Japanese Machine Orders (MoM) (AUG) (05:00 GMT; 01:00 EST)
Consensus:          11.2%
Previous:            -16.7%

Outlook:  Machine orders in Japan are anticipated to rebound in the month of August at a rate of 11.2 percent as business sentiment and capital expenditures remain buoyant. BSI for both large manufacturers and all industries increased significantly in the third quarter compared to the previous three months, indicating that companies were more confident in business prospects and making them more likely to spend in August. Furthering this signal is the result of the Tankan All Industry Capital Expenditure survey for three months through September. While the data posted slightly lower than expected at 11.5 percent, the figure was still near the 13-year record only 0.1 percent higher and bodes well for the August order release.

Previous: Japanese machine orders dropped the most in almost 20 years during the month of July at a rate of 16.7 percent, hurting expectations that Japan was experiencing a broad-based recovery which would impel the Bank of Japan to hike rates again before year end. The decline was led by fewer orders from semiconductor, steel, and mobile-phone companies and raised concerns that stellar Capex spending seen in the second quarter may not follow through into the second half of 2006. However, the disappointing orders results could have just been a correction following monthsââ,¬â"¢ improvements, and therefore may not signal a turn in trend growth.

Japanese Eco Watchers: Outlook (SEP) (07:00 GMT; 03:00 EST)
                          (Outlook)         (Coincidence)
Consensus:             n/a
Previous:                51.5

Outlook:  The Japanese Economy Watchers expectations index could rise again in the month of September following the figureââ,¬â"¢s rise above the 50 boom/bust level in August. The man-in-the-street survey is likely to be influenced by continuously improving labor market results, as the most recent results of the job-to-applicant narrowed to 1.08, holding the jobless rate at 4.1 percent. On the flip side, labor cash earnings dropped 0.5 percent on an annual basis and could hurt consumer sentiment as disposable income diminishes.

Previous: The expectations index of the Japanese Economy Watchers survey rose above the 50 level to 51.5 from 49.8, indicating that more people believe that economic conditions will improve in two to three months. A breakdown of the data shows that households think the retail and food sectors will perform better, while they saw a slowdown in housing. Business sentiment, on the other hand, was weighted towards a pickup for non-manufacturers rather than manufacturers. Meanwhile, the overall outlook for employment rose the most since January.

Canadian Housing Starts (SEP) (12:15 GMT; 08:15 EST)
Consensus:          222,000
Previous:              214,000

Outlook:  Groundbreakings on new Canadian residences are expected to have increased to a 222,000 annual pace for the month of September.  Investment in starts has softened somewhat from the first half as high lending rates have begun to catch up to the once, strong hiring trend.  However, the reported increase in net employment through the month of September could offer some proof of a modest rebound in the leading housing gauge.  Last month, employers added 16,200 people to the payrolls, though the entire improvement was isolated to part-timers.  Another indicator of support for the starts data is the building permits data for August.  Filings for new buildings, often a precursor to the starts, rose 8.3 percent in August while residential permits specifically rose 5.0 percent.  Monetary policy officials will likely keep their eye on housing trends in the months ahead to gauge whether domestic spending will help offset the contraction in export markets, or if the central bank will need to act in order to right the situation.

Previous: Starts of new homes slowed to 10-month low, 214,000 units in August as builders slowed production and the average price of existing units continued to climb.  From the breakdown of the monthly Construction on multi-family units reportedly dropped 21 percent to 87,860, while those of single-family units rose a moderate 2.6 percent to 91,500.  Recently, Canadian housing data has shown some trouble in adjusting to high mortgage rates and dear valuations.  Through July, the Bank of Canada raised the overnight lending rate at seven consecutive meetings to stem price growth.  These high levels of inflation were partly due to strong wage growth that had also led Canadians to enter the market for a new home, and in turn bid prices higher.  According to the most recent data, the resale price of the average Canadian house rose 10.1 percent over the year through July.  

Richard Lee is a Currency Strategist at FXCM.