A light week ahead, as is usually the case following the NFP release, and while Monday has no major economic events scheduled, markets will watch for any developments related to the conflict in the Middle East. On Tuesday, Australia will release the Westpac consumer sentiment index and the U.S. will publish the ADP employment change report and existing home sales data. On Wednesday, the spotlight will be on U.S. inflation while in Canada the focus will be the BoC monetary policy announcement. On Thursday, attention will shift to the ECB monetary policy announcement and the U.S. PPI m/m release, which is often viewed as a leading indicator of consumer inflation. Finally, on Friday, the U.K. will release its GDP m/m data, while in the U.S., the focus will be on the preliminary UoM consumer sentiment index and preliminary inflation expectations. The Westpac consumer sentiment for Australia saw a modest recovery in May, rising 3.5% after a steep drop in April caused by surging fuel costs and repeated rate hikes. The index remained in pessimistic territory, hovering in the low 80s range despite the Federal Budget being released during the survey. Conditions haven't improved much since then with households continuing to face economic headwinds from slowing growth which was reflected in a weaker than expected first-quarter GDP and ongoing declines in house prices. As a reminder, the RBA delivered a third rate hike this year in May, taking the cash rate to 4.35%. In the U.S., the consensus for core CPI m/m is 0.5%, compared to the prior 0.4%, while core CPI y/y is expected to rise to 2.9% from 2.8%. Headline CPI m/m is forecast at 0.3% vs. 0.6% previously, while CPI y/y is expected to increase to 4.2% from 3.8%, which would mark the highest level in three years. According to Wells Fargo, the increase in inflation is driven primarily by higher energy costs, particularly gasoline prices, but food prices also registered a modest increase. Core inflation, which excludes food and energy, is expected to see only a marginal rise. Core goods likely received support from used vehicles, but other categories of goods appear to have experienced some easing in price pressures. Effects from the Iran conflict were immediately seen in airline fares due to higher jet fuel costs, but are slow to filter into other retail prices. Primary shelter inflation is expected to return to a 0.2-0.3% monthly pace, while strength in healthcare-related prices is projected to be largely offset by softer readings in motor vehicle insurance and personal services, leaving core services inflation broadly stable, analysts said. At this week's meeting, the Bank of Canada is widely expected to leave interest rates unchanged. The conflict in the Middle East has contributed to higher oil prices, pushing headline inflation in Canada back above the Bank's 2% target. However, underlying price pressures remain relatively subdued, with core inflation measures showing signs of easing in recent data. At the same time, economic activity has been weaker than anticipated, with GDP contracting for a second consecutive quarter. Despite the soft headline growth figures, domestic demand has shown some resilience, analysts from RBC said. Consumer spending has continued to expand, and per-capita output has improved, suggesting that underlying economic conditions are firmer than the GDP data alone would indicate. Rising oil prices have also boosted national income by improving Canada's terms of trade. Labour market data remains mixed. The unemployment rate eased to 6.6% in May, layoffs continued to trend lower, and hours worked increased. However, hiring activity remains sluggish, particularly for new entrants into the workforce. Overall, recent data points to an economy that is slowing but not sharply deteriorating, reinforcing expectations that the BoC will maintain a cautious stance and keep rates unchanged for the time being. At this meeting, traders will closely monitor how policymakers assess the balance between recent economic softness and longer-term inflation risks. The Bank will also be watching whether higher energy prices and labour supply constraints keep inflation pressures elevated, while the upcoming USMCA review adds another layer of uncertainty for businesses. In the Eurozone, the ECB is widely expected to raise rates by 25 bps, taking the main deposit rate to 2.25% and main refinancing rate to 2.40%. There are still signs of persistent inflationary pressure across the eurozone. Supply-side disruptions in global shipping remain evident, while lower energy inventories and elevated energy prices continue to keep costs under pressure despite recent volatility. The latest flash CPI reading for May reinforces this picture, showing further acceleration, with short-term annualized measures of both headline and core inflation running well above their year-over-year rates. Price pressures have also broadened beyond the energy sector, with both services inflation and non-energy industrial goods inflation picking up in recent months, so the focus of this meeting will be on the ECB’s forward guidance. Policymakers are expected to emphasize the importance of restraining demand to reduce the risk of second-round inflation effects. Updated staff projections and scenario analyses are also likely to reflect a more challenging inflation environment than previously anticipated, analysts from Wells Fargo said. Markets are pricing in the start of the tightening cycle in June, with expectations that additional policy moves could follow later in the year, with a second rate increase as soon as July. This article was written by Gina Constantin at investinglive.com.