While the US and Iran reached an interim peace deal last week, including reopening the Strait of Hormuz, higher energy prices have spread across the globe. This has raised concerns about higher inflation and how it may impact consumer and business activity, along with overall global economic growth. Key inflation gauges in Canada and the US will be released this week. Markets will try to gauge how long higher energy prices may persist, and what that could mean for global central banks. Here’s what to watch for this week.

• Statistics Canada will release Canada’s consumer price index data today. Canada’s annual inflation rate picked up to 2.8% in April, its highest level since May 2024. The Bank of Canada is closely monitoring inflation after holding its policy interest rate steady last week.
• On Thursday, the personal consumption expenditure price index (PCE) in the US will be announced. The PCE has accelerated sharply in recent months amid higher energy prices. The PCE is the preferred inflation gauge of the US Federal Reserve Board.
• Looking elsewhere, European services sector activity will be released tomorrow, China’s foreign direct investment on Tuesday night, German business confidence on Wednesday and Mexico’s trade balance on Friday.
• Notable earnings in Canada include Alimentation Couche-Tard and BlackBerry. Key earnings in the US include FedEx and Micron Technology.

Investors are hoping to see progress on a permanent peace deal between the US and Iran. Furthermore, progress on getting oil through the Strait of Hormuz may alleviate concerns about the global supply of oil. In North America, the inflation reports will be carefully analyzed to see if inflationary pressures are becoming more broad-based beyond energy prices. Finally, we are closing in on the end of the deadline for the Canada-United States-Mexico Agreement to be extended for 16 years or continue with annual reviews.

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