Introduction

Countdown to the July 31 FOMC decision gets more exciting each and every day! We'll start the week's rundown looking at the latest inflation data from the world's three largest economies so you can judge for yourself whether rate cuts are or are not actually needed. We'll also track the global industrial sector for clues on trade effects and, in an effort to clear the fog of trade war, we'll also take a peak at a canary in the coal mine when it comes to cross-border trade. First we'll start off with a country whose monetary policy has closely matched that of the US -- that is a sustained spell of rising rates that may, or may not, be ready for a reversal.

The Economy

Monetary policy

There were no changes to the Bank of Canada's policy rate, holding at 1.75 percent in line with expectations. Potential growth is improving and inflation is close to the bank's 2 percent target, yet these factors for the BoC are offset by persistent trade tensions, leading policy makers to conclude that the degree of accommodation being provided by the current policy rate remains appropriate. The bank said it will continue to monitor incoming data and pay particular attention to developments in the energy sector and the impact of trade conflicts on the prospects for Canadian growth and inflation.

As the bank expected, the Canadian economy is returning to growth around potential following temporary weakness late last year and early this year. Growth in the second quarter appeared stronger than predicted, but this was due to temporary factors including the reversal of weather related slowdowns in the first quarter and a surge in oil production. The bank believes the housing market is stabilizing as a material decline in long term rates supports activity, and that exports are rebounding though it warns global trade conflicts will likely hold back growth to no more than a moderate pace. Manufacturing activity and business investment have been curbed and commodity prices pushed down, the bank said, by the U.S.-China trade conflict. Consumer spending is expected to grow steadily supported by income gains (up 2.5 percent year-on-year in the second quarter) and solid consumer confidence.

Annual GDP growth is now projected to average 1.3 percent in 2019 and rise to around 2 percent in 2020 and 2021, slightly above potential which the bank estimates at around 1.8 percent for the three years. The BoC now expects global GDP to grow by 3 percent in 2019, down from 3.75 percent in 2018, and strengthen to around 3.25 percent in 2020 and 2021. The bank said any escalation of trade conflicts remains the biggest downside risk to both the global and Canadian outlooks.

With some recent pressure from higher food and auto prices, inflation remains around the 2 percent target, but the bank expects Canada's CPI to dip to 1.6 percent temporarily in the third quarter due to lower gasoline prices and temporary factors. But as the slack in the economy is absorbed and temporary factors wane, inflation is then expected to return to 2 percent by the middle of next year.

Inflation

The last set of Federal Reserve estimates for ex-food ex-gas core inflation was shaved noticeably, down 2 tenths to 1.8 percent for the US this year. This was central to the Fed's shift from a neutral bias to a rate-cut bias at its June meeting. Yet earlier in the year the Fed was confident that inflation would begin to climb as special factors reversed including what was a long fall for apparel prices. And the Fed, at least this time, was right, as a 1.1 percent monthly surge in apparel fed a sizable 0.3 percent rise in the CPI core rate for June. Year-on-year the core was up 1 tenth to 2.1 percent and, like the monthly rate, was at the top end of Econoday's consensus ranges. The report's two key components -- housing and medical care which together make up about 1/2 the index -- were also on the high side, at 0.3 percent each on the month for respective yearly rates of 3.0 percent and 2.0 percent.

Outside the core, energy prices fell a sharp 2.3 percent on the month with the gasoline subcomponent down 3.6 percent. Energy prices, down 3.4 percent on the year, are not helping the Fed achieve its 2 percent inflation goal. Food is just about neutral for the Fed, at 1.9 percent on the year and unchanged on the month. Reflecting the downward pull from energy, the overall CPI managed only a 0.1 percent gain on the month for a 1.6 percent yearly rate.

The jump in apparel aside, housing is the important key rising 0.4 percent for rents (3.9 percent on the year) and up 0.3 percent for owners' equivalent rent (3.4 percent on the year). These are fundamental costs for the consumer and the tangible pressure provides a steady to rising floor for the core. June's CPI points to an upward move for the Fed's preferred inflation gauge, the PCE core index to be posted at month-end (last at 1.6 percent). For those FOMC policy makers who aren't completely sold on a rate cut, the CPI will offer key talking points.

