The coming week is a rather light one for data in Canada, but it does bring the 2003’s last decision on interest rates from the Bank of Canada. The data schedule is a little busier in the U.S.

The Bank of Canada meets on Tuesday. RBC Financial says that it expects no change in rates to occur. The next meeting will be on Jan. 20, 2004.

No change on rates was an easy call for most economists before this morning’s weak GDP number was released, now it may be a little dicier, although most still don’t expect the Bank to make a move.

“The same Bank of Canada that passed up the chance to cut rates in October is unlikely to do so in December. Although Q3 Canadian growth came in shy of expectations, final demand in both the U.S. and Canada have surprised on the upside, as has Canadian employment,” says CIBC World Markets. “We still see the Bank cutting rates in the spring of 2004, as the loonie’s climb provides further braking power on growth and inflation.”

BMO Nesbitt Burns says that the Bank is obviously concerned about the potential hit to growth from the soaring Canadian dollar, “However, the plain fact is that the U.S. economy is on an absolute roll, and Canadian growth appears to be perking up as well.” Odds suggest the Bank will stay on hold, Nesbitt concludes.

“While a stronger Canadian dollar is undeniably putting some downward pressure on exports, this morning’s GDP report suggests that the Canadian economy is weathering a stronger currency reasonably well,” TD Bank says. “As a result, we expect the Bank of Canada to stay on hold at the December 2nd Fixed Announcement Date, and through most of next year, with the Bank not adjusting its rate settings upward until October 2004, and then delivering only 50 basis points of tightening by year-end.”

“With the Bank set to lag the Fed with respect to both the timing and magnitude of monetary policy tightening next year, Canada-U.S. interest-rate spreads will narrow. However, this is unlikely to stem the rise in the Canadian dollar, given the broad-based decline in the U.S. dollar that is now underway,” TD adds.

Nesbitt suggests that the press release accompanying Tuesday’s decision is likely to suggest that the Bank retains a bias to ease. “In other words, the Bank will continue to effectively say that it stands ready to offer interest rate relief if the soaring Canadian dollar blunts exports more than expected. Our take is that volumes matter more than prices, so the pick-up in U.S. growth will dominate the exchange rate move, and the Bank will find no reason to ease again next year.”

In other economic news, building permits come out on Thursday, and Friday brings with it the labour force survey and November estimates of principal field crop production, which RBC says is of interest to forecasts for the prairie economies.

Most economists will be most interested by the jobs report. “In the wake of a massive jobs gain in October, it would take a significant job loss in November to raise any eyebrows in financial markets, so our slightly below consensus call would not provoke a response in either the currency or bonds,” CIBC says.

Nesbitt points out that the Canadian employment report will lose some of its impact, landing just days after the Bank has decided on interest rates. “The major question here is whether the amazing strength in October can be repeated. We doubt that employment can chalk up another huge gain, but the labour market does appear to have sparked back to life following six months of no growth from February to August.” It expects the jobless rate to tick back up to 7.7% in November, which is also the average level for 2003.

In the U.S., RBC says that next week will bring with it a number of important updates. “Monday kicks off with the ISM manufacturing survey which will provide fresh insight into the established pattern of improvement in the manufacturing sector. Construction spending for October is also due out on Monday.

Vehicle sales come out on Tuesday. An update on productivity and unit labour costs is slated for release on Wednesday along with the ISM services survey.