Japanese Industrial Production (NOV P) (23:50GMT; 18:50EST)
                           MoM                       YoY
Consensus:          1.0%                       5.2%
Previous:              1.6%                       7.4%

Outlook: Industrial production in Japan during the month of November is anticipated to gain 1.0 percent, though the annual rate is expected to ease back to 5.2 percent. Overseas demand has helped business confidence advance to a two-year high this month and is encouraging companies to increase output of automobiles and electronics. Strong production, which has also helped to tighten the labor market to an eight-year low of 4.0 percent, has the potential to prompt the Bank of Japan to raise interest rates as soon as January 2007. However, despite the resilience of the labor market, wage growth has been hard to come by and has left consumption weak; creating the risk of a major economic slowdown should the central bank decide to hike from 0.25 percent to 0.50 percent too soon.

Previous: Japanese factory output in Japan during the month of October surged 1.6 percent, pushing the annual rate up to a two year high of 7.4 percent. The figures were far stronger than expected and came as a relief to traders bullish on the Japanese economy following a spate of dismal data over the past week. The increase in output was led by the auto sector and by semiconductor producers, as two of Japanââ,¬â"¢s biggest carmakers, Toyota and Honda, said they boosted production to meet demand for fuel-efficient vehicles. The reports were in line with the October reading of machinery orders, which jumped 2.8 percent after plunging 7.4 percent the month prior. The figures raised the prospects for a December rate hike by the Bank of Japan as businesses continued to benefit from export growth and fueled economic expansion.

Japanese Labor Cash Earnings (YoY) (NOV) (1:30 GMT; 20:30 EST)
Consensus:          0.2%
Previous:              0.0%

Outlook: Expected to rise by 0.2 percent in the month of November, Japanese labor cash earnings are anticipated to have rebounded as lower energy costs may lend to some cheerful end of the year giving by employers.  Previously keeping wage increases dipped, employers profit margins may have expanded as crude oil costs were lowered throughout the month.  The notion will likely help in employee payouts for the month.  Subsequently, the increase in earnings may give the consumer the much needed impetus to spend in the economy, reversing the hesitance that has loomed over the consumer base for much of 2006.  Now, should spending increase domestically, policy makers may very well have to entertain the idea of further rate tightening in the new year.  Previously, the Bank of Japan noted that the lack of private consumption may adversely affect the economy, lending to contraction rather than expansion.

Previous:  Japanese labor cash earnings remained unchanged in the month of October, sparking concern that growth in the worldââ,¬â"¢s second largest economy may be stalling.  Wages including bonus and overtime pay was unchanged at $2,350, falling below the consensus expectations of a 0.2 percent gain.  Subsequently, the decline is boosting the likelihood that the Bank of Japan will forego a rate hike at the end of this year, a notion that had increasing speculative backing as domestic spending remains weak.  A notion that has persisted over the past year, consumers remain reluctant on spending as companies continue to maintain higher profit margins by restraining any pay increases to employees.  The hesitance to raise pay continues to crimp domestic spending, basically removing a pillar of growth for the Japanese economy.  Coincidentally, policy makers have been increasingly dependant on the consumer sector as the export market has remained teetering over the past quarter.

UK Nationwide House Prices (DEC) (7:00 GMT; 2:00 EST)
Consensus:  0.8% MoM, 9.9% YoY
Previous:  1.4% MoM,  9.6% YoY

Outlook:  House prices are expected to grow for the tenth straight month, albeit at a slightly slower pace.  Even though the latest mortgage application data reported a 14.2 percent drop, the index is volatile.  The annual Hometrack house price survey has already reported a 12.1 percent rise in house prices in 2006 as the combination of falling inventories and strong demand pushed prices higher throughout the past year.  Another strong report will raise the chances for a rate hike by the central bank on January 10th.  The rate hikes that we have seen thus far have done very little to slow the growth in the housing market and as such, the central bank may need to continue to drive rates higher. 

Previous:  House prices in the UK grew for the ninth consecutive last November, bringing the annualized pace of growth up to 9.6%, the fastest since February 2005.  Inventories are also at a two year low, highlighting the further upside risk to house prices.  The housing market has long been one of the strongest aspects of the UK economy and the Nationwide report has consistently given the Bank of England reason to lean towards a hawkish monetary policy. 

US Consumer Confidence (DEC) (15:00GMT; 10:00EST)
Consensus:          102.0
Previous:              102.9

Outlook: Consumer confidence in the US is anticipated to slow once again in the month of December, just as retailers are starting to report slower holiday shopping sales. American sentiment may no longer be getting a lift from falling gasoline prices and gains in stocks, and the housing slump is making it harder to borrow against home equity. Recent slides in confidence casts doubt on forecasts that consumer spending will power a rebound from the slowing pace of economic growth, which dropped to 2.0 percent in the third quarter. As such, it will be important to watch for any surprises in the important barometer of consumer health in the US economy.

Previous: The Conference Board's gauge of consumer optimism unexpectedly slipped to its lowest level in three months during November as current assessments and outlooks weighed the headline gauge down. A breakdown of the data showed the present situation sub-gauge dipped 1.5 points to 123.6 while the expectations component dropped 2.7 points to 89.2.  Further down the line, the labor conditions read, which takes the difference between those respondents saying jobs are plentiful minus those saying they are hard to get, slipped to match its low in August.  At the same time, the outlook for employment cooled with fewer seeing more jobs. Overall, the report was particularly gloomy ahead of the holiday shopping season and for US economic growth in general.

US Chicago PMI (DEC) (15:00GMT; 10:00EST)
Consensus:          50.2
Previous:              49.9

Outlook: After the sharp drop in November, the market is forecasting for a rebound in the Chicago PMI index in the month of December.  However, with the sharp fall in the Philly Fed manufacturing survey last week, the odds are more in favor or a weaker rather than stronger print.  Manufacturing conditions nationally have been and are expected to remain weak given the drop in vehicle production.  Much of the rise in durable goods orders was due to aircraft orders which mean that even durable goods contained underlying weakness.  If the Chicago PMI report remains in contractionary territory, taken in conjunction with the Philly Fed index, the market would immediately begin to price in a weak national manufacturing ISM survey for the same month.

Previous:  Manufacturing conditions in the Chicago region contracted for the first time since April 2003, which was much weaker than the marketââ,¬â"¢s forecasted rise to 54.4.  The weakness was widespread with deteriorations seen in every one of the underlying components.  The fear of a slowdown in the housing market has pushed many businesses to reduce their investment into new machinery and equipment and to focus on reducing inventories.  The surprisingly weak print suggests that manufacturing conditions nationwide could also be sluggish.

John Kicklighter is a Currency Strategist at FXCM.