Action-Packed Week for U.S. and Canadian Markets

According to strategists and economists, markets will be looking for some direction next week with the release of major economic reports. In the U.S., markets will receive PPI, CPI, retail sales, FOMC minutes and regional manufacturing reports on top of Fed Chairman Ben Bernanke testifying before Congress and the Senate. In Canada, markets will focus on the Bank of Canada's interest rate decision and monetary policy report.

George Adell, fixed income strategist from Commerce Capital Markets, said that in the past week, U.S. treasuries took their lead from the equities market. He added next week's data will be important and will provide some direction, but won't change the current economic outlook of rising inflation and slower growth.

"The landscape remains the same; growth is sluggish and inflation levels are horrible. There is nothing we can do about it we just have to muddle through," he said. "Slower growth and higher inflation is going to continue to handcuff the Fed."

"Going into next week, the data is going to be important and the street is going to look for any kind of direction," he added.

Chris Low, chief economist from FTN Financial, said the CPI and PPI will garner more attention than retail sales because markets are more sensitive to inflation expectations. He added the data could take a back seat to what is currently happening to Freddie Mac and Fannie Mae.

"Speculation about the soundness of (Fannie Mae) and (Freddie Mac) now trumps all economic news, at least until this furor dies down," he said.

For market direction, Low said Bernanke's testimony will be very important for markets as they try to predict future Fed monetary policy.

"Next week's testimony is even more important than usual as the markets are so unsettled and the Fed is coping with both inflation and recession threats," he said.

Win Thin, chief currency strategist from Brown Brothers Harriman, said he is expecting June retail sales will be more important than the CPI numbers.

"Stimulus cheques boosted May sales, and markets will be watching to see if consumption remains strong," he said. "June CPI out on Tuesday is not so important but could cause a stir nonetheless."

He added July's Philly Fed survey could also be important because it will set the tone for other regional manufacturing surveys for the rest of the month.

Taking a look at Canadian data, economists expect the Bank of Canada to maintain interest rates at 3.00%. That expectation was solidified after Friday's employment data as Canadian employment fell by 5,000 jobs. Despite the decrease, economists agree that it won't be enough to pressure the BOC to change interest rates.

"The employment data wasn't disastrous," said Andrew Tilton, Canada and U.S. economist from Goldman Sachs. "We don't expect any change from the Bank of Canada for the rest of the year. After their last meeting we thought the bank was fairly clear that the easing cycle has ended but we don't expect hikes anytime soon."

In other Canadian data, Tilton said they will be interested in reading the Bank of Canada monetary policy report to see the direction of future monetary policy, which will be released on Wednesday.

All times in EDT

Monday:

The week starts off slow but quickly picks up later on. Only minor data from Canada will be released on Monday as markets will receive second-quarter investment in non-residential building construction. In the previous quarter, construction rose 1.6%.

8:30 CA Investment in Nonresidential Building Construction Q2 Q/Q Prior: +1.6%

10:00 US Fed Governors Vote on Mortgage Rules in Open Meeting

13:00 US Treasury to Sell $24B 3-Month Bills

13:00 US Treasury to Sell $23B 6-Month Bills

Tuesday:

It's an action-packed day starting with U.S. PPI for June. Annual core PPI is expected to rise 3.2% following May's rise of 3.0% while monthly PPI is expected to rise 0.3% following a previous rise of 0.2%.

The next major release will come from Canada with the central bank interest rate decision. Economists expect the BOC to hold rates steady at 3.00%.

Markets will also receive U.S. retail sales for June. Core sales excluding autos are expected to rise 1.0% following a 1.2% increase in May.

Bernake's testimony on the economy and Fed policy will also garner a lot of market attention. This is the first to the two day Humphrey-Hawkins testimony. According to economists, markets will be paying close attention to Bernanke's comments to look for direction for future monetary policy.

8:30 CA New Motor Vehicle Sales (M/M) May Exp: 0.0% Prior: -2.6%

8:30 US Producer Price Index (M/M) June Exp: +1.3% Prior: +1.4%

8:30 US PPI Ex Food & Energy (M/M) June Exp: +0.3% Prior: +0.2%

8:30 US Producer Price Index (Y/Y) June Exp: +8.6% Prior: +7.2%

8:30 US PPI Ex Food & Energy (Y/Y) June Exp: +3.2% Prior: +3.0%

8:30 US Advance Retail Sales June Exp: +0.4% Prior: +1.0%

8:30 US Retail Sales Less Autos June Exp: +1.0% Prior: +1.2%

8:30 US Empire Manufacturing July Exp: -7.8 Prior: -8.7

9:00 CA Bank of Canada Rate 15-July Exp: 3.00% Prior: 3.00%

10:00 US IBD/TIPP Economic Optimism July Exp: 36.8 Prior: 37.4

10:00 US Business Inventories May Exp: +0.5% Prior: +0.5%

10:00 US Bernanke Gives Semiannual Monetary Policy Testimony at Senate

13:00 US Treasury to Sell 4-Week Bills

14:15 US TSY's Paulson to speak at African event at the U.S. State Department in Washington D.C.

