German Producer Prices (AUG) (06:00 GMT; 02:00 EST)
                            (MoM)             (YoY)
Consensus:            0.1%               5.9%
Previous:                0.5%               6.0%

Outlook:  The Producer Price Index (PPI) for the month of August is expected to rise 0.1 percent versus 0.5 percent the previous month, as faster than usual growth in the Euro-Zone is providing more leeway for companies to pass through higher prices onto the consumer. Prompting this attempt at recouping higher costs at the expense of consumers were consistently high energy prices.  This excess burden continues to pose problems for companies as the cost of producing goods has risen dramatically on metal and commodity prices. Energy prices specifically have risen close to 19 percent from a year ago.  Now consumers are pressed both at the pump and, because of pass-through, through other further refined products as well.

Previous:  Factory gate inflation in Germany, Europeââ,¬â"¢s largest economy, held near a 24-year high in July as increased energy and metal costs continued to contribute significantly to index gains. Producer goods from plastics to newsprint were over 6 percent more expensive in July as price inflation is now seeping into the PPI basket. One factor facilitating the pass-through of costs from companies is faster economic growth in the Euro-Zone. Retail sales rose for a fourth month in July as the jobless rate fell to 10.6 percent from 10.8 percent the previous month. With such fast paced economic growth, EZ consumer prices now sit at 2.4 percent, well over the ECBââ,¬â"¢s target rate of 2.0 percent. As crude oil continued to hold over $70 a barrel and the price of copper and nickel doubled in the past year, PPI may be expected to maintain growth in the near-term.

German ZEW Survey (SEP) (09:00 GMT; 05:00 EST)
                        (Econ Sentiment)         (Current Situation)
Consensus:               -8.0                               35.0
Previous:                   -5.6                               33.6

Outlook:  ZEW Economic Sentiment for the month of September is expected to decline to a negative 8.0 read from negative 5.6 in July as the prospect for significantly higher interest rates diminishes. Very sharp drops in the ZEW, as evidenced by Augustsââ,¬â"¢ readings, which were one of the lowest since 2001, show that those who are pessimistic now exceed those who are optimistic about the future of the economy. Main concerns center around inflation risks and control measures taken up by the ECB, but also anxiety about the world economy as a whole, as it faces the new reality of higher oil prices.

Previous:  Economic Sentiment in Europeââ,¬â"¢s largest economy sank to negative 5.6 in August, more than 20 points from Julyââ,¬â"¢s healthy figure as higher interest rates, spurred on by rising energy costs, and a planned tax increase dimmed the outlook for economic growth and expansion. While Germanyââ,¬â"¢s overall economy is set to expand, growth may very well have peaked as the ECB continues its tightening process and Chancellor Angela Merkel is set to raise the VAT to 19 percent from 16 percent in 2007, all in the face of waning demand for German exports.

Canadian Consumer Price Index (AUG) (11:00 GMT; 07:00 EST)
                          (MoM)            (YoY)
Consensus:          0.1%               2.1%
Previous:              0.1%               2.4%

Outlook:  Price growth in the Canadian consumer basket is expected hold steady for the month of August with a slight 0.1 percent increase.  This monthly change contrasts with an expected contraction in the annual figure from a 2.4 percent pace in July to 2.1 percent in the more current month.  Expectations of such a slowdown find relatively stable support under a few premises.  Perhaps the most influential factor for overall inflation for the month was the sharp reduction in the prices of energy products, and more specifically gasoline.  While gasoline prices are more specific to the consumer, the cheaper input prices for factories over the period could very well encourage Canadian firms to cut the price they charge in order to attract customers who are attracted to cheaper imports.  If the yearly measurement of inflation is tamed as expected, then it would be nearly inline with the bankââ,¬â"¢s target 2 percent set up under the inflation-target agreement.  With predictions of subdued price growth on both the headline and core figures, there seems little impetus for the Bank of Canada to consider another rate hike any time soon.

