Week Ahead: Economic Indicators 20th – 24th July (US)

Monday 20th July
08:30 ET
Canadian CPI for June
The Consumer Price Index (CPI), published monthly by Statistics Canada, measures changes in the prices paid by consumers for a basket of goods and services. It is the Bank of Canada’s primary measure of inflation, with particular focus on the CPI-median and CPI-trim core measures, which strip out volatile price movements to provide a better gauge of underlying inflation.

Summary of Last Report
In the previous report (May), Canadian inflation remained relatively contained, with headline CPI continuing to move close to the Bank of Canada’s target range.
The report showed:
Headline inflation was supported by higher shelter costs, while energy prices exerted less upward pressure than earlier in the year.
The CPI-median and CPI-trim measures remained broadly stable, suggesting underlying inflation pressures continued to ease gradually.
Goods inflation stayed relatively subdued, while services inflation remained firmer, reflecting ongoing wage and housing-related pressures.
Overall, the report suggested that inflation continued to trend in the right direction, although underlying price pressures had not fully returned to the Bank of Canada’s 2% target.

What to Expect
Canadian Stocks
A cooler-than-expected June CPI report could support Canadian equities, particularly interest rate sensitive sectors such as real estate, utilities, and financials, by strengthening expectations for future BoC easing.
A hotter-than-expected reading may weigh on stocks if markets begin pricing a more restrictive policy outlook.
Canadian Dollar (CAD)
Higher inflation would likely support the CAD by reducing expectations for near-term Bank of Canada rate cuts.
A softer inflation report may pressure the CAD as markets price a more accommodative policy path.
Canadian Government Bond Yields
A stronger CPI print could push yields higher, particularly at the front end of the curve, as markets reprice the expected path of interest rates.
A weaker inflation reading would likely pull yields lower as investors increase expectations for future policy easing.
Bank of Canada Policy
The key focus will be whether the core inflation measures continue to moderate. If CPI-median and CPI-trim remain sticky, the Bank is likely to maintain a higher-for-longer stance. If both headline and core inflation continue to ease, it would strengthen the case for a more accommodative policy path in the coming months.

Tuesday 21st July
No noteworthy economic indicators

Wednesday 22nd July
No noteworthy economic indicators

Thursday 23rd July
08:30 ET
Canadian Retail Sales for May
Canadian Retail Sales, published monthly by Statistics Canada, measure the change in the value of goods sold by retailers across the country. The report is a key indicator of consumer spending, providing insight into household demand and overall economic momentum. Markets also closely watch Retail Sales excluding autos, as it provides a clearer view of underlying consumer spending trends by removing the volatile motor vehicle component.

Summary of Last Report
In the previous report (April), retail sales rose modestly, suggesting Canadian consumers remained resilient despite elevated interest rates and a gradually slowing economy.
The report showed:
Sales were supported by motor vehicle dealers, general merchandise stores, and food retailers.
Spending was softer across some discretionary categories, reflecting continued pressure from higher borrowing costs and the cost of living.
Retail sales excluding autos also increased, pointing to healthy underlying consumer demand rather than a gain driven solely by vehicle purchases.
Overall, the data suggested that consumer spending remained supportive of economic growth, although households continued to show signs of becoming more selective in their spending.

What to Expect
Canadian Stocks
A stronger-than-expected May retail sales report could support Canadian equities, particularly consumer discretionary, retail, and financial sectors, by reinforcing confidence in household demand.
A weaker report may weigh on stocks by increasing concerns that consumer spending is slowing.
Canadian Dollar (CAD)
Firm retail sales would likely support the CAD, as resilient consumer spending reduces expectations for near-term Bank of Canada easing.
A weaker report may pressure the CAD as markets price a more accommodative policy outlook.
Canadian Government Bond Yields
Stronger sales could push yields higher, reflecting firmer growth expectations and reduced odds of additional policy easing.
Weaker sales would likely pull yields lower as investors price in softer economic activity.
Bank of Canada Policy
A robust retail sales report would support the Bank of Canada’s patient stance by indicating consumers continue to spend despite restrictive financial conditions.
A weak report, particularly if retail sales excluding autos disappoint, would strengthen the case for a more accommodative policy path as domestic demand loses momentum.

Friday 24th July
09:45 ET
US S&P Manufacturing & Services PMIs July Prelim
The S&P Global Purchasing Managers’ Index (PMI) surveys provide an early monthly snapshot of US private-sector activity. The Manufacturing PMI tracks output, new orders, employment, inventories, and supply-chain conditions, while the Services PMI measures business activity, demand, employment, and pricing trends across the services economy. Readings above 50 indicate expansion, while below 50 signal contraction, making these reports some of the earliest indicators of monthly growth and inflation momentum.

Summary of Last Report
In the previous report (June Final), both PMIs remained comfortably in expansion territory, indicating the US private sector continued to grow at a healthy pace.
The report showed:
Manufacturing activity remained resilient, supported by continued growth in output and new orders, although firms continued to report elevated input costs.
Services activity also expanded solidly, with business activity and demand remaining firm despite higher financing costs.
Employment improved modestly across both sectors, while price pressures persisted, particularly in labour-intensive service industries.
The Composite PMI remained firmly above 50, suggesting the broader economy continued to expand through the end of Q2.
Overall, the June data pointed to a resilient US economy, with growth remaining healthy despite restrictive monetary policy and lingering inflation pressures.

What to Expect
US Stocks
If both PMIs remain firm or move higher, equities, particularly cyclicals, industrials, financials, and consumer-facing sectors, may benefit as stronger activity supports earnings expectations.
A weaker set of readings, especially if services begin to slow materially, could weigh on stocks by reinforcing concerns about softer economic growth.
US Dollar
Stronger PMI data would likely support the dollar by reinforcing confidence in the resilience of the US economy and reducing expectations for near-term Federal Reserve easing.
Weaker readings may pressure the dollar if markets interpret them as evidence that growth momentum is fading.
US Government Bond Yields
Upside surprises, particularly if the price components remain elevated, could push yields higher as markets price stronger growth and more persistent inflation risks.
Softer readings would likely pull yields lower as investors price in weaker activity and increased odds of policy accommodation.
Federal Reserve Policy
A resilient set of July PMIs, especially if accompanied by elevated price pressures, would support a higher-for-longer Fed stance.
If activity slows meaningfully and the employment and price components soften, it would strengthen the case for a more accommodative policy path later in the year.