The Bank of Canada’s rate setting meeting on Tuesday will be this week’s economic highlight, although, there is general consensus that it won’t move rates. There will be a decent flow of data from the U.S. and earnings will feature prominently.

No one expects the Bank to hike rates Tuesday. TD Bank says, “a stronger consensus on the outcome of the meeting is hard to imagine”. It reports that a Reuters poll of Canada’s primary dealers yesterday afternoon indicated that all 12 expect the Bank to keep its overnight rate on hold at 2.5% next week, and a Bloomberg survey of 24 economists and strategists shows a similar consensus. “Nor have Bank of Canada officials made any effort to dissuade markets from this view in recent speeches,” says TD.

CIBC World Markets concedes that a stand-pat decision by the Bank on rates Tuesday is widely expected, but adds “observers will be looking to the Bank’s statement, however, and policy report update on Thursday for clues as to future policy actions, as evidence of competitive fallout from the 80¢ loonie mounts.”

BMO Nesbitt Burns says, “The Bank is also unlikely to provide a clear sign that it is on the verge of resuming its campaign to move policy toward neutral. The positive and negative forces are presumed to be in relative balance, suggesting that the Bank will likely stay in data watching mode.”

Apart from the rate decision, RBC Capital Markets notes “November retail trade numbers are due out on Monday, followed by employment insurance figures out on Tuesday. Thursday sees the release of the Business Conditions Survey for Canadian manufacturing industries, along with November payrolls data. And lastly on Friday, price indices for both raw materials and industrial products are out covering the month of December.”

CIBC says it expects to see retail sales slide, thanks to the auto component. But “softness in assorted sectors should confirm other recent evidence that the economy lost traction as the fourth quarter unfolded.”.

As for industrial prices, BMO Nesbitt says, “The direction that industrial prices take in December will depend on the battle between the Canadian dollar and the price of oil.”

In the U.S., RBC says that releases due out this week, “include existing home sales for December and the Conference Board’s measure of consumer confidence on Tuesday, followed by mortgage applications and the December Chicago Fed manufacturing activity index on Wednesday. The more market-moving indicators will come out at the tail end of the week, with advance durable goods orders for December out on Thursday, and the first look at fourth quarter GDP on Friday.”

The advance report on real GDP is expected to show the U.S. economy expanding at a 3.3% annual rate in the fourth quarter, BMO Nesbitt predicts. And, it expects, durables orders to rise from last month’s 1.4% gain. However, it sees existing home sales dropping 1.3%, and the Conference Board report ticking down a little.

CIBC says that the Conference Board report, “is likely to confirm that consumers started the New Year on a less ebullient note. That along with a negligible savings rate and high debt levels raises question marks about continuing momentum in household outlays. An above-consensus advance reading for Q4 GDP on Friday could weigh on bonds, but that’s a rearview mirror. A decelerating economy should ultimately breath new life into fixed income markets this year.”

Earnings releases will also be a constant factor this week. CN reports on Tuesday, along with Merrill Lynch and some other big U.S. names. On Wednesday, Abitibi reports, as does 724 Solutions, JDS Uniphase, Richelieu Hardware, and Zarlink Semi. Celestica, Dalsa, Potash, and Sears Canada all report on Thursday, along with mobile phone bellwether Nokia. Friday brings big U.S. names such as McDonalds, Chevron, Halliburton and P&G.