There's less available detail on Chinese consumer prices but the trend has clearly improved this year, hitting a low of 1.5 percent in February and holding in June at 2.7 percent and a 15-month high. Food prices rose 8.3 percent on the year in June, picking up further from 7.7 percent in May, with the year-on-year increase in fresh fruit and pork prices again accelerating, partly offset by a weaker increase in fuel prices. The year-on-year change in non-food prices moderated from 1.6 percent to 1.4 percent, with little change in most categories. And month-to-month, the index did not improve posting a 0.1 percent decline after increasing 0.1 percent in May.

This year's price pattern in India has been similar to China, rising from a January low of 1.97 percent to 3.18 percent on the year in June, up from 3.05 percent in May and the fifth consecutive increase in headline inflation. Yet this is still well below the 4 percent mid-point of the Reserve Bank of India's 2 percent to 6 percent target and helps justify the bank's series of rate cuts this year. Echoing China's results, the increase in headline inflation was largely driven by food and beverage prices. These rose 2.37 percent on the year in June after increasing 2.03 percent in May. Housing costs recorded a year-on-year increase of 4.84 percent, up slightly from 4.82 percent in May while the year-on-year increase in fuel and light charges slowed from 2.48 percent to 2.32 percent. Inflation in urban areas fell from 4.51 percent in May to 4.33 percent in June, but this was offset by an increase in inflation in rural areas from 1.86 percent to 2.21 percent.

At their latest policy review, held last month, the RBI cut policy rates by 25 basis points after a cut of the same amount at the two prior meetings in April and February. Officials also made small changes to their near-term inflation forecasts. For the first half of the 2019/20 fiscal year, officials forecast inflation will be between 3.0 percent and 3.1 percent, up from the previous forecast of between 2.9 percent and 3.0 percent, and between 3.4 percent and 3.7 percent in the second half of the fiscal year.

Industrial production

Industrial production, like inflation, is a central fixture of global economics and changes here offer a window into the effects of unfolding changes in global trade. Most of the news has been downbeat but not for France in May where year-on-year growth shot 2.9 percentage points higher to 4.0 percent. On the month, output (which here excludes construction) rose 2.1 percent, its strongest increase since November 2011 and that on top of a 0.5 percent advance in April.

The manufacturing component, however, was not quite as robust but, with a 1.6 percent monthly bounce, did record its best performance in 2-1/2 years. Transport equipment and other manufacturing did most of the work. However, it was not all good news as there were falls in machinery and equipment goods and food and drink. Elsewhere, overall production was supported by a jump in mining & quarrying as well as energy and also water supply & waste management.

The May report means that industrial production in France has now expanded in four of the last five months. Average output in April/May was 0.8 percent above its mean level in the first quarter so that June would have to plunge at least 3.4 percent for the sector to subtract from second quarter GDP. French production as well as French manufacturing look to be faring a good deal better than most of their Eurozone counterparts, notably Germany.

Year-on-year change in German industrial production (here including construction) has not been favorable to say the least, showing contraction each month since October last year. For May, production fell deeper back into the negative column, to minus 3.7 percent from April's minus 2.3 percent. Yet some of this deepening reflects a tough comparison with this time last year as the month-to-month comparison actually rose a modest 0.3 percent which was well up from a 2.0 percent slump in April. This was the third monthly increase in the last four months but only dented the prior nosedives.

May's monthly gain was attributable to capital goods, which were up a strong 2.0 percent, and helped by consumer goods which advanced 1.1 percent. Elsewhere, however, intermediates fell 0.5 percent while the volatile energy and construction subsectors were off 2.2 percent and 2.4 percent respectively.

Despite May's increase, average industrial production in April/May was 1.5 percent short of its mean level in the first quarter. Absent any revisions, this leaves June needing a highly unlikely monthly jump of at least 4.3 percent just to hold the second quarter flat. In other words, it looks very probable that the sector will subtract from real German GDP growth over the period. To make matters worse, the current trend in new orders (data separate from production) warns that the third quarter may not be much better.

For the Eurozone as a whole, France can't do it on its own. Year-on-year industrial production failed to improve in May, slipping from minus 0.4 percent to minus 0.5 percent for the sixth contraction in seven months. Yet the monthly data, like they were for Germany, were more favorable as ex-construction output jumped 0.9 percent for the first increase since January. May's monthly advance was quite broad-based and led by the consumer sector. Thus, non-durable goods climbed 2.7 percent and durables, at 2.3 percent, were not far behind. Capital goods also performed well and energy also contributed. The only negative was intermediates which posted a second successive decline.

