Upcoming US data is anticipated to suggest that the economy is facing one of the Fed’s worst fears: stagflation.

US Advance Retail Sales are expected to jump 0.5 percent in May after slipping 0.2 percent during the month prior, and excluding autos, the figure should be even stronger at a robust 0.7 percent pace. Since this index is not adjusted for inflation, rocketing food and oil prices are likely to be the primary driver for the increase.

In a Bloomberg News poll of 25 economists, all but one expects the Bank of Canada to cut rates by 25bps on Tuesday to 2.75 percent, the lowest target rate since September 2005.

U.K. factory gate prices are expected to increase to 7.7% in May from 7.5% the month prior.

The U.S. is economy is expected to have lost another 60,000 jobs when Friday’s Non-Farm payroll report is released.

The Bank of England is expected to leave rates unchanged at Thursday's monetary policy meeting, as inflation continues to rise on increasing fuel and food costs.

The U.S. ISM Non-Manufacturing release, which accounts for 70% of the economy, is expected to show that the sector expanded for a second month.

The RBA rate decision will be closely watched by traders as the central bank left the possibility of a rate hike after they were more hawkish than expected at their last meeting.

The Institute for Supply Management is expected to report that their survey of conditions in the manufacturing sector fell back to February’s five-year low of 48.0 in May from 48.6.

The Canadian GDP report is due out Friday which will provide measurements of growth for the month of March and the first quarter of 2008. Expectations are that the economy was flat for March and slowed in the first quarter to 0.4% from 0.8% the quarter prior.