Japanese Overall Household Spending (YoY) (JUL) (23:30 GMT; 19:30 EST)
Consensus:           -0.9%
Previous:                -2.2%

Outlook: Japanese household spending is expected to improve in July as consumers have been spending more on clothing and housing than in previous periods. The official consensus forecasts spending should contract only 0.9 percent in July from a year before compared to the 2.2 percent decline for same period in June.  The increase signals a change in domestic consumption, which accounts for more than half of the economy. Providing the bulk of the support for stronger private spending are improvements in labor markets.  The unemployment rate has fallen considerably over the past 5 years while the job-to-applicants ratio has reached recent historic highs. Furthermore, the Tankan’s employment conditions component has shown signs of moving beyond a low.   To improve confidence levels through wealth creation, steady rise in housing starts and increases in land prices point to a possible revival of the real estate sector. With the Japanese economy still relying heavily on the export sector, an increase in household spending would be a strong sign for the booming economy as it finds its way out of deflation.

Previous: Household spending for the month of June declined for the sixth consecutive month as domestic demand stuck to yearly lows. June consumption levels continue to slump even though the economy is experiencing one of its longest terms of economic expansion since WW II. This performance is also being recorded on the business side, as retail sales reports also flounder.  When recent GDP figures were released, the quarterly consumer-spending component reported a 0.5 percent increase, though this was still weak in comparison to the historical average. Nevertheless, labor market conditions, earnings indicators, and the economy’s emergence from deflation boosted optimism that private consumption will bounce in the near-term.

German GfK Consumer Confidence Survey (SEP) (06:10 GMT; 02:10 EST)
Consensus:              8.5
Previous:                   8.6

Outlook: German consumer confidence is expected to stall slightly as increased inflation risk will take its toll on consumers. Additional downside risk lies in the previous sentiment indicators that have come out of Germany. The ZEW outlook survey took a massive dive down to a five-year low negative 5.6 in August from 15.1 as Germans worried about the affects of higher lending rates and planned tax hikes on their earning potential. The IFO survey revealed the same sentiment from business men and women, albeit at a far more moderate pace than reported by investors in the ZEW.  Buoyant economic growth throughout the Euro-zone may be enough to keep consumers optimistic throughout the rest of the year, though, as German GDP growth is projected at over 2 percent this year.

Previous: The Gfk’s forward-looking consumer climate indicator rose to 8.6 for August as confidence in the German economy continues to climb. Soaring business and consumer confidence underlined government hopes that the German economy is finally emerging from years of stagnation as sluggish consumer spending due to high unemployment has loomed over the country. Germans' newfound willingness to spend is still rising slightly, but the planned VAT rise, which is aimed largely at curbing Germany's budget deficit, is expected to weigh on the economy and has drawn sharp criticism from business and opposition leaders. The growing trend toward a firmer employment environment should help keep the consumer climate robust as consumers are more apt to open their wallets when job growth is secure and expanding.

Swiss UBS Consumption Indicator (JUL) (07:00 GMT; 03:00 EST)
Consensus:            n/a
Previous:                 2.111

Outlook:  The UBS Consumption Indicator for July is expected to continue rising at a robust clip as consumer confidence takes its cue from strong labor conditions over the past few months. Currently reading at 2.111, the indicator already sits way atop its long-term average of 1.49, suggesting that the Swiss economy will probably continue to be supported by domestic demand. A few periphery reads have also lent weight to expectations of a more liberal Swiss consumer.  First off, July unemployment held near three-year lows in July after numerous contractions in the past months.  More convincing for spending habits was the SECO consumer sentiment gauge, which recently reported at a five year high on job security and financial health. 

Previous: During the month of June the UBS Consumption Indicator rose once again to 2.111 from a revised 1.872 number in May. June’s reading was the highest since April 2002 and indicates that household spending found a boost from high employment and a subsequent rising of confidence in the economy. Similarly, the KOF Leading Indicator composite index showed improvements in expectations for future economic performance as the reading climbed to 2.61 in July against 2.56 expected. The SNB is likely to have more impetus to normalize rates in future meetings to fight off appreciating prices, as the economy continues to grow on the back of both exports figures and consumer spending.

US Conference Board Consumer Confidence (AUG) (14:00 GMT; 10:00 EST)
Consensus:             102.5
Previous:                  106.5

Outlook:  The Conference Board read of consumer confidence is expected to sink to its lowest level of the year for August.  A market consensus for a 102.5 figure is likely response from Americans who are growing more and more concerned with near record gasoline prices and a steady but swift decline in housing market. The price at the pump rose to an average $2.98 per gallon of regular grade of gasoline, which continues to act as a major damper for spending as it consistently erodes the money available for discretionary spending.  Furthermore, the recent survey was completed about halfway through the month, so the dip in energy prices that occurred a little while later will not factor into this periods read.   Perhaps the more pressing issue for consumers will be the state of housing.  Representing an estimated 60 percent of net worth for the typical American, the recent housing market decline will be a sore spot for the economy as a whole.  Recently, sales of previously owned homes fell to a two-year low 6.55 million units on an annual basis.  For the same month, building permits, used to gauge building plans for the coming months, sank to a three-year low 1.747 million units on an annual pace. One area still stoking the optimism in consumers are employment trends.  Though the jobless rate nudged higher to 4.8 percent in July, it remains near five-year lows while wages continue to grow.  For comparison, the University of Michigan’s report on confidence for the same month dropped to 78.7 in August, its lowest since last October

Previous:  Optimism grew for the third consecutive month in July to a mark a 106.5 read even though energy prices made a hearty rebound, the FOMC added a seventeenth 25-basis point hike to its two year regime and housing prices continued to decline.  Officials at the Conference Board say the rise in confidence comes from strong employment and earnings numbers.  The jobless rate fell to a near-five year low 4.6 percent for the month, while average weekly wages continued to line the pockets of consumers.  Digging into the component data, both the present and expectations numbers picked up, the former from 132.2 to 133.0 and the latter from 87.5 to 88.8.  Those reporting that jobs are currently plentiful rose to 28.6 percent from 28.0 percent the month before, while the percentage of participants suggesting jobs were hard to come by remained unchanged at 19.9 percent.  Expectations for the labor market health was not so healthy.  Another interesting point, the average expectation for inflation 12 months into the future rose to 5.1 percent.

Richard Lee is a Currency Strategist at FXCM.