This week will be a short one in the U.S., a busy one in Canada, and one filled with war tensions for jittery investors. U.S. markets are closed on Monday for Presidents’ Day.

Monday will be quiet in Canada, too, with the leading indicator as the sole data release.

RBC Financial says that this week will bring a few key economic releases in Canada. Manufacturing shipments data and a federal budget make for a busy Tuesday.

Wholesale trade statistics are out Wednesday. International trade and retail sales date are on the schedule for Thursday.

TD Bank says that this week’s economic menu ” … will be extensive, although the markets are still likely to largely brush aside the economics to focus more tightly on the geopolitical risks.”

Still, TD notes that the key event of the week will be Finance Minister Manley’s first budget. “With the Canadian economy faring remarkably well, Mr. Manley has a substantial potential surpluses to play with, and play he will. And, the name of the game will be spending — do not expect much in the way of tax relief. At best, the finance minister will lift RRSP limits a notch, and perhaps start to put a dent in capital taxes. But, significant new measures on the personal and corporate tax fronts are not in the cards.”

BMO Nesbitt Burns notes that the focus will primarily be on health care, following through on the announcement with the provinces earlier this month. “Other key areas that will see significant new funding are likely to include defence, the environment, child care, and infrastructure. Any tax relief is widely expected to play a distant second fiddle to spending increases. Possible measures on the revenue side include an increase in RRSP limits, a phasing out of capital taxes for corporations, and perhaps a reduction in the airport security charge.”

British Columbia is also releasing a budget on Tuesday. Nesbitt says that the province is expecting the 2002 deficit to hit $4 billion and their plan for 2003 was a for $1.8 billion deficit, although stronger-than -expected domestic growth raises the likelihood that these deficits will be smaller than planned. The province is still on track to eliminate the deficit by 2004.

As for the economic data, TD says trade and retail sales will be key – and overall, will continue to paint a healthy picture of the Canadian economy. “While exports will have received a boost from rising energy prices in December, the weak U.S. economy is likely to have weighed on export volumes, as it has over the past four months. However, the retail numbers for December will continue to point to healthy consumer spending, with good holiday sales adding to a jump in auto purchases during the month.”

“While stores might have settled for much smaller gains in the holiday season, the headline retail report will get a big lift from the auto sector,” offers CIBC World Markets. “Still, overall quarterly GDP should be well below the Bank of Canada’s 3% non-inflationary threshold for real growth.”

Nesbitt believes that the data “is likely to be a mixed picture, with retail sales solid, trade stable, and manufacturing softening up. Retail sales are expected to post a solid gain of 1%, with most of the rise due to a year-end bounce in auto sales. A decline in auto production is expected to carve into manufacturing shipments in the month, weakness that has been signalled by the recent drop in factory employment in Canada. However, exports will likely hold up well, as surging energy prices are expected to offset some further softening in other goods, such as autos. Accordingly, we look for the trade surplus to edge up slightly to $4.2 billion for the month.”

In the U.S. some key releases will be due out later in the week, including the Philly Fed index on Thursday and the Consumer Price Index on Friday.

CIBC says that the CPI is the biggest news. “Core CPI prices look to remain tame. With the economy still soft, higher energy prices won’t spill over into other sectors, but will instead dampen demand (and therefore pricing power) for other goods and services,” notes CIBC. “December trade data will be the final piece for the first revision in Q4 GDP, which looks at this point to be better than the initial 0.7% estimate after the past week’s December inventory report.”