This week is relatively light on data releases, but the news that is coming will be important for firming up calls on interest rates.

RBC Financial says that in Canada the only significant data is May’s consumer price index and the April wholesaler’s report, both due on Friday. Bank of Canada governor Dodge will also be speaking.

RBC says, “The CPI report will get most of the market’s focus with expectations that the annual rate of inflation will hold at 3%.”

“The headline CPI awaits further disinflation in energy prices later this year for the next big leg downward, but core prices will continue to be well behaved in May,” says CIBC World Markets. “At this point, markets have already jumped a mile ahead of the Bank of Canada in pricing in a rate cut by fall, and CPI figures won’t do anything to alter that view.”

However, CIBC says keep an eye on the Canadian dollar. “Markets are likely to interpret any further climb as adding weight to the odds of an eventual Bank of Canada rate cut.”

BMO Nesbitt Burns says that it is looking for only a partial rebound from the spectacular drop in April CPI, with prices nudging up 0.1% in May. “This will further trim the headline inflation rate to 2.9%, which is miles below the recent peak of 4.6%. Core inflation is expected to nudge back up from the artificially depressed level of April, as the unwinding of the electricity rebate alone could add up to 0.3 percentage points to the CPI.”

BMO will also be watching the wholesale trade report. It expects it to “offer a good glimpse at how the Canadian economy held up (or didn’t hold up) during the stress of April. We look for broad-based declines in activity to be reported for the month, culminating in a sizeable decline in GDP for April — a 1.5% drop in wholesale trade would point in that direction.”

In the U.S. the data schedule is similarly light, but RBC says the reports are important. The big release will be the consumer price index on Tuesday. RBC says it “will be heavily scrutinized by markets for signs (or lack thereof) of deflation.” Also to be released this week are May housing starts on Tuesday and the Philly Fed index on Thursday.

CIBC says that the week ahead’s numbers will likely be the deciding factor on whether the Fed cuts a half point on June 25, or delivers the first of what would be two quarter point easings. “CPI won’t surprise anyone in showing no price momentum. We’re not quite as negative as the consensus on May industrial production, but if it does drop again, that would tend to point to a half-point rate cut the following week. Right now, the central bankers, and the Bush administration, want to throw every weapon they have at an economy with little growth and a significant deflation threat.”

Nesbitt says that the CPI, “is expected to support the rapidly solidifying view that the Fed will cut rates 50 basis points at the June 25 meeting. Unemployment claims, as well, have remained stubbornly above the 400,000 mark and another such reading would fuel worries about the June jobs report.”

Also, Nesbitt will be watching the first shreds of June data this week, particularly the Empire State factory survey and Philadelphia Fed regional survey. “We look for modestly positive results to hint that manufacturing is benefitting from a weaker dollar and decent domestic demand growth,” it says. “These are likely to be regarded as more relevant for markets than an expected flat reading for May industrial production.”

The only earnings reports on the schedule are Shermag Inc. on Wednesday and Solectron on Thursday.