Monday kicks off the week on a quiet note, with no major scheduled economic events for the FX market. Many European countries and the United Kingdom will observe a bank holiday, while the United States marks Memorial Day.
On Tuesday, Japan will release the Bank of Japan core CPI year-on-year figure, while the U.S. will receive the CB consumer confidence index.
Wednesday brings inflation data from Australia alongside the Reserve Bank of New Zealand's monetary policy announcement.
Thursday will see the market's focus shift to the United States, where key releases will include the core PCE price index month-on-month, preliminary GDP quarter-on-quarter, durable goods orders month-on-month, and new home sales data.
Finally, on Friday, Japan will publish the Tokyo core CPI year-on-year reading, while Canada will release its GDP month-on-month figure.
Throughout the week, several FOMC members are expected to deliver public remarks, and month-end rebalancing flows could also influence market activity.
Australia: Inflation in Focus
In Australia, the consensus for CPI month-on-month is 0.6%, compared to the prior reading of 1.1%. CPI year-on-year is expected at 4.4%, down from 4.6%, while trimmed mean CPI month-on-month is projected at 0.3%.
Westpac analysts expect headline CPI to rise by 0.9% in April, pushing annual inflation up to 4.8%. The main drivers behind the increase are seasonal factors, including holiday travel and higher clothing and footwear prices. However, some of the upward pressure could be offset by lower transport costs, supported by a temporary fuel excise cut and free public transport measures introduced in certain states.
Core inflation is also expected to edge higher, with Westpac's monthly trimmed mean forecast at 0.4%, leaving the annual rate at 3.5%.
In terms of monetary policy, the RBA remains focused on inflation and inflation expectations, and will closely monitor this week's data to assess whether rising input costs are feeding into the broader economy. If inflation surprises to the upside, it would increase the likelihood of further rate hikes, particularly following the more expansionary 2026–2027 federal budget. For now, the market is pricing in a rate hike in August, although this will depend on economic conditions and developments related to the Middle East conflict.
New Zealand: RBNZ Expected to Hold
At this week's meeting, the RBNZ is widely expected to keep rates unchanged at 2.25%. The central bank will continue to monitor how inflation pressures are affecting the broader economy. While the Middle East conflict has added another layer of uncertainty, the RBNZ is likely to signal that discussions around removing monetary stimulus are becoming increasingly urgent. There is already growing support within the Monetary Policy Committee for an earlier start to policy tightening, potentially as soon as this meeting.
United States: PCE and Consumer Spending
In the U.S., the consensus for the core PCE price index month-on-month is 0.3%, matching the prior reading. Personal income month-on-month is expected at 0.4%, compared to the previous 0.6%, while personal spending month-on-month is forecast at 0.5%, down from the prior 0.9%.
Consumer spending remained relatively resilient in April, with core retail sales showing solid momentum despite mounting economic headwinds. Data suggests that household demand carried into the second quarter on a firmer footing than expected, supported by steady goods spending and slight upward revisions to previous months.
However, the broader outlook is becoming more challenging. The Middle East conflict is contributing to renewed inflationary pressure, and analysts from Wells Fargo project the PCE deflator rose by 0.4% in April. This suggests much of the increase in nominal spending is likely being offset by higher prices, leaving real consumption growth relatively modest.
Consumers are also facing a softer labor market backdrop, with slower hiring and easing wage growth beginning to weigh on purchasing power. Although personal income is expected to rise moderately, inflation-adjusted income growth remains weak, which could limit the momentum of consumer spending going forward.
Japan: Tokyo CPI as a Leading Indicator
In Japan, the consensus for the Tokyo core CPI year-on-year is 1.5%, unchanged from the previous reading. Inflation is expected to remain subdued for now. Since the Tokyo CPI serves as a leading indicator for the national CPI, any upside surprise would add to expectations that the Bank of Japan will remain on a tightening path. Conversely, a weaker outcome would reinforce a more cautious stance. Ultimately, the outlook still hinges on how strongly wage gains feed through to prices.
Canada: GDP Growth Expected to Rebound
In Canada, the consensus for GDP month-on-month is 0.1%, compared to the prior reading of 0.2%. The economy is expected to have returned to growth in Q1 2026, rebounding at around 1.7% annualized after a slight contraction in Q4. The earlier decline appears less concerning on closer inspection, with domestic demand holding up as government, household, and business spending continued to improve, while inventories and housing were the main drags.
For Q1, home resales remained a weak spot but were partly offset by firmer consumption and government spending, along with a likely reversal of some one-off Q4 disruptions stemming from education and transportation strikes. Imports are set to surge, which would weigh on net exports, although RBC analysts note this reflects stronger underlying demand rather than economic weakness.
Growth is unfolding against a backdrop of slower population growth, meaning per-capita activity is likely improving more meaningfully. This supports the broader view that living standards are gradually strengthening, provided oil prices stabilize and trade tensions with the United States do not intensify.
Looking at the monthly data, the expected 0.1% GDP increase is anticipated to be led by wholesale trade and a recovery in manufacturing output — particularly for autos — while weakness in mining, energy, and retail likely capped overall gains.
Why it matters
Australia's CPI release is a key input for the RBA's rate decisions. If inflation comes in above consensus, the original article notes this would increase the likelihood of further rate hikes, particularly in the context of the more expansionary 2026–2027 federal budget.
The core PCE price index is the Federal Reserve's preferred measure of inflation and is released this week alongside scheduled remarks from multiple FOMC members, giving markets simultaneous data and policy commentary to assess the US inflation outlook.
Tokyo's core CPI serves as a leading indicator for Japan's national CPI reading, meaning this week's result will shape near-term expectations about the Bank of Japan's policy direction.
Month-end rebalancing flows are expected to influence market activity throughout the week, meaning price moves may partly reflect portfolio adjustments by institutional investors rather than responses to any single economic release.
