Investing.com - The outcome of Sunday's closely-watched French presidential election is likely to set the tone for global financial markets this week.
Elsewhere, key U.S. economic data could provide further evidence if the world’s largest economy is strong enough to withstand a rate hike as early as next month, with Friday's retail sales and inflation reports in the spotlight.
Meanwhile, China is to release monthly trade and inflation data amid ongoing concerns over the health of the world's second biggest economy.
Investors will also focus on monetary policy decisions due in the U.K. and New Zealand.
Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.
1. French Presidential Election
The second round of the French Presidential Election between pro-European Union centrist Emmanuel Macron and anti-EU, anti-immigration far-rightist Marine Le Pen win will be held on Sunday.
Some 67,000 polling stations opened at 8:00AM in Paris (6:00GMT). Pollsters will publish initial estimates at 8:00PM (18:00GMT), once all polling stations are closed.
Surveys on Friday showed Macron ahead by 62% to 38%, but investors are wary of opinion polls after recent political shocks such as Donald Trump's election to the White House and Britain's decision last year to leave the EU.
The expected victory of Macron would be taken by markets as a sign that political risk in Europe is receding and could be a positive for the euro and European stocks.
A surprise win for Le Pen would raise the risk that the euro zone's number two economy could abandon the single currency and even leave the EU, which could increase volatility in financial markets, particularly in European equities, bonds, and currencies.
Besides the French election, there will also be German, French and Italian industrial production data. All are expected to show growth, adding to evidence that the euro zone's economy is gaining momentum.
2. U.S. April Retail Sales
The Commerce Department will publish data on April retail sales at 8:30AM ET (12:30GMT) Friday. The consensus forecast is that the report will show retail sales rose 0.6% last month, snapping back after two straight declines.
Core sales are forecast to inch up 0.5%, after holding flat a month earlier.
Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy. Consumer spending accounts for as much as 70% of U.S. economic growth.
At the same time Friday, the Commerce Department will publish April inflation figures. Market analysts expect consumer prices to ease up 0.2%, while core inflation is forecast to increase 0.2%.
On a yearly base, core CPI is projected to climb 2%. Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.
Rising inflation would be a catalyst to push the Fed toward raising interest rates.
Besides the inflation and retail sales reports, this week's calendar also features U.S. data on JOLTs job openings, producer prices, initial jobless claims, as well as Michigan consumer sentiment.
Markets are currently pricing in around a 75% chance of a rate hike in June in the wake of last week's robust U.S. employment report, according to Investing.com's Fed Rate Monitor Tool.
Earnings from the likes of old-guard retailers such as Macy's (NYSE:M), Nordstrom (NYSE:JWN), Kohl’s (NYSE:KSS) and JCPenny (NYSE:JCP) are also on the radar this week.
3. China April Trade Balance
China is to release April trade figures at around 03:00GMT on Monday. The report is expected to show that the country’s trade surplus widened to $35.5 billion last month from a surplus of $23.9 billion in March.
Exports are forecast to have climbed 10.4% in April from a year earlier, following a jump of 16.4% a month ago, while imports are expected to rise 18.0%, after increasing 20.3% in March.
Additionally, on Wednesday, the Asian nation will publish data on April consumer and producer price inflation. The reports are expected to show that consumer prices rose 1.1% last month, while producer prices are forecast to increase by 6.9%.
China's foreign exchange reserves for April will also be in focus.
Authorities in Beijing have been turning the screws on financial stability risks and looking closely at credit in recent weeks, so April's figures will be of particular interest.
4. Bank of England Policy Announcement
The Bank of England will announce its rate decision at 11:00GMT (7:00AM ET) on Thursday, with analysts expecting no change in policy.
Market players expect BOE policymakers to remain cautious for at least the next few months as they assess the extent of any consumer slowdown while waiting to see how EU divorce negotiations pan out.
The central bank will also publish its Quarterly Inflation Report at the same time on Thursday.
Besides the BOE, traders will focus on monthly manufacturing and industrial production figures for further indications on the continued effect that the Brexit decision is having on the economy.
5. Reserve Bank of New Zealand Rate Review
The Reserve Bank of New Zealand’s monetary policy update is due at 21:00GMT (5:00PM ET) on Wednesday.
Most market analysts expect the central bank to hold its benchmark interest rate at the current all-time low of 1.75%, while signaling the next move in rates could be higher due to a recent uptick in inflation.
RBNZ Governor Wheeler will also hold a press conference following the decision.
Stay up-to-date on all of this week's economic events by visiting: http://www.investing.com/economic-calendar/