Japanese Household Spending (MoM) (NOV) (23:30 GMT; 18:30 EST)
Consensus: -1.7%
Previous: -2.4%

Outlook: Japanese Household Spending is predicted to drop for the eleventh consecutive month, as weak consumer confidence provides little motivation to boost consumption. As one of the more worrying trends for the Japanese economy, Yen bulls will hope that a strong job market will eventually reverse the trend and make the case for above-trend growth in 2007. Despite strong employment, however, wages have not followed suit and have stayed largely stagnant through 2006. The future of Bank of Japan monetary policy tightening hangs in the balance, as the central bank will be remiss to raise interest rates if household spending continues its pronounced downtrend.

Previous: Household expenditures fell for the tenth consecutive month through October, as weak demand hurt broader consumption. The 2.4 percent decline actually represented a slowdown in losses, however, as Septemberâ�,��"�s 5-year worst 6.0 percent plummet proved somewhat short-lived. At the time, Bank of Japan Governor Fukui described the sharp drop as â�,��"a little puzzlingâ�,�, but went on to say that â�,��"I donâ�,��"�t think thereâ�,��"�s any reason to be overly pessimisticâ�,�. Suffice to say, Household Spending will need to make a comeback in upcoming months for worthwhile optimism to return for broader consumption patterns. 

Japanese Jobless Rate (NOV) (23:30GMT; 18:30EST)
                           Jobless Rate       Job-to-Applicant Ratio
Consensus:                4.1%                    1.07
Previous:                    4.1%                    1.06

Outlook: The jobless rate in Japan is anticipated to hold steady in November at a rate of 4.1 percent. However, the job-to-applicant ration is expected to pick up slightly to 1.07, which could point to a slight loosening of the labor market. Nevertheless, the figures are strong for the Japanese economy but will likely continue to perpetuate the question of why wage growth isnâ�,��"�t accelerating. The labor ministry has reported that the economy is generating part-time and contract positions at twice the rate of full time jobs, which tend to pay less and offer fewer benefits. As of early December, the average wage had only risen less than 10,000 yen since the beginning of the year, severely limiting disposable income for households and leading to disappointing consumption rates. Should the Japanese job market continue to strengthen and show a shortage of labor, companies may have no choice but to raise payrolls in coming months.

Previous: The Japanese unemployment rate fell to near an eight-year low in the month of October to 4.1 percent. Additionally, the job-to-applicant ratio also fell unexpectedly to 1.06, pointing to an even tighter labor market. Companies, namely those which produce exported goods, have been quite profitable over the year on stronger demand for their products which has subsequently led to increased hiring. However, these businesses have failed to boost wages, leaving consumption to fall by the wayside and subsequently leading to a negative impact on growth. Fortunately for households, if the labor market continues to tighten in coming months, it should only be a matter of time before employers are forced to increase wages in order to attract workers.

Japanese Consumer Prices (NOV) (23:30 GMT) 18:30 EST
Tokyo CPI (Dec)
Consensus: 0.0% (MoM); 0.3% (YoY)
Previous:  -0.2% (MoM);  0.2% (YoY)

National CPI (Nov)
Consensus: -0.1% (MoM); 0.3% (YoY)
Previous:  -0.3% (MoM);  0.4% (YoY)

Consensus:  National consumer price growth is expected to remain subdued in the month of November with analysts expecting prices to drop for the third consecutive month.   Earlier this week, the BoJ Governor raised concern about the low level of consumer prices and Monday nightâ�,��"�s data is expected to reflect that.  However, the risk is to the upside with oil prices climbing once again in November.  Core prices are expected to tick higher on an annualized level as cell phone providers put an end to discounting.  However any increases that we see in inflation will probably not be significant enough to justify a rate hike at this point. 

Previous:  National consumer prices fell 0.3 percent in the month of October as a direct result of the 22 percent oil price drop the prior month.  This is the second straight month that prices have fallen on a headline level which explains why the Japanese government has been so hesitant about raising interest rates in the second half of 2006.  Core prices also dropped by 0.1 percent, which highlight the difficulties that the country has been facing in shaking off deflation.  Weak consumer spending has also limited price increases.  The more updated figures from Tokyo for the month November (which is a good leading indicator for the national release) also saw slower headline consumer price growth, but core prices accelerated by 0.2 percent.  The rise is far from impressive and indicates that low inflation rather than high inflation is Japanâ�,��"�s main problem.

John Kicklighter is a Currency Strategist at FXCM.