Nonetheless, despite May's relative strength the underlying trend in Eurozone industrial production remains sluggish. Average output in April/May was 0.1 percent below its first quarter mean and, aside from any revisions, June will need another solid advance if the sector is to make a meaningful contribution to second-quarter GDP. And to this end, business surveys have not been optimistic.

International trade

But improvement nevertheless is one of the week's themes, embodied in part by German exports. Germany posted a seasonally adjusted surplus of €18.7 billion in May, up from €17.0 billion in April for its second-best performance so far in 2019. The monthly widening in the surplus reflected a 1.1 percent increase in exports to €110.3 billion. Year-on-year exports, as tracked in the accompanying graph, rose 4.5 percent for the best showing for this reading since October last year. Imports for Germany have been generally holding up better than exports which is good news for its trading partners. Imports were up 4.9 percent year-on-year in May though the month-to-month trend isn't favorable, falling 0.5 percent after a 0.9 percent fall in April. This was their third decline in the last four months and their first back-to-back drop since February/March last year.

Another major exporter is China which posted a very revealing trade report in the week. China's trade surplus in US dollar terms rose from $41.65 billion in May to a much higher-than-expected $50.98 billion in June. Yet the rise is deceptive, not reflecting net growth in total cross-border demand only greater deterioration for imports than exports which is not good for China's trading partners. Imports fell 7.3 percent year-on-year in May which is less severe than April's 8.5 percent decline but compares against only a 1.3 percent June decline for exports.

The fall in China's export growth was mainly driven by the US but also the European Union. Exports to the US fell 7.8 percent on the year in June after dropping 4.1 percent in May, while growth in exports to the EU deteriorated from an increase of 6.1 percent to a fall of 3.0 percent. Exports to Japan in contrast strengthened, up 2.4 percent on the year after rising 0.5 percent previously. In domestic currency terms the story is much the same with exports well ahead of imports. On this basis, China's trade surplus rose from CNY279.12 billion in May to CNY345.18 billion in June. Exports, in yuan terms, rose 6.1 percent on the year in June after increasing 7.7 percent in May, while year-on-year growth in imports in yuan terms did improve from a 2.5 percent fall but remained negative at minus 0.4 percent.

GDP

For the world's two largest economies, trade effects so far this year appear to be positive for both, narrowing the trade gap with China which is a positive for US GDP and cutting imports for China which is a positive for Chinese GDP. But looking at the smaller economies offers perhaps another view. Advance estimates for Singapore's GDP slowed from 1.1 percent in the first quarter to only 0.1 percent in the second quarter. The drop was mainly driven by weaker manufacturing output, down 3.8 percent on the year after falling 0.4 percent in the first quarter. This is broadly in line with monthly data showing weakness in industrial production and exports over this period. Growth in service sector output was steady at 1.2 percent on the year, while year-on-year growth in construction sector output slowed from 2.7 percent to 2.2 percent. When annualized over the entire year, government officials currently forecast Singapore's economy to grow in 2019 at a rate slightly below the mid-point of their previously forecast 1.5 percent to 3.5 percent range.

Employment

We close the week with two interesting reports out of the US, the first showing a topping off in the labor market consistent perhaps with the need for more stimulus and the second showing a very significant and continuing increase underway in fiscal stimulus, the latter perhaps pointing against the need for a rate cut. Job openings in the US remain very high but are easing, to a lower-than-expected 7.323 million in May from April's 7.372 million. Hires in May fell to 5.727 million from 5.991 million in April which was and in line with that month's soft 72,000 showing for nonfarm payroll growth. The spread between openings and hires is at 1.598 million, up from 1.381 million in April but still down from roughly 1.800 million levels late last year and early this year.

Quits are not showing new traction, at 3.425 million versus 3.516 million in April to keep the quits rate where it has been all year, unchanged at a moderate 2.3 percent. A moderate quits rates suggests workers are not shifting to higher paying jobs which for Fed policy makers points to available capacity in the labor market and lack of pressure on wages. This report is consistent with easing levels of stress in the labor market in results that contrast with the strength of June's 224,000 jump in nonfarm payroll growth and which helps open the way for a possible rate cut at the month-end FOMC.

