BoJ Rate Decision (-- GMT; -- EDT)
Consensus:          0.25%
Previous:               0.25%

Outlook:  The Bank of Japan is widely anticipated to hold rates steady for the fourth consecutive month at 0.25 percent, as indications of significant price pressures have yet to materialize. This has been evidenced by National headline CPI, which slowed to an annualized 0.6 percent in September from 0.9 percent the month prior, while core CPI posted at a tepid 0.2 percent from 0.3 percent in August. Although BOJ Governor Toshiko Fukuiâ�,��"�s commentary regarding the economy, prices, and monetary policy tightening has been perceived as resolutely hawkish, he has been reluctant to establish any sort of timetable for policy action. Additionally, Japanese Vice Finance Minister Hiroshi Watanabe has been quick to play up economic conditions in the country as a reason for depreciation of the yen to end. Despite all of the rhetoric, traders will be focusing on the release of the semi-annual Outlook for Economic Activity and Prices at the meeting, as it will largely determine the prospects for additional BOJ tightening before year end. More specifically, if core CPI forecasts for 2007 hold above the revised 2006 forecasts, it may be confirmed that the policy board sees inflation maintaining its upward trend and ups the ante for a rate hike before 2007.

UK Nationwide House Prices (OCT) (07:00 GMT; 02:00 EDT)
                                (MoM)                    (YoY)
Consensus:          0.7%                       7.9%
Previous:              1.3%                        8.2%

Outlook: UK house prices likely slowed their recent pace of growth on a natural retracement from previous 8-month highs. Indeed, the 1.3 percent appreciation seen through September is likely to prove unsustainable, but likewise healthy forecasts of 0.7 percent bode well for domestic real estate markets. Risks on outlook arguably remain to the downside, with the prospects of higher interest rates weighing on commercial buying interest and some consumer confidence measures in negative territory. Regardless, tomorrowâ�,��"�s release should produce a clearer outlook on the prospects for domestic spending growth, as higher home prices will boost consumer demand in Europeâ�,��"�s second-largest economy.

Previous: House prices rose by the most since the beginning of the year through September, as buyers were able to overcome higher interest rates to keep real estate markets bid. Indeed, the result proved promising for the broader economy, as the news underlined the strength of the British consumer. Economists continued to stress risks to future growth, however, as rising borrowing costs may still prove detrimental to overall trends in domestic consumer expenditure-linked markets. We shall wait for tomorrowâ�,��"�s report to shed light on further developments in the British housing market, with any further gains to be seen as continued strength in overall demand.

German Retail Sales (SEP) (07:00 GMT; 02:00 EDT) 
                          (MoM)                      (YoY)
Consensus:          0.6%                       1.9%
Previous:              0.0%                       1.0%

Outlook:  Retail sales in Germany are expected to rebound 0.6 percent in the month of September after stagnating last month. Chancellor Angela Merkel's plan to raise the value â�,�“added tax next year to 19 percent from 16 percent is anticipated to fuel spending for the remainder of 2006 as consumers aim to avoid the additional levy.  Declining oil prices have not only left Germans with more disposable income, but it has also made them more optimistic about the economy, as marked by the most recent GfK consumer confidence jump to 9.2 from an upwardly revised 8.9. Meanwhile, successful businesses have hired on additional workers in order to meet surging demand for German products, subsequently tightening the labor market and sparking meager wage growth in 2006. With European interest rates still relatively low, domestic demand has ample opportunity to expand. However, with a hawkish European Central Bank on hand and ready to hike rates before the end of 2006, spending may not be able to underpin economic expansion going into 2007 as spending is likely to diminish in the face of monetary and fiscal policy action.

Previous:  Retail sales in Germany unexpectedly stagnated in the month of August, bringing the annual rate down to 1.0 percent. Consumers were hesitant to spend as outlooks regarding the economy have become increasingly pessimistic, especially ahead of the German VAT increase in 2007. Readings of two major investor surveys both indicated that while they were upbeat about the current situation, their assessments for the future dropped dramatically as the ZEW figure dropped to a dismal -22.2 from -5.6 and the IFO report declined to 98.9 from 101.4. However, the ever-tightening labor market could be the one factor to keep retail sales in positive territory in coming months.

