New Zealand Consumer Prices  (2Q) (22:45 GMT; 18:45 EST)
Consensus:          1.2%
Previous:              0.6%

Outlook: New Zealand consumer prices - a respected measure of inflation for the island nation - are expected to increase 1.2% quarter over quarter and 3.7% year over year, both at the higher end of historical readings since March of 2000.  The numbers, although high, were below RBNZ June estimates of 1.4% and 3.9%.  Higher oil prices and the increasing cost of new homes were likely the largest individual contributors to the rise.  This releases adds to the central bank's concern over inflation, as short-term measures continue to rise and yearly inflation holds above their own upper limit of 3%.  The increase is surprising considering New Zealand's 7.25% policy rate - the highest among the majors and a full 1.50% higher than Australia, who has the next highest.  Despite inflation, some have speculated that the high rate cannot be sustained for an extended period of time, with some expecting a decrease before the end of the year as consumers finally yield to the pressure of high lending and factory grinds down.

Previous: Quarter over quarter consumer prices increased at a slower rate in the first three months of 2006, up 0.6%, while the year over year measure reported at 3.3%.  In comparison, inflation in the fourth quarter of 2005 reported a 0.7% quarterly increase and 3.2% annual growth.  Inflation remained high even after 9 rate hikes since the December 2003 level at 5.00% as an unwavering consumer continues to spend on goods, be it through disposable income or credit.  Oil and housing again contributed to the reading, with housing accounting for the largest single increase for the fifteenth straight month and in turn offering the consumer greater access to capital to further support their spending habits.

Euro-Zone CPI (YoY) (JUN) (09:00 GMT; 05:00 EST)
                          (Headline)      (Core)
Consensus:           2.5%            1.4%
Previous:              2.5%            1.3%

Outlook:  Year over year inflation for the dozen countries using the Euro is expected to register at 2.5%, well above the ECB yearly target rate of 2.0%.  On its monthly pace, however, inflation is expected to ease from 0.3% to 0.1%, due in large part to cooling in Germany and France.  Leading into the regional read, German annualized price growth checked in lower to 2.0% from 2.1%, while French CPI reported at 2.2% against 2.4% in May.  The rates of inflation for each individual member state vary widely, however, with Finland at a 1.3% yearly rate and Spain at a scorching 4.0%.  The varying inflation rates cause varying real interest rates within each individual country, which has been a problem for the central bank, which regardless of the mild cooling in the more influential economies, looks set to hike the central policy rate in August.  Monetary officials in the European Central Bank have stated that the bank cannot control current inflationary levels as a lag of at least three quarter occurs between policy shifts and actual effects- so future adjustments will target future predictions of inflation.

Previous: Euro-zone CPI increased from 2.4% in April to 2.5% in March due in large part to upward pressure on prices from increased oil and commodities.  The reading marks the sixteenth successive month that annual inflation has been above the ECB target of 2.0%, which provides still more evidence for an August rate hike.  The bank previously forecasted a 2.2% annual inflation rate but has since revised the 2006 average rate to hit 2.3%.  Officials have spoken with relative calm about inflation, with member Juncker from the finance minister panel noting that sustained inflation "could be a major problem, but for now it's not a real problem," while bank head Trichet continues to point out the "historically low" rates.

Euro-Zone Industrial Production (MAY) (09:00 GMT; 05:00 EST)
                        (MoM)         (YoY)
Consensus:        1.3%          4.0%
Previous:          -0.6%          1.9%

Outlook: After a bleak release in April, industrial production in the Euro-zone during May is expected to have picked up a bit.  Expectations hold that factory activity rose 1.3 percent from the month prior and 3.9 percent from May 2005.  As a leading indicator, Germany posted May industrial production figures that exceeded expectations earlier this month with export demand surging despite the euro's strength during the month.  This looks to be an indication that the full Euro-zone figure should come in strong and that the previous month's disappointment was merely a temporary slowdown. 

Previous: April industrial production in the Euro-zone unexpectedly fell 0.6 percent from the month prior.  The figure posted a weaker than expected 1.9 percent gain from April 2005.  The month on month drop was associated to a drop in energy production, which fell 2.7 percent during the month.  Production in other sectors saw staid results as well with output declining 0.9% in the durable consumer goods sector, 0.7% in the capital goods sector, 0.4% in non-durable consumer goods, and 0.2% in intermediate goods.  These disappointing numbers did however come after stronger than expected growth during March, which may have exaggerated the weaker April-figure on a reversion to norms.