Fiscal policy

But how much stimulus is already in the pipeline from fiscal policy is an increasing factor for Fed policy makers to consider. The Treasury budget deficit came in at $8.5 billion in June to deepen the total deficit for the first nine months of the fiscal year to $747.1 billion, 23.1 percent deeper than in the same period in fiscal 2018. For the first nine months of fiscal 2019, total receipts were $2.609 trillion, up 2.7 percent from the same period last year. Individual income taxes brought in $1.301 trillion, 0.3 percent less than in the same period for fiscal 2018, while receipts from corporate taxes were $164.4 billion, 1.6 percent more than last year. Receipts from excise taxes rose 12.9 percent to $71.2 billion. Largely reflecting the impact of tariffs imposed on Chinese goods, receipts from customs duties rose 78.2 percent to $50.5 billion.

But the gains on the income side of the balance sheet are being dwarfed by spending. Outlays for the first nine months of the current fiscal year totaled $3.356 trillion, 6.6 percent more than in the same period last year. Spending on defense during the period totaled $512.5 billion, up 8.4 percent from the same period last year, while outlays for Medicare rose 6.4 percent to $484.8 billion and for social security by 5.6 percent to $780.0 billion. Interest costs to service the widening debt rose 16.4 percent from the year ago period to $335.6 billion.

Markets: Powell talks up rate cuts yet stocks mixed

Major Asian markets sold off heavily Monday after the prior week's much stronger-than-expected payroll growth out of the US. Then recovery was the order of the week as Fed Chair Jerome Powell stepped in on Wednesday and Thursday, saying the US labor market isn't overheating and talking up rate cuts in two days of testimony on Capitol Hill. Powell underscored risks to the US economy especially global trade tensions and global economic slowing, and he noted that inflation pressures "remain muted" stressing the risk that inflation weakness may be "even more persistent than we currently anticipate." Yet the core CPI for June, like the employment report for June, proved in fact not to be weaker than anticipated at all. Though Powell helped the Dow post a 1.5 percent weekly gain, European and Asian shares didn't show the same kind of response with Germany's Dax down 2.0 percent on the week and China's Shanghai losing 2.7 percent. With economic weakness now spelling rallies, the coming week may be good news for global stock markets as strong US data aren't expected to be the theme. Forecasters expect both US retail sales and US industrial production not to show too much strength at all. If so, rate-cut expectations at month end could be cemented and new gains the result.

The bottom line

If global inflation is improving it's not improving that much, and this is likewise true for global industrial production. However much Chinese exports are falling, Chinese imports are falling much faster in what could be an emerging outcome of the trade wars that could spell increasing trouble for everyone. For the Fed not to cut rates, it would take not only sharp upward surprises for both retail sales and industrial production but also second-quarter US GDP which will be posted before they meet.

**Jeremy Hawkins and Brian Jackson contributed to this article

Week of July 15 to July 19

The week opens with a flurry of key updates from China led by GDP and including fixed asset investment, industrial production, and retail sales. Most are expected to slow with any weakness, especially for GDP or industrial production, likely to be blamed on US trade tensions. And there will be plenty of inflation data including the UK and the Eurozone on Wednesday along with Canada and Japan on Friday. Weakness in manufacturing is a top concern for central bankers right now with US industrial production posted on Tuesday and Canadian manufacturing sales on Wednesday. Consumer spending has been holding up better than manufacturing in the global data and one of the biggest reports of the week will be US retail sales on Tuesday where expectations, however, are modest to mixed. Other readings on the consumer will be on Friday with Canadian retail sales and the latest consumer sentiment report out of the US. If the China data on Monday slow and US industrial production and retail sales prove soft on Tuesday, rate-cut expectations are certain to get a boost, though an offset would be surprise pressure in the week's inflation data which perhaps can't be ruled out following the strong showing for US core consumer prices in the prior week.

Chinese Second-Quarter GDP (Sun 22:00 EDT; Mon 02:00 GMT; Mon 10:00 CST)

Consensus Forecast, Year-on-Year: 6.3%

Incremental slowing is the call for second-quarter GDP, to a consensus 6.3 percent year-on-year versus 6.4 percent in the first quarter. Growth in China has been trending down to a 10-year low.

Chinese Fixed Asset Investment for June ( Sun 22:00 EDT;  Mon 02:00 GMT;  Mon 10:00 CST)

Consensus Forecast, Year-to-date: 5.5%

Fixed asset investment rose 5.6 percent year-to-date in May to miss expectations for a second straight month. Forecasters see June fixed asset investment rising a year-to-date 5.5 percent.