UK GfK Consumer Confidence Survey (OCT) (10:30 GMT; 05:30 EDT)
Consensus:          -6
Previous:               -7

Outlook:  British consumers are expected to have been more optimistic over the month of October according to the marketâ�,��"�s consensus for GfKâ�,��"�s report on the matter.  A predicted rise in Octoberâ�,��"�s survey to a negative 6 read draws a lot of its support from the recent GDP report and the easing in petroleum prices.  Just last week the governmentâ�,��"�s statistic bureau said expansion in Europeâ�,��"�s second largest economy reached 0.7 percent for the three month period, while annually it accelerated to a two year high 2.8 percent.  Further boosting consumersâ�,��"� optimism was the state of energy prices.  After the marked decline in price for nearly every energy product, October saw heating oil and gasoline prices stabilize at recent lows, allowing for greater discretionary spending and confidence.  On the other hand, there are a number of issues restraining a greater rebound in optimism.  Recently, the change in the number of jobless topped 45,000, a six year high; leaving the nationâ�,��"�s unemployment rate at 5.5 percent.  This was further degraded by an August report showing the first drop in average earnings in three months.  Another leading issue for most will likely be the high inflation rate.  Though the consumer basket index recently slowed to a 2.4 percent annual pace, from a nearly nine-year high 2.5 percent, much of the relief was due to energy.  As the cost of goods continues to climb, consumers are able to purchase less.  Furthermore, the fear that another rate hike could be in the works is adding to pressure already felt with high mortgage rates across the country. 

Previous:  UK consumer confidence rebounded from its sudden drop in August as a warm end to the summer and the start of a new school year raised spirits.  According to GfK NOPâ�,��"�s sentiment gauge, consumer confidence grew one point to negative 6 in September while five of the six components of the survey advanced.  From the report, the two economic situation sub-indices accelerated, but were well below the equilibrium level.  The report of economic conditions in the past 12 months grew 3 points to negative 32 while the outlook for the coming 12 advanced 2 points to negative 21.  Contradicting the 0.4 percent drop in retail sales for the period, the â�,�˜Climate for Major Purchasesâ�,��"� figure had also advanced.  The only sub-gauge to notch up a contraction reported the expectations for personal financial health in the coming year.  After the BoE raised the overnight lending rate in August and recent employment reports continued to degrade, consumers felt their ability to purchase goods in the coming months would evaporate.

Canadian Gross Domestic Product (AUG) (13:30 GMT; 08:30 EDT)
Consensus:          0.3%
Previous:              0.2%

Outlook:  Growth in the worldâ�,��"�s eighth largest economy is expected to accelerate for the second month in a row in August.  The 0.3 percent consensus of economistsâ�,��"� predictions comes on the part of a number of related indicators that will likely contribute to the value of total economic output.  An issue in recent months, foreign trade is expected to contribute to growth.  The surplus for the month reached C$4.203 billion, the highest since March, as the demand for energy exports reached a fevered pitch.  Strength wasnâ�,��"�t isolated to export sector however.  Domestically, new house prices grew by 1.5 percent in August, the most since 1989.  Also, retail sales rose 1.0 percent to C$33.4 billion, following a 1.5 percent advance in July.  During the period, sales of autos grew 4.1 percent for a C$6.3 billion addition to growth numbers while also being one of the best performances of the period. While there are a number of indicators expected to bolster growth, a few will act to anchor the improvement.  Opposing the effects of more expensive houses for the period, new home starts in August slowed to a 10-month low 214,200.  As it has been for the much of the year, the biggest draw on growth was likely come from the manufacturing sector.  Suffering from slowing demand in the US and a currency near multi-decade highs, manufacturing shipments slowed 0.3 percent while the Ivey PMI gauge dropped to its lowest level since January.

