By James Langton

(April 16 – 07:30 ET) – Traders had the Easter weekend to catch their breath before a shower of market data hits this week.

The big news in Canada will be the Bank of Canada rate decision on Tuesday. Analysts agree that the central bank is going to cut rates. They are only debating the size of the cut. BMO Nesbitt Burns says it sees a cut of 25 basis points. “While there is some possibility the bank will chop rates by another 50 bps next week, it is more likely to opt for a more restrained 25 bps route. The persistently weak Canadian dollar has already left overall monetary conditions very loose, and recent domestic economic data have not pointed to an urgent need for deeper rate cuts,” it says.

CIBC World Markets says it is hoping for a 50 bps move, but it notes that the market has priced in only a quarter point cut. CIBC says, “it’s really a coin toss whether or not Dodge will be prepared to run ahead of the curve at this point. Except for the very short end of the yield curve, other financial markets aren’t likely to see much of a swing either way, since no one would read a quarter point cut as the last word from the bank in this easing cycle.” Merrill Lynch agrees that a 25 bps move is the most likely scenario.

Apart from the rate decision there will be plenty of other market data, too, although traders are said to be playing it cool on U.S. data. “Markets have downgraded the importance of the data flow considerably on the view that the Fed is on hold until the May meeting and that another round of monthly data will be in hand before they take the next rate-cut decision,” says BMO.

Nevertheless, the U.S. Consumer Price Index will attract plenty of attention on Tuesday. Consensus is for a 0.1% rise, with core prices up 0.2%. Inflation hasn’t been much of an issue with the economy faltering in the United States. Housing starts and industrial production and capacity utilization numbers will also be out on Tuesday in the U.S.

Wednesday will bring trade balance data in both Canada and the U.S. “The economic signposts for the spring aren’t very encouraging for equities. The coming week’s data on manufacturing and capacity use will show a further slippage in March, and export data will underscore the weakness in external markets,” says CIBC.

On Thursday, manufacturing shipment data is due out in Canada. On Friday, Bank governor David Dodge speaks to the Vancouver Board of Trade, and Statistics Canada releases the latest Consumer Price Index data. But with the announcement on interest rates coming earlier in the week, these events won’t be as important as they otherwise might be.

There are a couple of notable earnings announcements scheduled this week, perhaps most importantly Nortel Networks. Tuesday will see reports from Alcan and Sears Canada Inc. On Wednesday, Celestica, Danier Leather Inc., Falconbridge, Methanex Corp., and Sierra Wireless report. Thursday brings Nortel, along with Domtar Inc., and Legacy REIT. The week closes out with reports from ADF Group Inc., AT Plastics Inc., Aliant Inc., Canfor and Stillwater Mining.