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Talking Points:

- The only 'high' rated data release for the United States comes out on Tuesday in the form of the Advance Retail Sales report for April.

- The final April Eurozone CPI release on Wednesday will be more important to the Euro than the revision to the Q1'18 EZ GDP report on Tuesday.

- Another step lower by Japanese inflation in April could open the gate for further Japanese Yen weakness.

Join me on Mondays at 7:30 EDT/11:30 GMT for the FX Week Ahead webinar, where we discuss top event risk over the coming days and strategies for trading FX markets around the events listed below.

05/15 Tuesday | 12:30 GMT | USD Advance Retail Sales (APR)

Consumption is the most important part of the US economy, generating nearly 70% of the headline GDP figure. The best monthly insight we have into consumption trends in the US might arguably be the Advance Retail Sales report. In April, according to a Bloomberg News survey, consumption rebounded with the headline Advance Retail Sales due in at +0.3% from +0.6% (m/m). The Retail Sales Control Group, the input used to calculate GDP, is due in at +0.4% from +0.4% (m/m).

FX Markets Turn to US Retail Sales, EZ, Canada, Japan CPI

Based on the data received thus far about Q2’18, the Atlanta Fed GDPNow forecast is looking for growth at +4%. The next update to the Q2’18 forecast will be released after Tuesday’s US economic data.

Pairs to Watch: EUR/USD, USD/JPY, Gold, DXY Index

05/16 Wednesday | 09:00 GMT | EUR Eurozone Consumer Price Index (APR F)

The final April Eurozone Core CPI is due in at +0.7% (y/y) unch, still a sign that the relatively strong Euro (still up over +7% on a trade-weighted basis over the past 12-months) is proving to be a headwind for achieving policy goals. The headline CPI figure is due in at +1.3% unch (y/y), well-below the ECB’s medium-term target of +2%. Historically, when the spread between Eurozone and US inflation rates and bond yields diverge in the manner that they are presently, EUR/USD weakness emerges.

Pairs to Watch: EUR/GBP, EUR/JPY, EUR/USD

05/17 Thursday | 01:30 GMT | AUD Employment Change & Unemployment Rate (APR)

Australian employment increased by +4.9K in March, and despite labor market data proving stronger in recent months, focus remains elsewhere for traders. With the unemployment rate set to hold at 5.5%, the Reserve Bank of Australia is probably looking for nothing more than signs of stable growth rather than another blowout print to keep their optimism about the labor market intact. Current forecasts call for +20K jobs to have been added last month, in what should amount to another strong labor report overall.

But despite the steadily improving state of the labor market, uneven economic data appears to be a wrinkle in the outlook for the RBA, which continues to note that real wage growth trends aren’t strong enough to provoke a rate hike any time soon. Interest rate expectations (per overnight index swaps) show that no rate move is expected in 2018.

Pairs to Watch: AUD/JPY, AUD/NZD, AUD/USD

05/17 Thursday | 23:30 GMT | JPY National Consumer Price Index (APR)

Japanese inflation figures are expected to fall back again, due in at +0.7% in April from +1.1% in March (y/y). The February reading was the fastest rate of price pressures since April 2015 – when Shinzo Abe government enacted the (unpopular) sales tax reform. Accordingly, a retracement in inflation should cool market participants’ speculation over an early termination to the BOJ’s easing policies; the BOJ has recently signaled that the end of the extraordinary easing measures will come around the start of FY2019 – next April. Further downside in inflation could restart Yen weakness.

Pairs to Watch: AUD/JPY, EUR/JPY, GBP/JPY, USD/JPY

05/18 Friday | 12:30 GMT | CAD Consumer Price Index (APR)

Canadian inflation is expected to holdabove the central bank’s medium-term midpoint target of +2.0% in April, set to hold at +2.3% (y/y). Despite recent improvements in the labor market, figures from Statistics Canada showed that overall wage growth is at its lowest since 1990. With both inflation and labor market data trending in the right direction, it seems that the only thing standing between the BOC hiking rates again this year is a resolution to the NAFTA negotiations.

Pairs to Watch: CAD/JPY, EUR/CAD, USD/CAD, Crude Oil

Read more: Euro Forecast: EUR/USD Weakness Can Resume if EZ CPI Declines Again

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--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com.

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX.