This week is a light one for Canadian economic data, but it is a busy one for U.S. data, including a Federal Open Market Committee meeting on interest rates. Traders will likely be preoccupied by ongoing flow corporate earnings reports, too.

RBC Financial points out that the Canadian data calendar is fairly clear this week, with September industrial and raw materials prices released on Wednesday and August monthly GDP out on Friday. “August GDP is expected to be weak, however it will include the effects of the power blackout that will be reversed in September,” RBC offers.

CIBC World Markets predicts that August’s GDP report will surprise on the downside, “as the consensus forecast in our eyes seems to have underestimated the hit from Ontario’s blackout and subsequent power shortage,” but it says, “The market is likely to dismiss the report as a distorted read, as it similarly ignored a huge drop in August factory shipments”.

“It’s appropriate that August GDP will be released on Halloween — because it’s going to be scary … really scary,” says BMO Nesbitt Burns. “The GDP report threatens to go down in history as one of the weakest months of the past 15 years.” Nesbitt believes that GDP fell as much as 0.8% in the month. “Despite the shock of a steep decline in monthly GDP, the report will ultimately have no impact on policy if the economy does rebound in September. The full Q3 GDP report will be out by the end of November, just before the Bank next decides on rates on December 2.”

“This week in the U.S. markets, with more data and with President Bush back at home from his Asian tour, the market will have more concrete items on which to focus. The main event is Tuesday’s FOMC meeting,” says RBC. “We expect steady policy, but the accompanying statement will be of interest. Markets may look for some Fed acknowledgment that the economy is much improved and some backing away from deflation fears. That would better align the Fed’s view with the market. We expect the Fed statement will maintain the split bias on growth and inflation, although a change in the direction of the market could come within a few months given the stabilization in inflation.”

CIBC agrees that the Fed will do nothing on interest rates, but it says it has a delicate balancing act in wording its statement. “It might want to be more upbeat on growth, but can’t risk a bond-market sell-off if it puts that into a “bias” statement, where it wants to emphasis downside risks to inflation and the need to maintain low rates. It will either leave the bias neutral on growth, or take the growth issue out of the bias statement altogether.”

On the U.S. data front, RBC reports that the week begins with September new and existing home sales on Monday, September durable goods orders and October consumer confidence on Tuesday, and weekly unemployment claims and Advance Q3 GDP on Thursday, September personal income, October consumer sentiment and October Chicago PMI data are all due on Friday.

CIBC says that it expects a big GDP number, but that the more interesting data will be forward-looking figures on durable goods orders and consumer confidence. “Orders should pick up after an August correction, as manufacturers respond to depleted inventories across the economy. But consumers, having spent their tax cuts, aren’t likely to be any rosier about what lies ahead.”

On the earnings front, Nesbitt says that the reports slow down this week after a bombardment of reports last week. Still, about 18% of the S&P 500 are scheduled to report.

“With almost 65% of the S&P companies having already reported earnings, it now appears Q3 earnings growth will be the best quarter since Q2/2000, when year-over-year earnings growth reached 21.6%. Q3 earnings growth is currently at 19.5% and is on pace to reach 21% when all is said and done.” Nesbitt says that there are still five Dow companies on deck, bringing the total to 26.

American Express, International Paper and Procter & Gamble kick things off Monday. Boeing reports on Wednesday and on Thursday, we get results from Exxon Mobil.

A slew of Canadian firms report, too, including Barrick, CHUM, Clearwater Seafoods Income Fund, Stillwater Mining and TransAlta Power on Monday.