UK Jobless Claims Change (SEP) (08:30 GMT; 04:30 EST)
                      (Change)            (Rate)
Consensus:       0.0K                  3.0%
Previous:         -3.9K                   3.0%

Outlook:  The labor market could hold steady in the month of September, as the number of jobless claims is anticipated to post unchanged, subsequently leaving the claimant count rate at 3.0 percent. If the employment statistics prove to be positive, payroll growth concerns could come to the forefront again, especially given the results of the retail price index this week. RPI jumped 0.5 percent, far higher than expected and indicated that wages, which are priced based on RPI, could inflate as well. However, downside risk comes as figures like GDP have been downwardly revised and create a bearish bias for expansion going into late 2006.

Previous: In August, the UK claimant count posted well below expectations with a 3,900 contraction.  However, the result was not totally unexpected given Prime Minister Blair's comments on September 12, when he stated that he expected the August figures to show â�,��"for the first time in some months - a fall again in unemployment.â�,� Improvements in the manufacturing sector, which saw greater output numbers, have helped to tighten a labor market that is flush with new foreign workers looking for jobs. The encouraging employment results raised concerns about wage growth, as inflation that was already above the Bank of Englandâ�,��"�s 2 percent target could be pushed higher with price pressures becoming broader based.

US Consumer Price Index (SEP) (12:30 GMT; 08:30 EST)
                         (MoM)             (YoY)
Consensus:       -0.3%               2.3%
Previous:           0.2%               3.8%

Outlook:  The most commonly followed measure of inflation is expected to moderate significantly in its September report.  Over the month, the consumer price index is expected to slow 0.3 percent, while the annual figure looks to slow 1.5 percentage points to 2.3 percent.  Inflation for the month has already shown a penchant for such a large shift in the two preceding price reports for the same month.  Septemberâ�,��"�s import price index fell for the fist time in six months by a substantial 2.1 percent.  Similarly, inflation reported at the producer level slid 1.3 percent on the month, the biggest contraction since April 2003.  Both of these indicators were heavily influence by the drop in energy prices.  The import index reported a sizable 10.3 percent drop in the petroleum product bill, while the producer index saw a 22.2 percent decline in consumer gasoline.  Gas receipts are likely to have the same effect at the consumer level.  On the other hand, when the volatile factors are stripped out, the CPI is expected to be little changed like just like the PPI.  Core PPI prices actually rose 0.6 percent in September and the consumer equivalent is expected to mimic the previous month with a 0.2 percent increase.  Should this final measure of inflation match up to the previous ones, the FOMC may see a rate cut more clearly in the near future.

Previous: Price growth in the consumer goods basket was cut in half over the month of August.  From a 0.4 percent pace in July, monthly growth tallied 0.2 percent as cheaper prices for energy products filtered through in direct and indirect means over the period.  From the specific energy component for the period, 2.9 percent expansion from the previous period was tempered to a 0.3 percent pace.  Much of this was accomplished through the cheaper prices in gasoline, averaging $2.85 per gallon compared to $2.95 when crude was at a record high in July.  While the headline figures were showing these significant contractions, the same was not evident in the core numbers.  On the month, core inflation rose 0.2 percent and advanced 2.8 percent from the year before.  The latter was the fastest pace since November 2001, propped by still rising rent and housing prices.  This dichotomy between the headline and core figure supports the number of policy board members that have said inflation remains a significant risk for the economy in the future.
 
US Housing Starts (SEP) (12:30 GMT; 08:30 EST)
Consensus:         1.645M
Previous:            1.665M

Outlook:  Housing starts in the US are expected to drop to the lowest level since April of 2003. The rate has declined in six out of the last seven months, while permits have declined for seven straight months, and the disappointing results arenâ�,��"�t likely to stop anytime soon. Homeowners are projected to find in record numbers that they can no longer afford to pay their mortgages, as ARMs are repriced significantly higher. These defaults will boost the already high level of inventories, putting newly built homes at a huge disadvantage. Should housing levels continue to decline, the Fed could be forced to cut rates in the effort to prevent a hard landing of the housing sector.

Previous: US housing construction declined more than anticipated in the month of August by 6 percent to 1.665 million, the lowest level in three years. Likewise, building permits dropped for a seventh straight month to the lowest level in four years, signaling that home construction will keep slowing. Rising mortgage rates and sky-high home prices have caused inventories to surge and demand to wane. The weaker housing market poses a substantial risk to US economic growth in general, as consumer spending is thought to be driven by asset values derived from house prices.

Canadian Leading Indicators (MoM) (SEP) (12:30 GMT; 08:30 EST)
Consensus:          0.2%
Previous:             0.2%

Outlook:  Canadaâ�,��"�s leading economic indicator index is expected to repeat the previous monthâ�,��"�s 0.2 percent read in September.  Though only a few of the component gauges are known before hand, their weight provides the forecasts behind this outlook.  Just like August, the greatest downward pressure is likely to come from the housing market.  While housing prices have consistently risen in the measureâ�,��"�s previous prints, construction has steadily slowed.  Housing starts over the month of September fell to a 211,300 pace from 216,600 the month before.  Another detractor from the indicator used to predict economic expansion in the coming three to six months is the stock component.  In the previous months it had padded growth; but given the large drop in the indices over the period, it is likely to weigh on the indicator in September.  On the other hand, the business service employment and manufacturing work week for the period will likely benefit the overall figure.  The net change in employment for the month finally increased after three consecutive contractions.  

Previous: The leading indicators gauge slowed to a 17 month low in August as improvements in employment, productivity and consumer spending were barely able to cover a large drop in the housing index.  From the composite, the most influential change for the period came on the part of a large 2.5 percent drop in the housing index as housing starts continued to fall amidst higher prices and financing costs.  The only other components to ease on the month were the stock and US activity indices, which both dipped 0.1 percent.  On the positive side, the measure of business employment grew 0.5 percent in the second consecutive acceleration in the read.  Also, the money supply figure, though its slowest in over six months, grew 0.6 percent.  This was followed by furniture sales at its slowest pace in a year at 0.5 percent growth. 

Richard Lee is a Currency Strategist at FXCM.