In addition, a slew of top-drawer economic data could provide clues about when the Federal Reserve might start cutting back its monetary stimulus.
And traders will also look forward to what is expected to be another successful slate of earnings from the big Canadian banks, which are preparing to report for the financial year ended Oct. 31.
The Bank of Canada will, in all likelihood, keep its trend-setting rate at a low one per cent, where it has been since late 2010 amid weak global economic conditions.
In fact, many analysts don’t think the central bank will start raising rates until 2015 and some even think it could be persuaded to cut.
Speculation about a cut gained momentum after the bank’s last announcement Oct. 23, when it dropped its warning about the potential for higher interest rates.
And in its monetary policy report, also released Oct. 23, the Bank of Canada said 2013 growth will likely average 1.6 per cent, two-tenths of a point lower than the previous forecast. Its projection for 2014 was lowered by four-tenths of a point to 2.3 per cent and 2015's estimate was eased back to 2.6 per cent, a notch below the July estimate.
"The bank has already cut its growth forecast in the latest MPR," observed David Watt, chief economist at HSBC Canada.
The central bank's ideal inflation rate is 2.0 per cent, but considers it to be acceptable within one percentage point higher or lower. The latest monthly report from Statistics Canada showed that the national inflation rate in October was just 0.7 per cent.
However, Watt doesn't think the central bank will change its key interest rates either up or down this week.
In fact, excluding certain volatile items such as gasoline and fresh food prices, core inflation was 1.2 per cent in October, down one point from September and within the central bank's target range of 1 to 3 per cent.
The other major Canadian data reports are merchandise trade on Wednesday and the November employment figures on Friday. The national unemployment rate is expected to be unchanged at 6.9 per cent, with about 15,000 jobs added.
Jobs data in the U.S. also comes out Friday, following a string of other data earlier in the week, including the latest readings on manufacturing, new home sales and the final revision to third quarter gross domestic product growth.
This data will be crucial in the Fed determining whether it starts to cut back on its US$85 billion of monthly bond purchases at its next meeting on Dec. 18.
Watt said "there is a strong possibility", but not a certainty, that the Fed will start to gradually reduce its bond purchasing program, which has been at US$85 billion a month in order to keep long-term interest rates low while the U.S. recovers from the last recession.
"We think there could very well be a decision to initiate tapering in December," Watt said.
"But our view is we don’t to have super-strong data (for the Fed to start tapering). We just need to have 'not terrible' numbers."
Speculation about tapering has roiled markets since May, when outgoing Fed chairman Ben Bernanke first mentioned that the bank may taper the stimulus, which has encouraged a strong stock rally.
Meanwhile, the Canada's quarterly earnings season wraps up this week with reports from the major Canadian banks. The market is looking at another strong quarter, along with full-year earnings.
"Earnings are generally forecast to rise five to seven per cent, year-over-year, which is pretty attractive," said Chris King, portfolio manager at Morgan, Meighen and Associates.
Such a performance would come at a time when the TSX financial sector is up about 20 per cent year to date. A chunk of that increase is due to a sharp runup in the battered insurance sector.
But the big banks "are still very strong businesses . . . they generate 15 to 18 per cent return on equity, these are solid businesses and they generate strong returns for shareholders."