This week brings with it another heavy slate of economic data. A decision on U.S. interest rates will compete with political and military news from Washington for top billing with traders.

With the utterly unpredictable military situation in the background, traders will likely key on the outcome of Tuesday’s FOMC meeting.

Already the market has priced in at least a 25 basis point cut to U.S. interest rates, and some are calling for 50 bps. “Since the Fed is going to take the funds rate to at least 2.25%, it might as well give the market 50 basis points now, insists CIBC World Markets. BMO Nesbitt Burns agrees that 50 bps is in the cards for Tuesday.

Ahead of the decision, we’ll get personal income and spending numbers and National Association of Purchasing Manangers numbers for September. NAPM will be the key number, and should have a small effect from the September11 attacks priced in.

Economists expect to see the already rock bottom reading degrade even further. “The data this week will only underscore the need for aggressive action,” says CIBC. “The September NAPM, which saw a misleading bump higher last month, will beat a hasty retreat, while an ugly rise in jobless claims will see payrolls drop more than 100,000. But as is increasingly the case, recession-like data will now be no surprise to financial markets.”

Data on jobless claims is due out on Friday, and is expected to show another tick up in U.S unemployment to 5%. Our jobless numbers are also out next Friday. Canada is expected to see a small rise in unemployment, too, hitting 7.3%.

“Canadian payrolls are likely to retreat for the fourth month in a row in September, although the latest spate of layoff announcements is unlikely to appear in this report,” says BMO, noting that the survey includes the chaotic week of the attacks, but not the ugly aftermath for workers. “Ultimately, the jobless rate is expected to climb to 8%, or higher, as the economy slows further in the months head,” it says.

TD Bank economists agree, noting, “With both the Canadian and U.S. economies expected to endure at least a brief recession in the second half of this year, net job losses are likely to continue through the balance of the year. With the slowdown in economic growth on this side of the border expected to be on par with that of the United States over the second half of the year, job cuts in Canada will likely be at least as deep as those seen in the U.S. in the months to come.” Although it sees joblessness only running to 7.7%

Information on Canada’s building permits are due to be released on Thursday. U.S. factory orders are out on Thursday, too. They won’t garner much attention ahead of key jobs numbers.

On the earnings front, the only firms scheduled to report this week are ATI Technologies and C.I. Fund Management Inc., both on Wednesday. The market will be watching for earnings warnings though.