BoJ does decide to lift rates it will be at a slow, measured pace so that the economy has time to adapt to the decisions.  In other words, it appears that the Bank will follow the decisions of the various markets, not the other way around.

Australian Trade Balance (MAY) (01:30 GMT; 21:30 EST)
Consensus:          -A$1.100B
Previous:             -A$1.093B

Outlook:  Australia's trade balance is expected to have moved further into negative territory in May, with the consensus calling for an A$1.1 billion deficit.  Some economists have predicted that the gap could widen to as much as A$1.6 billion as disruptions in shipments abroad could have allowed domestic consumers to push the inflow gauge further.  Poor weather conditions in Western Australia, where many of the country's mining operations are based, is expected to have contributed swelling, overall shortfall.  Elsewhere, mining has been performing strongly as of late with rising commodity prices benefiting the country's hefty dependency on raw material shipments abroad.  Despite this, exports are not expected to have increased as strongly in May as they did in April, with economists predicting 1% growth.  Imports, meanwhile, are forecasted to accelerate 4%.  Further contributing to the imbalance was the Australian dollar, which in May hit its highest levels against the US Dollar since June of 2005.

Previous: The trade shortfall for Australia improved in April to A$1.093 billion as exports jumped five percent and imports advanced only 2 percent.  This compares to the disappointing -A$1.545 billion deficit the month before.  Continued strength in the mining sector and strong commodity prices helped to boost trade in April; despite a steadily rising dollar, which hit its lowest levels for the year at the end of March.  The Australian trade balance has been fairly volatile, with large percentage changes from month to month not uncommon, as unseasonable weather can drastically affect the important shipping and mining sectors while economic uncertainty surrounding Asian and Pacific economies can effect foreign demand.

US Advanced Retail Sales (JUN) (12:30 GMT; 08:30 EST)
Consensus:            0.4%
Previous:                0.1%

Outlook: Despite rising gas prices, US Advance Retail Sales are forecast to increase 0.4% for the month of June.  The increase will extend the positive run to four straight months, and notch an impressive 10 of the last 12, indicating consistent growth in US domestic demand.  However, the increase is below the average for the past year, which itself could indicate a possible pace reduction even as growth remains positive.  Oil prices recently hit an all-time high surpassing $76 per barrel in July, but that statistic will have to wait for the next release.  However, in other more consumer specific roles, at the start of the summer driving season national gas prices had approached $3 a gallon - which had long been held as a "tipping point" in the American consumer economy.  Wal-Mart, which accounts for almost 10% of US retail sales, reported the smallest year-over-year increase in June since April 2005, providing a good projection of how stores nationwide fared.  Also helping to boost the numbers was a reported rebound in auto-sales.

Previous: The 0.1% rise in retail sales in May was the slowest pace in three months, as sharp jumps in gasoline prices and associated costs hit consumers in the wallet.  Excluding services stations, the reading actually produced a 0.1% contraction for the period.  With producer prices rising, hurting executives have become more willing to pass the bill onto the consumer, which itself is pressuring the Fed to raise rates to rein in the resultant inflation.  Retail sales are a crucial measure for the economy as they account for just under half of all consumer spending in the United states, which in itself accounts for 70% of GDP.  Building materials, garden supplies, and automotive sales all showed substantial declines.

University of Michigan Consumer Confidence Survey (June P) (13:45 GMT; 09:45 EST)
Consensus:          85.5
Previous:             84.9

Outlook: The University of Michigan Confidence survey is expected to rise to its highest level in three months, building off of the consumer sentiment improvement in June.  The indicator, a survey of personal confidence in business conditions, historically has a positive correlation to retail sales.  As consumer spending constitutes the bulk of the US economy, the measure of optimism from their point of view becomes very important.  An increase in confidence will be a hard hill to climb.  A continued assault on disposable income has been waged by consistently high gasoline prices and every growing mortgage payments.  Making a surprise contribution to a possible shift in sentiment will be last Friday's job's data.  American's likely took note of the fact that NFPs fell short Wall Street's consensus, but the persistent additions to payrolls, a jobless rate at a five-year low and wage growth that continues to pace inflation should offer them some solace.

Previous: Confidence rose in June, bring the U of M's gauge of the emotion to 84.9 following the dip to 79.1 in May, ending a three month downtrend from 88.9.  The number is still below the yearly high of 91.2 but above the all-time low of 74.2 established in October of 2005.  The increased consumer confidence indicates a possible improvement in retail sales - as noted above, consensus opinion has retail sales improving from 0.1% in May (79.1 U of M survey) to 0.4% in June (84.9 U of M survey).  A look at the yearly numbers also shows a positive, if not direct, correlation, with declines in the University survey followed by a decline in retail sales.

Richard Lee is a Currency Strategist at FXCM.