Japanese Overall Household Spending (YoY) (JUN) (23:30 GMT; 19:30 EST)
Consensus:             -1.9% 
Previous:                 -1.8%

Outlook: Overall household spending is once again expected to decline, marking the sixth consecutive year over year contraction in the indicator.  This time, the pace of reduction is expected to accelerate, in step with a worsening retail trade outlook for the same month.  The sustained decline comes despite the unmistakable improvement in the broader Japanese economy, with the end of deflation and an upturn in GDP and the yen's value.  More importantly, the number defies the 4.1% jobless rate, the lowest in eight years.  This inability of the economic recovery to as of yet stimulate consumer spending could become the rally call for perpetual lending rate doves to stick to their guns when others point elsewhere.  Domestic consumer spending accounts for over half of the nation's GDP and the lag in spending has been a thorn in the side of an otherwise improving outlook.

Previous: Overall spending among Japanese households fell 1.8% in May from the same month a year ago, the fifth such decline this year.  The month prior, household spending declined -2.0%.  Month on month spending increased 1.3%, up from 0.3% the month prior.  The longer-term numbers, more disturbingly, have performed poorly with 17 negative readings over the last 24 months.  As the Jobless rate has continued to contract through May to its lowest percentage of the available population in eight years, there has been little response from consumer in terms of either confidence or spending.  If sustainable inflation is to be achieved in the economy, domestic spending will need to play a big part in it, should import prices begin to relax.

Japanese National Consumer Price Index (JUN) (23:30 GMT; 19:30 EST)
                             (MoM)          (YoY)
Consensus:           -0.1%           1.0%
Previous:                0.3%           0.6%

Outlook: Japanese nationwide inflation is expected to slow a reserved 0.1% month over month following the strong 0.3% increase the month prior.   This would mirror the change in the Tokyo gauge for the same month.  While the shorter span is expecting an unfavorable contraction, the longer-term read is looking at a 1.0% increase.  A positive number in the annual gauge would mark the sixth straight increase in the to offer an important signal to the economies long fight to end deflation.  Price growth over the period will be well grounded in the rebound in commodities, and especially energy products, which the island nation must import the vast majority of.  With crude marching to its highest level on record during the period, there is little doubt the pressure was there.  The real question remains whether the long held net pessimism in the Japanese economy made for a suitable environment to pass higher costs onto the consumer.  With retail sales picking up in May, firms may have been confident enough to do so.

Previous: National CPI in Japan rose 0.3% over May, beyond the 1.0% rate of growth recorded in April.  Core CPI showed a 0.2% increase, after going unchanged in the previous period.  Proving buoyant, food prices surged 0.9%, while specifically fresh food was up 4.6%.  Clothing also continued to grow, although it was off of the accelerated pace of the previous two months.  Overall, clothing was up 1.1% from 3.6% the month before.  More importantly, annualized inflation held at a strong 0.6% pace, up from 0.4% the month before and, as noted above, marked the fifth straight positive yearly increase.  Core price growth over the same period was also up 0.6%, against 0.5% in April. 

Japanese Retail Trade s.a. (JUN) (23:30 GMT; 19:30 EST)
Consensus:          -0.2%
Previous:               0.6%

Outlook: Monthly retail trade is expected to have declined 0.2% in June.  As with most countries, monthly growth in adjusted retail sales has been more volatile than year over year growth.  Annually, purchases are predicted to increase 0.1%, the same rate as last month, but this can largely be blamed on a skew of June 2005's number.  Buffering the pessimistic outlook, a read of convenience store sales recently recorded the first positive year over year reading since June 2004.  On the other hand, the nation's confidence gauge is still having trouble breaching the 50.0 net optimist/pessimist line.  Consumer spending has been struggling to turn upward after years of economic uncertainty in Japan, but with a recovery underway, many forecasters have shifted gears to produce outlooks that involve stronger numbers.

Previous: Month over month retail sales unexpectedly rose 0.6% in May as employment and consumer sentiment remained strong.  Sales were expected to drop 0.4%, but wage growth and better job opportunities (with jobless rate down to 4.1%) has helped to boost consumer spending, a large part of Japanese GDP.  Annually, retail growth turned higher with a 0.1% increase following a sharp 0.8% drop the month prior.  Retail trade numbers only account for brick-and-mortar stores, which limit the effectiveness of the indicator in revealing broader consumer trends as the Japanese domestic spending pattern shifts away from traditional department stores to specialty stores and internet shopping.

Swiss KOF Leading Indicator (JUL) (12:30 GMT; 08:30 EST)
Consensus:           2.56
Previous:              2.50

Outlook: Switzerland's leading indicator is likely to extend its decade high to 2.56.   Despite further growth, 2.56 serves as only a increment when compared to this year's overall pace.  The KOF research institute approximates that a continuation of export growth along with a recent revival in domestic consumption will result in an acceleration of GDP growth later this year.  The number could taper off, however, as recent reports have shown that both economists and business leaders in Germany, a key trading partner, are expressing more pessimism about the future.  In addition, retail sales declined by 2.3 percent.  However, the cynicism this could have bestowed was mitigated since the previous read surged 12.2 percent.  Also, since the last KOF, unemployment extended its lows to 3.1 percent, which puts Switzerland's $340 billion economy among the world's best.  Nevertheless slowing gains, or even declines, are imminent as they are being seen across Europe, as Central Banks will need to continue to boost rates to combat energy-induced inflation.  A US slowdown will also hurt Europe, and in turn, hurt Switzerland.