Canadian International Securities Transactions (MAY) (12:30 GMT; 08:30 EST)
Consensus:         C$3.000B
Previous:            C$3.895B

Outlook: Foreign investment in Canadian securities is expected to decline off of the previous month's reading despite strong oil and commodity prices, which comprise almost 35% of Canadian exports, and almost half of the major Canadian stock index.  Further, continued strong growth in the US is expected to draw some investment away from her neighbor to the north.  During the month of May the Canadian dollar hit a high of 1.0989 against the dollar early in the month before losing strength.  For the remainder of the month, the cross rate hovered near the recent historic high, putting some investors off of potential investments as it could potentially gouge returns if the currency reversed course. While corporate and government debt probably attracted some capital as interest rates were rising, equities were likely not so helpful.  The benchmark S&P/TSX Composite Index dropped nearly 9% through the month alone.

Previous: Net foreign investment in Canadian securities was expected to slow to C$3 billion, as it is this in May, but instead increased from C$3.325 to C$3.895.  With an aggressive BoC policy foreign investors plowed more capital into the Canadian economy as yields from debt instruments were supported by an economy chugging along at a robust clip.  While some believed the US's rate gap over Canada's would not close anytime soon, some noted initial signs of US consumer demand stalling on the back of higher lending rates and expensive gasoline.  Specifically for the period, the sale of C$3.895 billion worth of bonds was the largest amount since October 2005, besting the high set the month before.

US Empire Manufacturing Survey (JUL) (12:30 GMT; 08:30 EST)
Consensus:           20.1
Previous:               29.0

Outlook: New York's regional factory health index for July is expected to temper to a more moderate and sustainable reading of 20.1 after May's unexpected surge to 29.0.  Although the figure is expected to moderate for the month, it still looks to outperform other regional survey indicators.  Demand remains especially strong in the US, while foreign growth looks to boost growth in the large export market in the near future.  Foreign demand has several potential benifits, firstly in increasing exports and boosting production and output for the various New York industries the survey follows.  Second, the increased demand could help lower the gross trade imbalance that the US suffers, helping to boost domestic and foreign sentiment and leading to a further surge in sentiment.  However, the single region is not influential enough to improve the nation's overall health alone, and therein domestic demand's pull factor would be needed.

Previous: Since 2001, when the NY Fed Empire State Index first began, it has had a strong correlation with the ISM survey, although the Empire index has been slightly more volatile.  In March and June of 2006, however, the two diverged significantly.  In March, the Empire reading jumped from 21 to 29, while the ISM survey dipped from 56.7 to 55.2.  From May to June the ISM survey again declined slightly from 54.4 to 53.8 even as Empire State surged from 12.9 to 29.  Propelling the jump were increased business activity and strong prices, which have helped raise favorable outlook ratings for the index.

US Industrial Production (JUN) (13:15 GMT; 09:15 EST)
Consensus:          0.5%
Previous:            -0.1%

Outlook: US industrial production through June is expected to rebound 0.5 percent from last month's upsetting contraction.  Projected gains are attributed to a pick up in business equipment and favorable weather, both of which should have contributed to reductions in constraints while providing pull from businesses and consumers.  In fact, capacity utilization has been flirting with the 82 percent level, which has not been breeched since the year 2000.  The outlook for more expansion in this sector is now a bit less gloomy, for although the Fed raised rates again, it expressed dovish sentiment for the first time in the recent series.  A 0.5 percent gain, followed by gains in the future, will be welcomed and needed to wear down the trade deficit, which is keeping potential capital out of the United States. 

Previous: Industrial Production was forecasted to rise 0.2 percent, but declined by 0.1 percent unexpectedly in May.  The indicator was largely expected to slow  were forced to take on the burden of more expensive raw materials while finding a relatively unwilling outlet for passing them onto the consumer.  However this was the first drop since January, giving the United States a taste of sobering data that exemplifies that the economy is beginning to slow.  The Fed had increased interest rates by 25 basis points sixteen consecutive times and another time since this number came out, lending additional costs to factories who have to borrow money to invest in equipment and expand capacity limits.  Also to be noted is that the decline came off of the year's high of 0.8 percent in April, so a correction was not out of the question.  On a longer time frame though this index is clearly indicating a slowdown when compared to last year, as October through December's gains averaged 1.0 percent. 

Richard Lee is a Currency Strategist at FXCM.