Australian Import/Export Price Index (QoQ) (2Q) (01:30 GMT; 21:30 EST)
                       (Imports)         (Exports)
Consensus:         1.5%              4.5%
Previous:            1.3%              5.1%

Outlook: In the three months ending in June, the gap in Australia's price indexes for the goods it imports and exports is expected to contract.  The average cost of foreign goods purchased by Australians are expected to accelerated to a 1.5% pace from 1.3% the previous quarter, while Australian-produced goods sold abroad are expected to be 4.5% more expensive following a 5.1% rise the first three months of the year.  This shift would largely mirror the trend seen in the general broadening of the deficit in the trade balance.  From April to May, the shortfall in the trade of goods and services with the rest of the globe grew from A$1.115 billion to A$2.266 billion as the value of commodity shipments eroded and the average Australian consumer liberalized their spending habits.  The Australian economy finds a large percentage of growth from firms who mine raw materials and export their goods to large consumer economies like China, Japan and India to name a few.  In the May and June, commodities made an abrupt turn lower - especially industrial metals, which are amongst Australia's largest exports.  Both gold and copper prices on American commodity exchanges dropped around 25% from the recent historical highs.  At the same time, imports prices were being pushed up by rising demand from Australia and the rest of the world.  Most likely still the most expensive import over second quarter, as it was the three months before, was the prices paid for fuel.  Both crude oil and gasoline did not fall far from their all-time records over the period and it should reflect in price.

Previous:  The inflation differential between the goods Australia exports and those it imports improved in the first three months of the year.  As the average price of an imported good in the index basket increased 1.3%, from 0.4% the final quarter of 2005; the value of exports rose 5.0% for the biggest jump since the second quarter of 2005.  Goods specifically expensive for Australian firms and consumers to purchase from abroad were mineral fuels and animal and vegetable oils.  Mineral fuels, which include petroleum-based products like gasoline and other refined fuels, were 7.3% more expensive for the quarter and 53.9% more so than the same period a year ago.  By no means a pittance, animal and vegetable oils were 6.3% more pricey for the quarter and 22.9% for the year.  On the other side of the equation, Australian manufactured goods and crude materials that are purchased by outside sources improved revenues at home.  The price of crude materials rose 5.3% on the quarter and 26.1% on the year, while those of manufactured goods surged 13.2% over the three months and 20.4% on an annual measure.

Canadian Core Consumer Price Index (JUN) (11:00 GMT; 07:00 EST)
                         (MoM)      (YoY)
Consensus:         0.1%       2.1%
Previous:            0.5%       2.0%

Outlook:  Prices of goods in the consumer basket are expected to cool rapid pace of acceleration on a monthly gauge, but the more closely watched annual measurement is predicted to retain its overheating rate of growth.  This will be a particularly important read in context of historical releases since Canada's central bank recently decided to put off its aggressive string of quarter-point interest rate hikes that were specifically aimed at taking the wind out of inflation far beyond the target.  From a year ago, headline inflation is expected to repeat the previous month's 2.8% tempo.  This in itself would be difficult to absorb for the economy, but more concerning is the consensus for the core prices.  Excluding the volatile eight categories like energy, inflation is expected to notch higher to 2.1%.  A direct sign that higher energy input costs are being pushed through in second round effects, the foundation of a core inflation rate already above the Bank of Canada's target inflation rate would leave no room for any further rise in commodities and the remaining volatile components.  If such a rapid pace of price growth persists, the BoC may have no other choice but to reinstate rate hikes to ensure the economy does not overheat.

Previous:  Canada's standard inflation gauge, the consumer price index, reported a surprising jump in the core measurement.  Excluding changes in the gasoline, food and six other volatile components, inflation in Canada accelerated to 2.0%, the fastest pace since December 2003 and also the target rate laid out by the BoC.  All together, the headline calculation reported a repeat 2.8%, beyond the self-imposed target for the 11th straight months.  One of the single largest inputs in the strong pace of growth was gasoline.  While other energy products' prices were easing through the month, gasoline changed little.  Further facilitating steadily more expensive items for Canadians to purchase was the consistent pace of demand that encourages producers to pass on higher costs to the consumers.  In May, the number of jobs added to the economy quadrupled from the month before to 96,700, holding the unemployment rate down at 6.1%.  Also, a general build up in home equity was encouraging to Canadians to act on their growing confidence.  For the month, the average home value breeched $300,000 for the first time ever.  This rate of price growth had suggested to many that a rate hike in the future was almost assured, but as many had seen and were forewarn, they did not.  If inflation continues at such a strong pace, there may be no room for policy officials to remain so neutral.

Richard Lee is a Currency Strategist at FXCM.