Chinese Industrial Production for June (Sun 22:00 EDT; Mon 02:00 GMT; Mon 10:00 CST)

Consensus Forecast, Year-over-Year: 5.2%

Industrial production in May, at a year-on-year increase of 5.0 percent, fell short of expectations for a second straight month to indicate that trade tensions with the US are having a significant impact on the manufacturing sector. Forecasters see June production improving to a 5.2 percent yearly pace.

Chinese Retail Sales for June (Sun 22:00 EDT; Mon 02:00 GMT; Mon 10:00 CST)

Consensus Forecast, Year-over-Year: 8.3%

After stronger-than-expected 8.6 percent year-on-year growth in May, a gain of 8.3 percent is the forecast for June. Strength in May was broad-based though it followed broad weakness in April.

UK Labour Market Report for June (Tue 04:30 EDT; Tue 08:30 EDT; Tue 09:30 BST)

ILO Unemployment Rate, Consensus Forecast: 3.8%

Average Weekly Earnings

Consensus Forecast,  Year-over-Year: 3.0%

The ILO unemployment rate is expected to hold unchanged in June at 3.8 percent. The call for average hourly earnings including bonuses, which slipped 2 tenths in May to 3.1 percent, is a decrease of 1 tenth to 3.0 percent.

German ZEW Survey for July (Tue 05:00 EDT; Tue 09:00 GMT; Tue 11:00 CEST)

Consensus Forecast, Business Expectations: -22.0

Consensus Forecast, Current Conditions: 5.0

Business expectations fell precipitously in June, down nearly 20 points to minus 21.1 in what the report attributed to uncertainty over the global outlook and a poor start to the second quarter. Forecasters see little change in July at a consensus of minus 22.0. Current conditions are expected to slip modestly to 5.0 compared from June's 7.8.

US Retail Sales for June, Month-to-Month (Tue 08:30 EDT; Tue 12:30 GMT)

Consensus Forecast: 0.1%

Consensus Range: -0.2% to 0.4%

Retail Sales Ex-Autos

Consensus Forecast: 0.3%

Consensus Range: -0.2% to 0.5%

Retail Sales Ex-Autos & Gas

Consensus Forecast: 0.4%

Consensus Range: 0.0% to 0.5%

Retail Sales Control Group (Ex-Food Services, Ex-Autos, Ex-Gas, Ex-Building Materials)

Consensus Forecast: 0.4%

Consensus Range: 0.2% to 0.4%

Correction lower is what forecasters see for June retail sales, at a headline consensus increase of only 0.1 percent vs a 0.5 percent rise in what was a strong May report. Unit vehicle sales were slightly lower in June and hint at a better showing for the ex-auto rate where the consensus is plus 0.3 percent. Ex-autos & ex-gasoline are expected at a respectable 0.4 percent gain with the control group also at 0.4 percent.

US Industrial Production for June (Tue 09:15 EDT; Tue 13:15 GMT)

Consensus Forecast, Month-to-Month: 0.1%

Consensus Range: -0.1% to 0.4%       

Manufacturing Production

Consensus Forecast, Month-to-Month: 0.2%

Consensus Range: 0.1% to 0.4%

Capacity Utilization Rate

Consensus Forecast: 78.2%

Consensus Range: 77.9% to 78.3%

Industrial production, boosted by a swing higher in utility output, beat expectations in May with a 0.4 percent gain. But for June forecasters see only a 0.1 percent rise. Manufacturing production, which has been soft this year and a special concern for Federal Reserve policy makers, improved in May but no further improvement at a 0.2 percent consensus gain is expected. The capacity utilization rate is expected to rise 1 tenth to 78.2 percent.

UK CPI for June (Wed 04:30 EDT; Wed 08:30 GMT; Wed 09:30 BST)

Consensus Forecast, Month-to-Month: 0.0%

Consensus Forecast, Year-over-Year: 2.0%

The CPI is expected to be unchanged month-to-month in June and up 2.0 percent year-on-year. In May, a 0.3 percent monthly rise matched the market consensus.

UK PPI for June (Wed 04:30 EDT; Wed 08:30 GMT; Wed 09:30 BST)

Consensus Forecast, Output Year-over-Year: 1.7%

Consensus Forecast, Input Year-over-Year: 0.3%

Petroleum and food provided the principal boosts to factory gate prices in May which rose a year-on-year 1.8 percent. For June, a yearly 1.7 percent rise is expected. Raw material and food costs rose at a yearly rate of 1.3 percent in May. Here, forecasters for June are calling for only a 0.3 percent yearly gain.

