In Japan, the highlight of the week will be Monday's Tankan second-quarter survey, as touted by Capital Economics' Julian Jessop.

"This will almost certainly report that business conditions have deteriorated. And at face value, the latest monthly CPI and activity data are consistent with stagflation," he wrote.

"The 3.2% y/y slump in real household spending in May was particularly worrying. These numbers are not very reliable but we cannot ignore a third successive y/y decline, especially when consumer confidence has also been very weak."

The Tankan's large manufacturers index is expected to come in at a level of 3, down from a previous level of 11. The large manufacturing outlook is expected to come in at 2, down from a reading of 7 in the first quarter. The non-manufacturing component is expected to come in at 8, down from a previous reading of 12, and the non-manufacturing outlook is expected to decrease to 7 from 13. The all industries capital expenditure is expected to show a 2.00% second-quarter increase, all the while.

On Tuesday, in Australia, the RBA's cash rate target decision looms. ANZ economist Riki Polygenis forecasted that the bank would hold rates at the board meeting holding out for a hike until later on in the year.

"While we believe the RBA will have to [hike] rates further this year, it can afford to wait at this stage and assess whether domestic demand is slowing as it requires," Polygenis wrote. "It cannot wait too long, however, with inflationary expectations on the rise and a good chance that the economy picks up somewhat in the second half of 2008 as households receive $11.2 billion of tax cuts and the income flows from the latest increases in coal and iron ore prices start to filter through the economy."

"We expect a high Q2 CPI number in late July to force the RBA's hand and are looking for a 25bp increase at the August meeting."

The consensus is indeed for the RBA to hold rates next Tuesday at 7.25%. Released on the same day, the country's retail sales for May are poised for a 0.1% month-over-month increase after April 0.2% decrease.

All times in EDT

Sunday:

The week starts out with the release of Australian TD Securities inflation report for June. According to the bank's report inflation rose by an annualized rate of 4.5% in May. In Japan markets will receive Nomura/JMMA manufacturing PMI for June, which came in at a reading of 47.7 in May.

19:15 JN Nomura/JMMA Manufacturing PMI June Prior: 47.7

20:30 AU TD Securities Inflation (M/M) June Prior: +0.3%

20:30 AU TD Securities Inflation (Y/Y) June Prior: +4.5%

21:30 AU Private Sector Credit (M/M) May Exp: 0.6% Prior: +0.4%

21:30 AU Private Sector Credit (Y/Y) May Exp: 13.4% Prior: +14.1%

AU HIA New Home Sales (M/M) May Prior: +0.1%

Monday:

Markets will focus on the Japan Tankan large manufacturing index for the second quarter. Economists expect the Tankan index to show a reading of 3 down from last quarter's reading of 11. The Tankan non-manufacturing index is expected to show a reading of 8 down from the first-quarter's reading of 8.

1:00 JN Housing Starts (Y/Y) May Exp: -3.70% Prior: -8.70%

1:00 JN Annualized Housing Starts May Exp: 1.113M Prior: 1.151M

1:00 JN Construction Orders (Y/Y) May -8.4%

19:30 AU AiG Performance of Mfg Index June Prior: 51.2

19:50 JN Loans & Discounts Corp (Y/Y) May Prior: -0.3%

19:50 JN Tankan Large Manufacturers Index 2Q Exp: 3 Prior: 11

19:50 JN Tankan Large Mfg Outlook 2Q Exp: 2 Prior: 7

19:50 JN Tankan Non-Manufacturing 2Q Exp: 8 Prior: 12

19:50 JN Tankan Non-Mfg Outlook 2Q Exp: 7 Prior: 13

19:50 JN Tankan Large All Industries Capex 2Q Exp: +2.0% Prior: -1.6%

21:30 JN Labor Cash Earnings (Y/Y) May Exp: +0.7% Prior: +0.6% Revised: +0.8%

Tuesday:

It's a busy day in Australia with the release of the Reserve Bank of Australia interest rate announcement. The consensus is for the central bank to leave rates on hold at 7.25%. In more Australian data, markets will receive May's building approval report, which rose 7.8% in April. And finally markets will be interested in May's retail sales, which fell 0.2% in April.

00:30 AU Reserve Bank of Australia Cash Target Rate Exp: 7.25% Prior: 7.25%

1:00 JN Vehicle Sales (Y/Y) June Prior: -6.1%

2:30 AU RBA Commodity Index SDR (Y/Y) June Prior: +28.6%

19:50 JN Monetary Base (Y/Y) June Prior: -0.9%

21:00 AU DEWR Skilled Vacancies (M/M) June Prior: -0.1%

21:30 AU Retail Sales May Exp: +0.1% Prior: -0.2%

21:30 AU Building Approvals (M/M) May Exp: -3.4% Prior: +7.8%

21:30 AU Building Approvals (Y/Y) May Exp: +7.2% Prior: +5.2%

Wednesday:

Aside from weekly Japanese investment data, markets will turn to Australia for the release of May's trade balance report. Australian's trade balance showed a deficit of A$957 million with exports rising 5.85 and imports falling 2.2% the previous month.

19:30 AU AiG Performance of Service Index June Prior: 49.7

19:50 JN Foreign Buying Japan Bonds W/E June 27 Prior: -1312.6

19:50 JN Foreign Buying Japan Stocks W/E June 27 Prior: +¥34.2B

19:50 JN Japan Buying Foreign Stocks W/E June 27 Prior: +¥16.3B

19:50 JN Japan Buying Foreign Bonds W/E June 27

21:30 AU Trade Balance May Exp: -950M Prior: -957M

21:30 AU Exports (M/M) May Prior: +5.8%

21:30 AU Imports (M/M) May Prior: -2.2%

Thursday:

No data is expected to be released in Australia or Japan

Friday:

The week ends with Japanese leading index for May, which came in at 92.8% in April. Markets will also receive Japanese coincident index for May, which rose 101.7% previously.

1:00 JN Leading Index CI May Preliminary Exp: +93.0% Prior: +92.8%

1:00 JN Coincident Index CI May Preliminary Exp: +103.4% Prior: +101.7%

By Neils Christensen, This email address is being protected from spam bots, you need Javascript enabled to view it , with contributions from Ryan Szporer, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, This email address is being protected from spam bots, you need Javascript enabled to view it

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