Previous: Leading economic indicators in Switzerland rose to six-year highs in June.  The index, released by the Zurich-based KOF economic research institute, advanced to 2.50 last month from an upwardly revised 2.34 in May.  This marked the eleventh-straight increase and was another figure amid continuously strong Swiss data that supports the claim that the economy is still benefiting from solid European economic growth.  Other notable pillars to this growth were the labor market, which had fueled a surge in retail sales to all time highs in April.  Moreover, laying seeds for supplies of Swiss-made goods, German business confidence hit fifteen-year highs in June.  The Swiss National Bank raised its benchmark interest rate by 25 basis points to 1.5 percent on June 15th and then said that it would do so again in September, should economic strength continue.  If this composite indicator continues its pace, the central bank's condition will already be in place.

US Gross Domestic Product Annualized (2QA) (12:30 GMT; 08:30 EST)
Consensus:          3.0%
Previous:              5.6%

Outlook: US growth looks to have slowed over the second quarter, as a number of factors combined to suppress consumer spending, which is itself expected to have risen only 2.1% for the period. Oil prices likely took a generous bite out of consumer's budgets, evidenced by last month's decline in retail sales. Another cut into growth likely came from the Federal Reserve's unrelenting pace of rate hikes. The response to higher lending rates has come most fervently from the housing market, with new housing starts, demand for home loans, and sales of new and existing homes showing declines thanks to mortgage rates that are growing beyond most American's income. The job market has also been less than spectacular, with non-farm payrolls coming in below expectations throughout the quarter. Probably the most recent piece of data incorporated into expectations was yesterday's Beige Book from the Fed.  A composite of surveys from all the federal districts mirrored recent nationwide data by reporting a turn in consumer spending. There is hope, however, that economic growth could benefit from strong manufacturing numbers, as durable goods sales grew at a respectable 3.1% in June and the Fed report also reporting positive shifts in business activity.

Previous: Last quarter's GDP number came in higher than the anticipated 4.9% on consumption that reached its highest level in over two years. PCE numbers came in at 5.1%, up from a disappointing 0.9% increase in the last quarter of 2005. Low oil prices provided a rosy environment for growth, with many sectors of the economy reaping the benefits. One of these sectors was undoubtedly manufacturing, which saw a boost in demand with March' s durable goods orders increasing by 6%, the highest in almost a year. Consumers were optimistic, with the University of Michigan confidence survey coming in at consistently high levels. This positive outlook translated quickly into strong retail spending, which grew at a 3% pace in January, the fastest in four years. The same month also saw housing starts grow 13%, for the quickest increase in thirteen years. However, growth had begun to taper off by the end of the quarter, with oil prices beginning their rise and the housing market already showing signs of weakness as housing starts fell abruptly by 7.8% in March.

US Personal Consumption Expenditures (QoQ) (2Q) (12:30 GMT; 08:30 EST)
Consensus:          2.1%
Previous:             5.6%

Outlook: US personal consumption expenditures are expected to show a 2.1% quarterly increase, cooling from the first quarter's strong 5.6% pace.  On the other hand, core consumption inflation is expected to rise 2.9%, faster than the 2.0% rate over the previous months.  PCE differs from Consumer Price Index in that it uses a chain index, which considers changes in consumption due to changes in price, while CPI measures prices of a fixed basket of goods.  Due to the nature of the indicators, PCE is generally easier to predict and deviates from expectations less drastically and less often that its more frequent sister gauge.  Both measures have followed one another fairly closely over the past several years, so the change in this periods read could counter the recent trend.  Inflation as measured by the CPI was unyielding over the three months ending in June as energy prices rose and firms found a more receptive consumer to the pass on of higher prices they were incurring.  If this indicator should post in line with expectations, it would be a blow to rate hike proponents who point to the steady pace of inflation to necessitate the Fed's continued pace of tightening.  This indicator would offer a longer-term view of price pressure, which would line up with the central bank's expectations that as growth moderates, so does inflation.

Previous: First quarter PCE surged 5.1%, a strong increase and a significant indicator when taken into conjunction with the 5.6% quarter growth in GDP.  The boost was fueled largely by consumer spending and a generally strong economy that allowed Americans the ability to accept rising oil prices.  Gasoline costs remained buoyant, despite easing slightly from the previous quarter, when Hurricane Katrina caused a temporary spike above $3 a gallon for much of the country.  Most inflation reads: PPI; CPI; the PCE and other component gauges were uniformly pointing at growth beyond what the economy could tolerate to sustain a consistent pace of growth.  Seeing this, the Fed stuck to its steady diet of quarter point interest rate hikes in an effort to stem spending and moderate economic expansion.  So far, these efforts seem to have yield only a minor effect.

Richard Lee is a Currency Strategist at FXCM.