In the European session, the only highlight is the German ZEW report. The consensus sees a dip to 27.3 vs 34.7 prior. The data shouldn’t change anything for the ECB though, so it might be ignored completely.

In the American session, the focus will turn to the Canadian CPI and the US Retail Sales data. The Canadian Trimmed Mean CPI Y/Y is expected at 3.0% vs 3.0% prior. Inflation has been rising steadily since December 2024 in Canada and is now hovering around the upper bound of the BoC 1-3% target band.

Nonetheless, the central bank has been focusing more on the labour market which weakened further in 2025 after some improvement in late 2024. The latest report showed the unemployment rate jumping to 7.1% vs 6.9% prior which triggered a more dovish repricing in interest rates expectations.

The market is now fully expecting a 25 bps cut at the upcoming meeting and then one more cut by the end of the year. Today’s data is unlikely to change the pricing much although a downside surprise could see slight chances for a third cut getting priced in.

The US Retail Sales M/M is expected at 0.2 vs 0.5 prior, while the ex-Autos M/M measure is seen at 0.4% vs 0.3% prior. The better gauge of underlying consumer spending, the control group, is expected at 0.4% vs 0.5% prior. Retail Sales is a market-moving release but it’s generally faded as the volatile nature of the data makes it a less reliable indicator.

Moreover, the data won’t change anything in terms of expectations at this point as the focus will remain on the FOMC decision tomorrow and the US Jobless Claims on Thursday.

This article was written by Giuseppe Dellamotta at investinglive.com.