Previous:  Inflation in Canada was drawn in multiple directions in July as higher prices for gas and fresh fruit competed with the effects of a federal tax cut which required the government to adjust their calculations of the price gauges.  In July, the consumer price index accelerated 0.1 percent from one month ago, against expectations of a 0.2 percent dip.  Pressuring inflation through the month came from specific assistance from a 4.6 percent increase in gasoline and a 7.4 percent rise in fresh fruit.  Record petroleum prices through the period were showing their presence through more than just gasoline prices.  Transportations costs, like buses and air travel, grew 1.3 percent for the same period.  Another issue playing into the inflation barometer was the goods and services sales tax cut from 7 percent to 6 percent taking affect on June 1st.  To adjust for these effects, the central bank deducted 0.5 percentage points from the monthââ,¬â"¢s read.

US Producer Price Index (AUG) (12:30 GMT; 08:30 EST)
                           (MoM)            (YoY)
Consensus:           0.3%              3.8%
Previous:               0.1%              4.2%

Outlook:  US inflation at the producer level is expected to moderate in August with a predicted 0.3 percent pace of growth from the month before.   This slight acceleration on the monthly read contrasts with the expected slowdown in the annual pace: from 4.2 percent in July to 3.8 percent last month.  Expectations for the longer-term contraction in the pace of growth that had been so integral to the Fedââ,¬â"¢s consistent policy of rate hikes lies with the declines in energy costs over the month.  Already, the Labor Departmentââ,¬â"¢s first two inflation reads (the import price index and consumer price index) have reflected the cheaper price of crude oil and gasoline.  The same is expected for the producer price index, but some are saying the bulk of the decline occurred after the government ended its data collection, relegating the majority of the impact from this group to the following month.  However the PPI reports, be it above or below expectations, its significance for the Fed meeting the following day seems minor.  With CPI already falling off of highs and the economy presenting irrefutable signs of moderating, policy makers have less scope in raising rates.

Previous:  Prices paid to producers grew at a slower pace than predicted in July.  The 0.1 percent increase in headline inflation through the month fell well short of the 0.3 percent predicted.  More significant was the performance of core prices.  Month over month, core prices plunged 0.3 percent, matching the sharpest drop in prices received since April 2003, while the annual measurement narrowed to 1.3 percent growth for its slowest pace of growth in 29 months.  The softer prices were a detriment to US factories as the costs for input prices were rising to record levels.  In fact, core prices at their earliest stage of production rose 43 percent in the previous three months.  When looking to the components, the decline was seen as broad-based.  Autos suffered with a 0.8 percent drop in passenger car values and light trucks plunged 3.1 percent as a by product of consumer demand plummeting in the wake of near record gasoline prices.  Elsewhere, capital equipment fell 0.2 percent while computers were 1.8 percent less expensive.

US Housing Starts (AUG) (12:30 GMT; 08:30 EST)
Consensus:            1,750K
Previous:                1,795K

Outlook:  August housing starts are expected to decline to 1.720 million units on an annual basis as housing prices continue to depreciate and financing costs remain above many consumersââ,¬â"¢ ability to afford. The rate of housing starts has declined in five out of the last six months, while permits have declined for six straight months. Septemberââ,¬â"¢s NAHB survey suggests that a continued contraction in the housing sector is upon us after printing a fresh 15-year low for the second month in a row. A big contributor to the sluggish NAHB numbers were residential construction concerns, as they have now been a drag on both the housing sector and overall GDP for the last three quarters. In line with the free-fall of the NAHB survey, housing starts may be expected to continually decline over future periods as speculation mounts of a longer term economic cool down.

Previous:  Housing starts fell by 2.5 percent, under market expectations; to an annual rate of 179.5 million in July as mortgage rates slowed sales and left builders with ballooning inventories. Reduced home buyer affordability, currently sitting at the lowest level since 1989, has reduced consumer demand and forced builders to cut earnings forecasts which have raised caution in the market and generated fears of a possible impending housing crash. A steady decrease in residential construction, which accounts for 6 percent of GDP, is further evidence that a slowing of this sector will affect and ultimately cool the whole economy.

Richard Lee is a Currency Strategist at FXCM.