North American markets are likely to open flat Tuesday, ahead of an expected increase in short-term interest rates by the U.S. Federal Reserve this afternoon.

The Fed’s Federal Open Market Committee is expected to raise short-term interest rates another quarter percentage point to 2.25%

Here at home, Statistics Canada said Canada’s merchandise trade surplus with the world fell for the second consecutive month in October to its lowest level in a year, mostly because of declining exports. The surplus hit $4.4 billion in October, down $3.0 billion from the most recent high in June, which was the biggest surplus in three and a half years.

Meanwhile, StatsCan said manufacturing activity has taken a downturn. Manufacturers reported fewer shipments for the second month in a row in October. Finished product inventories also continued to accumulate and fewer new orders were received, StatsCan said.

South of the border, the U.S. Commerce Department said the U.S. trade gap widened 8.9% to $55.46 billion in October, as oil prices surged and high demand for foreign-made consumer goods trumped a strong performance by U.S. exporters.

A report on U.S. industrial capacity and utilization during Novemberwill be released later this morning.

In other news, Franklin Templeton added its name to the list of prominent Canadian mutual fund managers under scrutiny for allegedly permitting market timing, a controversial activity that could result in hefty financial penalties. The company became the fifth Canadian company to reveal it’s under investigation by the Ontario Securities Commission, which said Monday it had settled with three other fund companies and was in talks with a fourth.

Bombardier Inc. grabbed the headlines Monday, but it couldn’t spoil the party on Bay Street as Canadian markets posted solid gains. At close, the S&P/TSX was up 67.50 points or 0.75% to 9,032.77 while the TSX Venture exchange advanced 8.59 points or 0.5% to 1,722.97.

Shares of Bombardier plunged after the maker of railcars and regional aircraft dismissed president and CEO Paul Tellier, effective “immediately.” Bombardier skidded 19% to $2.10 on volume of more than 90 million shares.

U.S. investors cheered Oracle Corp.’s long-awaited takeover of PeopleSoft Inc. and a better-than-expected survey of retail sales.

The Dow Jones industrials surged 95.10 points or 0.90% to 10,638.32. The technology-heavy Nasdaq gained 20.43 or 0.96% to 2,148.50, while the S&P 500 was up 10.68 or 0.90% to 1,198.68.