1. Bank of Japan Monetary Policy Meeting
2. Canadian CPI
3. US Leading Economic Indicator

Japan BoJ Monetary Policy Meeting (May 18-19)

Outlook:  The Bank of Japan will meet this week to discuss the current results of decreasing the current account deposit balance.  BoJ Governor Toshihiko Fukui stated earlier this month that the liquidity drawdown may be completed within a few weeks.  Analysts expect that the BoJ will upgrade their assessment of the economy to "expanding" for the first time in almost 15 years.  While the bank is expected to leave interest rates near zero this week, investors began speculating a rate hike during the June 14-15 meeting.  Fukui downplayed this rumor by announcing that the central bank will not immediately begin raising rates following an end to excessive liquidity.  Traders will listen closely to comments made after the meeting to determine when a shift from a zero interest rate policy may occur.

Previous:  On April 28th, the Bank of Japan raised their projections for growth, up to 2.4% for this fiscal year and 2.0% next year.  The BoJ stated that inflation will accelerate as consumer prices increased for a fifth month in March.  They expect inflation to accelerate over the next two years, supporting speculation of interest rate hikes.  Governor Fukui stated that a shift from the zero interest rate policy would occur in prices continued to rise with steady economic recovery.  The board will keep a keen eye on economic releases suggesting any shifts back towards deflation.  As expected, the central bank will continue draining excessive funds available in the market while maintaining a zero interest rate policy.

Canadian Consumer Price Index (April) (11:00 GMT, 07:00 EST)
                   (MoM)  (YoY)
Consensus:   0.5%  2.4%
Previous:       0.5%  2.2%

Outlook:  Canadian CPI is expected to rise by another 0.5% in April matching the rise in the index in March. Gasoline prices may once again be the primary driver of higher prices as crude remained above the $70/bbl for most of the month of April. Overall consumer prices are expected to increase 2.5% on a year over year basis - exceeding the Bank of Canada's 2% target. The inflation data will be of particular importance to Canada's central bank which has been raising rates since last September in a bid to contain inflation. Should the numbers exceed projections they would raise the odds of a BOC rate hike to 4.25% at the central bank's next meeting scheduled for May 24

Previous:  Canadian CPI rose 0.5% in March from February after dipping 0.2% in February. The rise in March was largely due to higher gasoline prices. Excluding energy prices, the CPI was up 1.7% in March from a year earlier, compared to a 1.6% rise in February Average gasoline prices rose 7.4% in March from a year earlier, the same rise as in February. But on a monthly basis, they soared by 5.2% in March, after a 6.8% fall in February The rise in gasoline prices, as well as in purchase and rental prices of cars were partially countered by falls in prices of computer equipment and clothing according to Statistics Canada.

US Leading Economic Indicators (APR) (14:00 GMT; 10:00 EST)
Consensus:  0.1%
Previous: -0.1%

Outlook:  The Conference Board's is expected to report a 0.1% growth on the Leading Economic Indicator for April which is a 0.2 percent increase from March's negative 0.1 percent print. The indicator is a measure of current and future economic activity and may suggest that higher borrowing costs, record energy costs and a slowing housing market continue to weigh significantly on consumer spending which could in turn slow in the world's largest economy. On the positive side, manufacturers' new orders for non defense capital goods and average weekly initial claims for unemployment insurance should account for a small improvement in the indicator. The Institute for Supply Management rose to 60.4 in April from 57.5 the previous month.

Previous: The March leading indicators index fell 0.1 percent in March and the February's release was revised down to 0.5 percent. Five of the ten indicators that make up the leading index increased in March. The coincident index increased 0.2 percent and the lagging index increased 0.3 percent in March. The largest positive contributor for the leading index was vendor performance. Other encouraging components were stock prices, index of consumer expectations, manufacturers' new orders for consumer goods and materials, and interest rate spread.

Richard Lee is a Currency Strategist at FXCM.