Eurozone HICP Flash for June (Wed 05:00 EDT; Wed 09:00 GMT; Wed 11:00 CEST)

Consensus Forecast, Month-to-Month: 0.1%

Consensus Forecast, Year-over-Year: 1.2%

Eurozone inflation is expected to edge 0.1 percent higher in June for a year-on-year 1.2 percent rise that would be unchanged from May.

US Housing Starts for June (Wed 08:30 EDT; Wed 12:30 GMT)

Consensus Forecast, Annualized Rate: 1.260 million

Consensus Range: 1.218 to 1.280 million

Building Permits

Consensus Forecast: 1.300 million

Consensus Range: 1.251 to 1.305 million

Steady are the forecasts for housing starts and permits in June which in May, for a second report in a row, beat expectations. Starts are expected to come in at a 1.260 million annual pace vs May's 1.269 million. The consensus for permits is 1.300 million vs 1.299 million in May (revised from an initial 1.294 million).

Canadian CPI for June (Wed 08:30 EDT; Wed 12:30 GMT)

Consensus Forecast, Month-to-Month: -0.2%

Consensus Forecast, Year-over-Year: 2.0%

June consumer prices are expected at a monthly 0.2 percent decline for a yearly 2.0 percent growth rate. The CPI in May proved higher than expected for a second straight month, up 0.4 percent and 2.4 percent on the year.

Canadian Manufacturing Sales for May (Wed 08:30 EDT; Wed 12:30 GMT)

Consensus Forecast, Month-to-Month: 2.0%

Canadian manufacturing sales unexpectedly fell 0.6 percent in April though year-on-year growth did improve to 3.1 percent. Forecasters see May sales rising a monthly 2.0 percent.

Japanese Merchandise Trade for June (Wed 19:50 EDT; Wed 23:50 GMT; Thu 08:50 JST)

Consensus Forecast: ¥426  billion

Consensus Forecast, Exports Year-over-Year: -5.3%

Consensus Forecast, Imports Year-over-Year: -0.6%

A surplus deficit of ¥426 billion is expected for the June merchandise trade report vs a deficit of ¥967.1 billion in May. Exports fell a sharp 7.8 percent year-on-year in May and are expected to fall 5.3 percent in June while imports, which were down 1.5 percent in May, are expected to fall 0.6 percent.

UK Retail Sales for June (Thu 04:30 EDT; Thu 08:30 GMT; Thu 09:30 BST)

Consensus Forecast, Month-to-Month: -0.3%

Retail sales had been improving but slipped a monthly 0.5 percent in May with a 0.3 percent monthly dip the consensus call for June.

Japanese Consumer Price Index for June (Thu 19:30 EDT; Thu 23:30 GMT; Fri 08:30 JST)

Consensus Forecast Ex-Food, Year-on-Year: 0.6%

A 2 tenths dip to a year-on-year plus 0.6 percent pace is the call for ex-food consumer prices in June, well below the Bank of Japan's 2 percent target. May was held back by slowing in utilities charges and a deeper decline in transportation and communication costs.

German PPI for June (Fri 02:00 EDT; Fri 6:00 EDT; Fri 08:00 CEST)

Consensus Forecast, Month-to-Month: 0.2%

Consensus Forecast, Year-over-Year: 1.3%

Producer prices in Germany fell an unexpected 0.1 percent in May driving the year-on-year rate down 6 tenths to 1.9 percent in what was the first sub-2 percent reading since April 2018. June's consensus is at plus 0.2 percent for the monthly rate and plus 1.3 percent for the yearly rate.

Canadian Retail Sales for May (Fri 08:30 EDT;  Fri 12:30 GMT)

Consensus Forecast, Month-to-Month: 0.3%

Canadian retail sales in May are expected to rise 0.3 percent vs a lower-than-expected 0.1 percent increase in April. What gains there were in April were tied to price increases as volumes were down 0.1 percent.

US Consumer Sentiment Index, Preliminary July (Fri 10:00 EDT; Fri 14:00 GMT)

Consensus Forecast: 98.6

Consensus Range: 96.9 to 99.0

Forecasters see limited bounce for consumer sentiment calling for a preliminary July reading of 98.6 that would compare with June's 1.8-point dip to 98.2.