Reserve Bank of New Zealand Rate Decision (21:00 GMT; 17:00 EST)
Consensus:        7.25%
Previous:           7.25%

Outlook: Despite continued inflationary pressure, the Reserve Bank of New Zealand is expected to keep its overnight cash rate steady at 7.25% for the eighth consecutive month.  With the second quarter consumer price index showing a 1.5% quarterly increase and a 4% yearly rise, it has become clear that inflation not put off consumer spending which has largely pushed the reads to its current highs.  Skyrocketing oil prices and diminishing Kiwi strength have also played a large part in the heated level of price growth.  The bank has noted that there is a lag between rate increases and economic impact, generally three months, and as such the lag period should have long kicked into effect.  Officials predict annual CPI will not dip below the bank's target of 3% until well into 2007, which will keep the pressure under high lending rates for some time.  Keeping the policy group from hiking rates further on the other hand, are blatant signs that economic growth has stalled.  With exports crippled by high energy prices, an unfavorable exchange rate and cheaper prices for the commodities it sends abroad, domestic demand is the last bastion of support for the economy.  While cutting the benchmark lending rate would revive spending and growth, it would also spur inflation.  This makes any possible move by the policy group a double-edged sword.

Previous: Domestic growth held strong even as rates remained at the high 7.25% rate.  June housing sales increased 5% from June 2005, while house prices rose 9%.  New job offers have continued despite the high rates, although a slowdown is expected.  Domestic spending accounts for approximately sixty percent of GDP, and a sustained slackening in the job market, combined with subdued wage growth and vigilant monetary policy, are expected to eventually bring down inflation pressure.  Although economic data still indicates expansion, a rate hike above 7.25% has remained a distant option, with benchmarks already 1.50% higher than the next highest central bank rate.

German GfK Consumer Confidence Survey (AUG) (06:10 GMT; 02:10 EST)
Consensus:         7.8
Previous:            7.8

Outlook: GfK's consumer confidence survey, used to determine whether German's deem it a good time to purchase large items, is expected to hold steady at 7.8 for the coming month.  This is somewhat in contrast to what has been seen with investor and business confidence, which has begun to wane.  However consumer confidence does have legitimate potential to hang on.  Aside from unemployment being at its best in years, retail sales continue to grow and are expected to rise another 0.5 percent annually in June.  This could be evidence that the Euro-Zone's recent domestic strength is more than a product of the World Cup.  It should also be of note that U.S. consumer confidence unexpectedly rose yesterday.  Seeing the European outlook is fundamentally more comforting than that of the U.S., European consumers may be better able to absorb global conflict, along with rising commodity, energy and borrowing costs.  On the other hand, German parliament's decision to increase the Value Added Tax rate from 16 to 19% come January is not likely to produce just a muted effect amongst consumers who are already finding their income stretched by gasoline prices.  As German's represent the consumer base for the largest economy in the European Union, the ECB will take the gauge seriously come August 3rd.

Previous: German Consumer Confidence for July extended its multi-year highs once again, reaching 7.8 from an upwardly revised 7.0 in June.  The key component that which carried the measure last month was the "Willingness to buy," a jump to 54.2 from last month's 49.8.  Consumer spending in Europe will be critical to world growth in the coming months as the export prospects seem murky, while foreign demand has driven much of the nation's growth over the past months.  Elsewhere, the forward looking economic outlook factor cooled off, dropping to 20.4 from 30.9.  This should be no surprise as both the German ZEW and IFO measures displayed future pessimism as floating energy prices and climbing interest rates put a dark cloud over economic activity.  The worst part of July's measure was for income expectations, which came in at -8.9 despite falling unemployment across Europe.  This may indicate that companies are nearly done with expanding, and hiring may be put off in the not-so-distant future.

US Durable Goods Orders (JUN) (12:30 GMT; 08:30 EST)
Consensus:         2.0%
Previous:          -0.2%

Outlook: June durable goods orders are expected to increase 2.0% after two months of declines.  Greatly improved aircraft sales are expected to boost the reading, offsetting weakness in the domestic auto sector.  Looking for justification, while June's ISM did decline slightly from 55.8 to 54.4, the indicator remains positive, providing support to the growth outlook.  While the number generally does not have a major impact on dollar trading, it does establish a forecast for the quarterly GDP equipment spending and fixed investment.  After a decline of 4.7% in April and a slip of 0.2% May, the 2.0% growth will help keep the quarterly number somewhat buoyant, but at this point it should almost certainly be down from the first quarter.

Previous: Aircraft orders, a volatile yet important component of durable goods, pulled down the headline read in May.  Initial readings showed durable goods down 0.3%, but the revised number received a slight boost to only a 0.2% drop.  Expectations for a reserved 0.4% increase rested with in large part with a suspected natural rebound from the previous month's large 4.7% drop.  Motor vehicle orders were up 2.5% after April's 2.0% contraction the period before.  The number looked to offset some of the major losses, which threatened GDP forecasts for the second quarter.  Equipment spending and fixed investment accounted for almost 3% of first quarter GDP growth.

US New Home Sales (JUN) (14:00 GMT; 10:00 EST)
Consensus:         1150K
Previous:            1234K

Outlook: US new home sales for June are expected to decline 6.0% month over month to 1.150 million, after May's 4.6% increase to 1.234 million.  If this figure comes in as expected the 'housing bubble' theory will further loose its sway as steady declines - barring unusual volatility due to weather conditions - continue to 'leak' air from the bubble, rather than 'pop' it.  A drop in new home sales would be the first since February's strong plunge on violent weather in the southern and western United States.  June existing home sales posted a modest decline from 6.71 million to 6.62 million, a slightly smaller slip than expected.  The new home sales is generally considered more forward looking however, as declines in their purchases have historically preceded contraction in existing residences and rentals.  Furthermore, construction of new homes and new home orders both appear to be slowing at a measured pace, indicating future decline in the market.  The US housing market remains a key component of the economy and a sudden drop-off could have major effects on the country, but the current measured drop is in line with expectations for a slowdown in the overall economy.

Previous: US new home sales increased more than expected in May, posting a 4.6% gain to 1.234 million units.  The consensus expectation was actually for a 3% decrease, which would have put many policy officials back on the path of seeking slower growth in the sector that represents the largest portion of accumulated wealth for consumers.  The number was the third consecutive gain following February's weather-based plunge of 11.5% in the total figure.  Favorable conditions across the Western and Southern United States contributed to the increase in the May reading, while a 7.9% decline in Northeastern new homes sales held the indicator back somewhat.  Median prices increased 3.1% to $235,300, while average price increased 2.4% to $294,300.

Richard Lee is a Currency Strategist at FXCM.