U.S. news, both earnings and economic, will likely dominate the scene this week, with the Canadian data flow looking light.

The focus this week will be on U.S. economic data and its impact on the Federal Reserve Board meeting scheduled for next week. “In the U.S., another decline in industrial production, moderating inflation and sagging auto sales should all set the stage for a 25 basis point cut by the Federal Reserve Board at its upcoming August 21 meeting,” says CIBC World Markets.

U.S. retail trade numbers are out on Tuesday. Wednesday will bring the industrial production and capacity utilization figures. Both sets of data are likely to be closely watched.

“The week’s data will test some important themes that markets are focused upon,” says BMO Nesbitt Burns. “First, did retail sales fall well below plan, as the Beige Book hinted, or were they half-way decent as Wal-Mart’s results suggested? Industrial production may fall less in July than seen in recent months. Small gains outside the tech sector are likely to be outweighed by another hefty drop in technology production.”

On Thursday, Canada wades into the fray with manufacturing shipment data, and the Bank of Canada’s summer review.

“In Canada, expected declines in both manufacturing shipments and merchandise exports will follow on the heels of this week’s dismal employment report. A nearly 2% decline in June manufacturing shipments will show that the factory sector in Canada is doing no better than stateside. At the same time a visibly weakening American economy is exerting more and more of a drag on its chief trading partner. Whatever tone the Bank of Canada takes in its upcoming summer report, the numbers provide a growing chorus to ease,” says CIBC World Markets.

Not to be outdone, the U.S. Consumer Price Index and housing start data is also out on Thursday. But with inflation seen to be subdued, economists will be focused on the earlier reports, unless there’s some unforeseen surprise in the numbers.

“U.S. CPI will be the key news Thursday. Core CPI has been pumped up by a hard-to-explain burst in the shelter component, which has a huge 30%+ weight in the overall index. It’s particularly annoying to see the financial markets driven to distraction by this mysterious rise,” says BMO Nesbitt Burns. “There is a reliable tendency for the component to do well in months after disasters such as we’ve just experienced. That rather unscientific basis, along with the fact that the Beige Book stressed price discounting in every other sentence of the report, is why we’re taking a shot at only a 0.1% core CPI rise.”

On Friday, we get trade balance numbers for both Canada and the U.S. “Both exports and imports fell heavily in May, but the trade surplus still edged up to $7 billion, the third highest on record.,” says BMO Nesbitt Burns. “This time, the weakness in exports is expected to dominate, cutting the surplus to $6.5 billion.”

The earnings scene looks rather quiet for Canada this week, too. ATS Automation Tooling Systems reports on Monday, along with Decoma International.

On Tuesday, Four Seasons Hotels is due to report, as are Industrial-Alliance Life and Metro Inc. Wednesday will see Breakwater Resources and H&R REIT reporting. Penn West Petroleum and TVX Gold take centre stage on Thursday.

In the U.S., the scene should be livelier. “The market will probably spend most of this week focused on next week’s Fed meeting, but it is a very important week for earnings reports,” says First Call. “The pace of 2Q01 earnings reports have been winding down in recent weeks, and earnings reports have fallen off the worry screen of most investors. But the pace picks up a bit this week and next as the bulk of the July ending quarter companies report. About half are retailers.”

Leading the parade are the last three Dow components, with Wal-Mart and Home Depot on Tuesday, and Hewlett-Packard on Thursday.

Among the major techs reporting, are Applied Materials on Tuesday and Dell Computer, Ciena, and Analog Devices on Thursday.

Major retailers reporting this week, in addition to Wal-Mart and Home Depot, are May Dept Stores on Monday, JC Penney, TJX, and Abercrombie & Fitch on Tuesday, Federated Dept Stores on Wednesday, and Kmart, Gap, Tiffany, Nordstrom, and Kohl’s on Thursday.

@page_break@Other companies of note reporting this week include farm equipment leader Deere on Thursday.