In the European session, the only notable event is the Eurozone ZEW, which has been improving steadily since October 2022 and it recently touched the highest level since 2021. The consensus sees a pullback to 48.1 vs. 51.3 prior, but in the big picture it shouldn't change anything.
The attention will then switch to the American session as we get the Canadian CPI and the US Retail Sales reports. These are market moving releases and although they might not change much in the grand scheme of things, they can impact the market in the short-term.
12:30 GMT/08:30 ET - Canada June CPI
The Canadian CPI Y/Y is expected at 2.8% vs. 2.9% prior, while the M/M measure is seen at 0.0% vs. 0.6% prior. The underlying inflation measures, which is what the BoC is most focused on, are expected at 2.8% vs. 2.9% prior for the Trimmed-Mean CPI Y/Y, and 2.7% vs. 2.8% prior for the Median CPI Y/Y.
The BoC will likely need benign data to deliver a back-to-back rate cut in July given that wage growth jumped to 5.6% in the last labour market report. The market is assigning a 82% chance of a rate cut in July and with an upside surprise in the data that might fall to roughly 50%.
12:30 GMT/08:30 ET - US June Retail Sales
The US Retail Sales M/M is expected at 0.0% vs. 0.1% prior, while the Ex-Autos M/M measure is seen at 0.1% vs. -0.1% prior. The Control Group figure is expected at 0.2% vs. 0.4% prior. Consumer spending has been pretty stable which is something you would expect given the positive real wage growth and resilient labour market. We’ve been also seeing some weakness in the UMich Consumer Sentiment which could suggest that consumer spending is likely to soften a bit. Eamonn shared the range of estimates here.