15:30 US Fed's Yellen Speaks in Los Angeles at Conference 15-July

17:00 US ABC Consumer Confidence 13-July Exp: -42 Prior: -41

Wednesday:

It's another busy day with the release of June U.S. inflation data. Economists forecast annualized core inflation will remain steady at 2.3%. Monthly CPI is expected to tick higher to 0.7% following May's rise of 0.6%.

Markets will also receive U.S. industrial production and capacity utilization. Industrial production is expected to remain unchanged following a previous 0.2% decline and capacity utilization is expected to remain steady at 79.4%.

The big news of the afternoon will be the FOMC minutes from the June 24- 25 meeting, when the Fed held rates steady at 2.00%

7:00 US MBA Mortgage Applications 11-July Prior: +7.5%

8:30 CA Manufacturing Shipments (M/M) May Exp: +0.4% Prior: +2.0%

8:30 US Consumer Price Index (M/M) June Exp: +0.7% Prior: +0.6%

8:30 US CPI Ex Food & Energy (M/M) June Exp: +0.2% Prior: +0.2%

8:30 US Consumer Price Index (Y/Y) June Exp: +4.5% Prior: +4.2%

8:30 US CPI Ex Food & Energy (Y/Y) June Exp: +2.3% Prior: +2.3%

8:30 US CPI Core Index (SA) June Prior: 214.832

8:30 US Consumer Price Index (NSA) June Exp: 217.907 Prior: 216.632

9:00 US Net Long-term TIC Flows May Exp: $67.5B Prior: $115.1B

9:00 US Total Net TIC Flows May Prior: $60.6B

9:15 US Industrial Production June Exp: 0.0% Prior: -0.2%

9:15 US Capacity Utilization June Exp: 79.4% Prior: 79.4%

10:00 US Bernanke Gives Semiannual Monetary Policy Testimony at House

10:30 US DOE U.S. Crude Oil Inventories W/E July 11 Prior: -5840K

10:30 US DOE U.S. Gasoline Inventories W/E July 11 Prior: +909K

10:30 US DOE U.S. Distillate Inventory W/E July 11 Prior: +1816K

10:30 US DOE U.S. Refinery Utilization W/E July 11 Prior: -0.07%

13:00 US NAHB Housing Market Index July Exp: 18 Prior: 18

14:00 US Fed Releases Minutes, Forecasts from June 24-25 Meeting

14:00 US Fed's Hoenig Speaks in Colorado on U.S. Economy

Thursday:

Markets will get more housing data with the release of June housing starts and building permits. Housing starts are forecasted to come in at 960,000 units, down from May's 969,000 starts. Building permits are expected to coming in at 970,000, down slightly from May's revised number of 978,000 units.

Markets will also be interested in the Philly Fed survey, which is expected to fall to a level of -15 following a reading of -17.1 in May.

8:30 CA International Securities Transactions May Prior: C$9.751

8:30 CA Travel Between Canada and Other Countries

8:30 US Housing Starts June Exp: 960K Prior: 975K

8:30 US Initial Jobless Claims W/E July 12 Exp: 380K Prior: +346K

8:30 US Continuing Claims W/E July 5 Exp: 3180K Prior: 3202K

8:30 US Building Permits June Exp: 965K Prior: 969K Revised 978K

10:00 US Philadelphia Fed. July Exp: -15 Prior: -17.1

10:30 CA Bank of Canada Monetary Policy Report

10:30 US EIA Natural Gas Storage Change Prior: +90 Bcf

Friday:

The week ends on the lighter side with Canadian leading indicators for June and Canadian wholesales sales for May. The consensus for leading indicators is for a 0.1% rise following a 0.2% increase in May. The consensus for wholesale sales is for a 0.5% increase following the previous month's rise of 1.4%.

8:30 CA Leading Indicators (M/M) June Exp: +0.1% Prior: +0.2%

8:30 CA Wholesale Sales (M/M) May Exp: +0.5% Prior: +1.4%

10:00 US Regional and State Employment and Unemployment June

By Neils Christensen and edited by Nancy Girgis