Previous:   Canadaâ�,��"�s economy grew 0.2 percent in July, following no change in the previous month.  Despite the overall rebound however, the change in the components revealed the growth was uneven.  Only eight of the 18 industries Statistics Canada follows actually grew.  From those advances, the biggest contributions were made on the part of the wholesalers, mining and financial industries.  Wholesalers, which have seen the biggest growth over the year, expanded 1.0 percent over the month.  More temporary in retrospect was the performance for mining, gas and oil extraction, which surged 1.8 percent over the month as demand and value for their products hit record highs.  From the group of underperformers, construction and agricultural industries suffered the most.  Residential construction dropped 1.1 percent in July as Canadians responded to a number of hikes in the nationâ�,��"�s overnight lending rate by controlling their purchases of homes and other big ticket items.  Elsewhere, farmers and lumber mills plunged 1.7 percent in the same period as demand from across the boarder suffered a drop in disposable income.  Overall, despite marking the fastest pace of growth in four months, the monthâ�,��"�s report of GDP did little to sway expectations for a potential rate hike in the near future.

US Employment Cost (3Q) (12:30 GMT; 08:30 EDT)
Consensus:          0.9%
Previous:              0.9%

Outlook:  Growth in US labor costs for the third quarter is expected to hold its 0.9 percent pace.  Expenses related to salary and other forms of compensation are predicted to have continued to grow through the three months despite a moderation in non-farm payrolls.  In September, a modest 51,000 hires were added to the nationâ�,��"�s payrolls, a far cry from the 300,000-plus seen earlier.  However, while this trend suggested a downturn in the labor market was underway, earnings continued to outperform.  For the same month, average hourly earnings growth matched a five-year high 4.0 percent.  Furthermore, the final revision of the wage trend indicator for the third quarter may also offer the support for a strong employment cost report.  According to the Bureau of National Affairs gauge, plans to increase private industry wages grew 1.0 percent from the same period a year ago, matching the pace reported in the second quarter.  This suggests that current wage growth has not yet hit levels that are deemed unsustainable.  While the NFP report due later this week will likely overshadow the earlier released employment cost indicator, the latter may prove more relevant for the Fed and for the economyâ�,��"�s health in the months ahead.  Should job growth continue to print at levels deemed necessary to sustain growth, economists and policy-makers will turn to earnings to determine whether incomes will drive spending in the months ahead.

Previous:  The Labor Departmentâ�,��"�s Employment Cost Index grew 0.9 percent in the three months through June, matching the fastest pace of growth since the second quarter of 2004.  The faster than expected pace came from a consistent increase in benefits and wages and salaries.  Benefit costs, excluding bonus, severance, healthcare and paid vacations, rose 0.8 percent over the period.  This was the fastest pace of growth since the first quarter.  For comparison, wages and salary costs rose 0.9 percent, the biggest jump in three years.  The acceleration in incomes reflected the competition in the US labor market, as employers vie for the fewer skilled workers in the economy by using greater compensation packets.  During the three-month span, the jobless rate contracted to a five-year low 4.6 percent of the available labor pool; which in turn pressured average hourly wage growth to its own five-year high 3.9 percent.

US Consumer Confidence (OCT)
Consensus: 108.0
Previous:      104.5

Outlook: Analysts predict that US consumer confidence improved through the month of October, as falling gas prices and improving employment boosted sentiment in the worldâ�,��"�s largest economy. Questions remain, however, as to whether lower energy prices will outweigh the recently bearish results in the US housing market. Given that real estate expansion has made sizeable contributions to American disposable incomes, analysts wonder whether a subsequent housing contraction will effectively spell the end to strong consumer spending growth. Indeed, with retail sales 0.4 percent lower through the month of September, some claim that such a decline in demand has already come to fruition. Regardless, we shall monitor tomorrowâ�,��"�s report for clearer indication of the all-important trend in consumer sentiment.

Previous: US consumer confidence gained more than expected through the month of September, as sharp drops in gasoline prices improved sentiment. This report was seemingly contradictory with same-month data that showed a 0.4 percent drop in national retail salesâ�,�”leading many to question whether improved confidence would be enough to buoy spending. Likewise significant, economists expressed concerns that lower house prices would put a dent in overall demand. We will subsequently monitor October consumer confidence results and later retail sales data for indication of future domestic expenditure growth.

Richard Lee is a Currency Strategist at FXCM.