Japanese Annualized Gross Domestic Product (QoQ) (2Q P) (23:50 GMT; 19:50 EST)
Consensus:              2.0%
Previous:                 3.1%

Outlook: Gross Domestic Product, the broadest measure of economic activity in Japan, is expected to have decelerated in the second quarter of 2006.  Expansion is expected to measure 2.0 percent on an annual basis, keeping the bid for the longest expansion since the postwar period alive.  The record will be achieved if growth continues through November, but threats to this title exist.  Cooling weather and a stock market slump probably curbed consumer spending, which played a significant role in first-quarter growth.  Yet consumer spending may be needed to pick up potential slack in the export market.  Crippling energy prices and a collective slowdown in some of the world's major economies have eroded some of the demand for Japanese goods abroad.  Aside from a stronger labor market fueling a revival in retail sales, business investment has also contributed to growth.  Capital investment grew at its fastest pace in over a decade in 2005, buoyed by low interest rates, and is expected to have grown 3.3 percent in the second quarter from 3.1 percent in the first.  Multi-year highs in lending activity however have since prompted the Bank of Japan to lift its zero-interest-rate-policy.  Further hikes, which many deem necessary, will make the situation worse for Japanese exporters, so the BoJ will have to be especially cautious so that consumers don't close the purse strings.

Previous: Japanese economic growth came in faster than expected in the first quarter, rising 0.8 percentage points for a 3.1 percent annual pace, beating the forecast of 1.1 percent.  The Bank of Japan met the next day and left rates at zero, but contributed to hawkish speculation by noting that the economy is growing strong enough to withstand higher borrowing costs, as the world's second largest economy seems to be successful in fighting off deflation.  Consumer spending rose 0.4 percent in the first quarter as business spending fueled more hiring, pushing unemployment down to 4.1 percent, a seven-year low.  In April, consumer confidence showed net optimism for the first time in over 15 years, with wages having risen during six of the seven previous months.  Although a revival in domestic demand was a pillar, Japan's GDP in the first quarter still lagged behind its super-power counterparts, the United States and Europe.

Australian Trade Balance (JUN) (01:30 GMT; 21:30 EST)
Consensus:          -1.600B
Previous:             -2.266B

Outlook: Australia's trade deficit is expected to narrow in June, with exports expanding to overcome continually high priced crude imports. Australian mining and energy companies are returning to full capacity after May's output disruptions, and Asian economies continue to clamor for raw materials. In fact, first quarter mining investment climbed 91% as companies struggled to meet rising global demand. In addition, June's weak Australian dollar will also merit higher exports. Overall, officials suggest that limited shipping capacity at Australian ports will prove the most dramatic constraint on exports. However, with imports climbing consistently and oil prices remaining well above $70 a barrel, it remains to be seen if Australia can slow energy consumption enough to allow a recovery from the widest trade gap since January.

Previous: Australia saw its trade balance double in May, as higher oil prices foiled predictions that the trade deficit would fall slightly. Instead, imports rose 3% on the month, with strong commodities prices and a booming economy forcing miners to ship in more machinery to help expand their production capabilities. The major impetus behind the unexpectedly large increase, though, was a significant drop in exports as cyclones and other weather problems delayed shipments of fuels and other goods, and slowed production at Australian mines and oil rigs. With Australian industry beginning to get back on its feet as cyclone season ends exports are back in the running for significantly affecting the trade account.

US Advanced Retail Sales (JUL) (12:30 GMT; 08:30 EST)
Consensus:            0.8%
Previous:              -0.1%

Outlook: US retail sales are expected to recover in July as car purchases pick up from last month's sharp decline. The increase is based in based in levels of consumer optimism, as confidence rebounded to 84.7 in the University of Michigan survey amid speculation that the Federal Reserve would pause interest rate hikes to avoid suffocating America's slowing economy. Specifically sales of fans and air conditioners are expected to increase are sales of fans and air conditioners, with July this year coming in as the second-hottest on record. Unsurprisingly, however, much of the sales increase is expected to come from service station revenues, which are expected to have lifted prices as tension in the Middle East drove oil prices to record highs over the same period. Although high crude prices could bring down consumption in the future if consumers cut spending in response to higher gasoline costs, it appears that they will prove a boon for sales numbers in July.

Previous: June saw a falloff in retail sales as the American economy suffered from higher energy prices and rising interest rates. With oil prices never breaking below $70, a good portion of the decline was attributable to the related slowing of car purchases, as retail sales excluding autos actually rose by 0.5%. However, it is not only gasoline costs that are contributing to the slowdown, as import prices climbed and CPI rose by 4.3% on the year have made non-essential goods dearer, and therefore less financial viable. With consumer confidence falling and the economy showing initial signs of slowing, June's sales figure came as little surprise.

Richard Lee is a Currency Strategist at FXCM.